The low earner Liberal Democrats

Yesterday The Voice ran an op-ed from the Resolution Foundation’s Sophia Parker about the, “9.4 million working-age ‘low earners’ – those people living on an average household income of £15,800 while remaining broadly independent of state support.”

It’s a group of people that is not that often explicitly addressed in Liberal Democrat policy debates or campaigning and messaging discussions, expect in as much as they are part of the millions who would benefit from the party’s policy of raising the income tax threshold to £10,000.

Yet these low earner households have been the bedrock of many of the party’s biggest electoral successes in the last decade. The party’s control of a string of large cities – Liverpool, Sheffield, Newcastle, Bristol and so on – has often rested heavily on the support from ‘low earner Liberal Democrats’.

Other elements of that coalition for urban success often get attention. How does the party continue to best appeal to the ex-Tory voters in more affluent parts of those cities won over in the past by a mix of tactical voting and dislike of the pre-1997 government? How can the party keep the support of young graduates won over by the party’s stance on the Iraq war? Is the party saying enough on the environment to retain the votes of the Mosaic Urban Intelligence categories? And so on.

But often very little is said about the low earner Liberal Democrats. Consider how rarely the housing situation for renters, rather than those with mortgages, gets a mention.

The Resolution Foundation’s analysis of the group in general is a good starting point for looking at this group:

They are:

  • Squeezed: often too poor to benefit from the full range of opportunities provided by private markets but too rich to qualify for substantial state support;
  • Exposed: living at the edge of their means and therefore vulnerable to changes in circumstances; and
  • Overlooked: low earners are not well-defined as a group and the pressures they face are not well understood.

They can be defined as:

  • Household income: first qualification is presence in income deciles 3-5 (income measured on equivalised, gross and disposable bases depending on detail provided by source), and
  • Benefit-receipt: second qualification is independence from state support (independence defined as obtaining less than 20 per cent of total income from income-related benefits)

There are 7.2 million households who meet this definition (28% of all households), over two-thirds of whom are in social classes C1 and C2:

Low earners graph

It’s a group of people for whom the Liberal Democrat policy of raising the income tax threshold to £10,000 is particularly well-suited to, because they usually spend all their disposable income each week, have low levels of savings and due to work patterns have variable levels of income from week to week.

As a result, Labour’s preference for tax-credits often makes for a sluggish and bureaucratic system which easily gets out of step with their personal situations – and when errors are made, people do not have the cushion of savings to see them through. That’s why taking people out of income tax brings about more than just the usually discussed benefits. As I wrote previously:

There is a major benefit which doesn’t get counted in pounds and pence in your pocket from being taken out of the income tax system – if you are the sort of person who struggles to handle complicated bureaucracy, who moves in and out of jobs through the year, who doesn’t have the financial cushion to see them through while tax takes are adjusted and over/under payments come and go. Or indeed, if you’re the sort of person for whom all of that applies.

(It’s a point which, incidentally, the Fabian Society seems curiously reluctant to fully embrace when it’s been looking at the Lib Dem tax plans. Yet it’s only the combination of tax systems and how they work in practice that determines the money in people’s pockets. To neglect the question of how they work in practice – the over-payments, the under-payments, the stress caused by paperwork, the sudden changes in tax codes and more – risks putting theory above reality.)

Low earner households have also often been particularly hit by rising prices, as food and fuel takes up a larger part of their expenditure that it does for better off households:

Inflation graph

When it comes to housing, rental property plays an important role. Overall nearly three-quarters of low earner households are home owners, but rates are much lower among younger low earners and, in the youngest age group, 43 per cent live in private rented sector.

There is much more that could be said about this group of people, but – with a general and local elections so near – there is also the obvious question: what does this mean for campaigning?

Here are three personas who capture the range of low earner Liberal Democrats:

Chris

  • Works full time
  • Separated from wife but can’t afford to move out
  • Lost eligibility for tax credits
  • Rent up 5 per cent; salary up 0.5 per cent
  • Taken a second job, looking for a third
  • Can’t buy new shoes for children
  • No money for self – no socialising, no eye test
  • Avoids credit
  • Saves with a credit union but unexpected costs – like new washing machine or bank charges – eat into this
  • Doesn’t want to think about the future

Jane

  • Renting from housing association
  • Husband left last year, significantly reducing her income
  • Lost job as part time assistant when shop closed
  • Visits jobcentre twice a week, searches websites and asks around in shops/businesses
  • Available jobs require three years’ relevant experience or NVQ Level 2, 3 or 4 – only has NVQ 1
  • Became unwell – depression and anxiety
  • Sold car – limiting her job prospects
  • Must choose between heating and eating
  • Lives hand-to-mouth and feels worthless

Julie

  • Works full time as an agency carer
  • Lives in privately rented flat with partner
  • On council waiting list for five years
  • Doesn’t like where she lives, but can’t afford to move
  • Not much leftover after rent and bills – no prospect of buying a property
  • Before meeting her partner she lived with her daughter because couldn’t afford to live alone
  • Grand-daughter gave up her room, so she felt like she was intruding
  • Worried that landlord might sell – they’re at his mercy

Leaf through your leaflets and news releases: are there messages in there that will appeal to them? On some points, almost certainly – especially the £10,000 income tax threshold policy.

But many of these concerns either are covered  by party policy which is rarely talked about (such as improving the rental sector) or are ones that, at least online, are often abruptly dismissed by some (think how often issues such as a woman’s feeling of self-worth are dismissed as trivial, irrelevant or non-existent by male commenters).

