Blog 2023 Malcolm Blair-Robinson

The Squeezed Middle

No wonder there is confusion as to what it means, because it is nonsense. Ed Milliband knows that. It was a quick soundbite. It has no substance. Everybody feels squeezed.

If we go back to the founding of the modern welfare state after WWII by the Attlee government and the introduction of universal benefits, we find a fairly threadbare middle class too proud to seek help but happy to receive it,  along with the poor for whom it was a lifeline. The Conservatives  accepted this and became the champion of welfare, because their supporters liked it. The middle classes were slower to embrace state education (and still are at the more affluent end) but all used the NHS,  pocketed the Child Benefit and collected (no bank credits then) the  Old Age Pension, as it was known. This could be done with discretion at Harrods Post Office in Knightsbridge. I had an aunt who made use of the peculiar facility. Apparently she was bold among her posh friends, who were too proud and went without.

We are now in a completely different world. The middle class has sprawled to include almost everyone, leaving an underclass, an ignored aristocracy and a celebrity class; the latter living a lifestyle involving an orgy of spending because  for very little reason, money is thrown at them. All this is slowly beginning to fall down. First the banks tottered. Rescuing them has put whole countries at financial risk and sent one, Ireland, to the wall. Cutting is now in hand on an undreamed of scale, yet its full impact is yet to be felt. There is no certainty that the vast borrowings can ever be paid off.

We cannot tell what will come after. We can tell that the middle classes with three cars and two homes who have been getting child benefit, free healthcare and state education for their kids, all on the taxpayer, are going to have to get real. Too much of their income has been used to spend for fun, not to meet family obligations and responsibilities. The money has fuelled property prices so that these assets are now valued way above their worth. It has put up costs so that we cannot even produce simple things like light bulbs competitively for the home market, let alone for export. This will have to stop. The model has crashed. It is very near collapse.

In future people who can afford to will have to make a proper contribution to the basic obligations of citizenship and family life and go without handouts they do not need. Call it squeezing the middle if you wish. In fact it is simple arithmatic. Follow the numbers. Start at the £10 trillion national indebtedness. The thing about numbers is they are not open to interpretation. They are matters of fact.

Ed Milliband and Labour

Ed Milliband is right when he says New Labour lost its way and it is time to move on. This is important because a vibrant democracy needs an effective party operating left of centre. The trouble is that nobody seems to be sure where left actually is. It is where it always was, at the less fortunate mass of society, seeking greater equality and an end to injustice, exploitation and deprivation. This is where Labour has to be. There is no party there at the moment, just lip service and waving, as, caught up in the endless chase for wealth, now called aspiration, shallow politicians dash past.

Labour has to look at and question big time, our economic model which sucks money through debt from the poor to the rich. It has to find a way of bringing discipline to energy markets which fries speculators and warms the old and cold. It has to regain a model of public ownership through taxpayer shareholding, without creating flabby state monopolies. It has to turn the welfare sate upside down so that a depleted cash flow goes to need.

It has to understand that creating a public sector of more than half the county’s GDP and twice that of communist China, is a break on growth and a fuel for poverty. It has also to understand that public borrowing to excessive levels cannot be sustained and achieves nothing of value. It is folly, as New Labour did with such gleeful abandon, to cut income tax and increase spending. If you want to splash out on a vast bureaucratic infrastructure of quangos, regulators and busybodies, you have to tax to the level to pay for them and if you do that you will never be elected.

You can relieve poverty with benefits, but you can only get rid of it by creating real jobs which earn money and build wealth. You will not do that unless you set people free. How to do that without setting bubbles, booms, greed and selfishness free and holding the good, decent and hard working back, is the question. If Ed Milliband and his re-focused Labour Party can answer that, they will win. If they cannot, they will not. Moreover they will not deserve to. 

The Labour Party has a lot to do in the next two years. Time to get cracking.