Chris, Jane and Julie do get their rightful attention from some in the party; why not encourage others in your local party to add themselves to those ranks too?

Thanks to the Resolution Foundation for supplying the graphs and some of the information used in this piece.

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27 Comments

  • Welcome to the real world.

    Tony Greaves

  • I try to be as vague as possible about the details of my personal life. 🙂

    I used to volunteer at a Citizens Advice Bureau & we had a thing called a “Quick Benefit Calculator”. I entered clients’ circumstances (work, benefit, other income, mortgage/rent, council tax, children etc) & it told me what benefits they were entitled to. Why not have something for would-be voters along the same lines? They do come up with these “who will be the winners & losers” thing at budgets, where they elaborate that Mr Sod will be taxed more but old Mrs Arsewipe will get more on her pension, etc.

    I, further, recall that there was a website prior to the US elections in 2008 on which Yanks could enter their details & be told how much Obama would cut their taxes by. Why not have a similar thing?

    PS-
    The old MOSAIC has been superseded now so “Urban Intelligence” no longer exists. But there is a category called Liberal Opinions which seems fairly similar.

    http://guides.business-strategies.co.uk/mosaicuk2009/html/animation.htm

    You can enter your own postcode & those of people you know. Also, I enter in pubs I may be visiting to get an idea of whether going there is a good idea or not.

  • “Rigorous Liberalism is just right for them, though I surmise from the number of times I haver to point this out that it is far from instinctive.”

    Quite, not instinctive, or rigorous or Liberal. It’s a rather sad brand of utopian libertarianism.

    It’s really just a mirror image of “the state can solve every problem” attitude that so exercises you,

    “Liberatianism really can solve every problem” (or near enough) is little more than my utopia is better than your utopia.

    Liberalism accepts that they way the state operates can be reformed. It also accepts that there is no utopi

  • I don’t think Jane is in this group, by the way. A single person in a workless household is almost certainly in the bottom decile, and very unlikely to be in decile three-five.

    This group – or at least those with kids – are the “hard working families” that Brown is so keen on mentioning. Nationally they have a reputation for switching directly from Tory to Labour and back again. Our emphasis on civil liberties, sorting-your-rubbish-environmentalism is rarely key to their concerns. The £10k tax band, in contrast, does speak to their concerns.

    But as Jock says, the key to making these people better off is housing costs. At the moment the party has nothing coherent to say on this (I know, I had to speak on LD housing to the National Housing Federation last week – the best I could say is that the policies of the other parties were no worse than ours!). If we allow more houses to be built, big or small, private or social, then housing costs (purchase and rent) fall, and people like Chris, Julie and Jennie’s lives are improved both financially, and because they have more choice as to where to live, and more choice that comes from having more disposable income each month. 500,000 houses a year for a decade would be a start.

  • “However, you will find much opposition in this party, despite its long history as Liberal policy.
    But you will find”

    But we will find what?
    Wht is the secret of eteral life? 😉

  • Liberal Eye 24th Mar '10 - 4:31pm

    @ Tim Leunig

    “But as Jock says, the key to making these people better off is housing costs. At the moment the party has nothing coherent to say on this”.

    Agreed. And it’s not just housing costs. One way or another businesses also have property in their cost base so this directly and indirectly ripples through the economy putting up costs all round.

    So why is this elephant in the room apparently invisible to the official party?

  • Matthew Huntbach 24th Mar '10 - 4:31pm

    Mark Pack

    Yet these low earner households have been the bedrock of many of the party’s biggest electoral successes in the last decade. The party’s control of a string of large cities – Liverpool, Sheffield, Newcastle, Bristol and so on – has often rested heavily on the support from ‘low earner Liberal Democrats’.

    Yes, but why mention just these?

    What you, and many who suppose our success now and in the future in the south of England involves being “Tory-lite” forget, is that our success in the south often rested heavily on low-waged people there. This is what brought me into the party, and still is what ultimately fires me. Poor people in the south were never Tories, yet felt let down by Labour who ignored their interests and seemed to stand only for the interests of the north and inner cities. That is why they flocked to the Liberals in the 1974 general elections, and their support then was the foundation of the third party revival which has led to us being in existence now. More so than what happened in 1981, despite what has been written in history.

    The south does not consist entirely of wealthy people who work in financial services, despite what the smart set may say. The smart set who live in the south think everyone else in the south is like them because the poor in the south are invisible to them. The poor in the south never took to Labour much because Labour didn’t have much to say for them either. They remain savagely discriminated against by the electoral system, denied a voice, yet to this day we hardly mention that aspect as one of the reasons for supporting electoral reform. Denied a voice and representation, they have little even to raise awareness amongst themselves of their plight. Even in Liberal Democrat news just recently there was an appalling article in which the word “southern” was used to mean this wealthy smart set rather than real southern people to whom this smart set is as alien as it is to the northerners.

  • I second Jock in thinking about a negative income tax. It is certainly the most theoretically simple, and possibly the most fair, as well as providing incentive to work (which shouldn’t be a dirty phrase, since it entails helping people into independence, as has been mentioned above), proportionality and universality

One Trackback

  • By Low earner Liberal Democrats: the rural dimension on Wed 24th March 2010 at 10:21 am.

    […] talking about the low earner Liberal Democrats this week, I have emphasised the urban aspect: It’s a group of people that is not that often explicitly addressed in Liberal Democrat […]

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