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As part of The March of the Oligarchs series, Stephen Colegrave looks at the impact of the super rich on the English middle class.
Since the Industrial Revolution, the middle classes have been the backbone of England. Their energy and entrepreneurism saw them create wealth in Victorian Britain. Engineers like Brunel created a world leading transport system, pioneering an infrastructure we still use today. The upper classes knew a good thing when they saw it and welcomed them into the new public schools and married them to keep their stately homes from falling down.
In the last century, the middle classes provided much of the officer class in the First World War, with Wilfred Owen its soundtrack for history. As senior civil servants, they oversaw the creation of Beveridge and Bevan’s welfare state. They won more Nobel Prizes for Cambridge University than any other in the world. At the Foreign Office, they prevented wars. As lawyers, they breathed life into the rule of law and, as hospital consultants, they played god with our lives. Their ascendancy was assured when they provided Margaret Thatcher with her Cabinet. The upper classes, on the other hand, were clinging on to conventions such as debutante balls, the summer season of Ascot and Henley and unheated stately piles.
However, the 21st Century has not been kind to the middle classes.
No longer able to afford homes in London, to educate their children in public schools, to be members of the most exclusive golf clubs, drive the latest Range Rover and rent a proper villa in the south of France, they have had to resort to new survival techniques.
For example, fees at top public schools are £40,000 plus for boarding and £30,000 for day fees – and that’s before the thousands needed for kit and skiing holidays. So, to send three children to public school, you would need to earn £120,000 a year after tax – equating to a required income of around £250,000 a year – just to pay the school fees before you can eat. This means that a permanent secretary in the Civil Service would not be able to afford to send two children to a top public school on a salary of £140,000 and definitely not a senior civil servant on £60 to 80,000 a year. But, 25 years ago, they probably could have.
In the 25 years to 2016, school fees rose by 553%, versus average wage increases at 217%, according to figures cited by The Independent. Some professions did not even keep up with this salary increase – especially senior civil servants. Similarly, if you wanted to buy a house in London, house prices in the 24 years to 2019 rose by 538%, even accounting for the 2008 banking crisis when average salaries were much less than half of that. It looks like the professional middle classes would need to be twice as rich to enjoy the same lifestyle as they did 25 years ago.
Of course, that’s not to say that private schools are good or that our Civil Service would benefit from those with a public school education, but it is a fact that most of the professional middle class in the UK is priced out of the elite lifestyle they used to enjoy – and how they cope with this is of public interest.
But, first of all, it is worth considering how they found themselves in this position.
Running Faster, Keeping Up
The UK, and particularly London, is an attractive playground for oligarchs to use as a safe haven, business, tax location and a place to educate their children. However, the rise of this growing class of super rich who corrupt whatever they touch has been troubling.
As the oligarchs sent London property prices sky high – with a trickle-down effect on middle class houses in Islington and Clapham – filled public schools with their children and bought up top golf clubs such as Wentworth, they put them beyond the grasp of the middle classes. Resentment festered and – more dangerously – money-making schemes and bending laws seemed the only way to compete.
It wasn’t just the impossible rising costs, it was also the new definition of what success and wealth really looked like that was even more pernicious.
Much of our current corruption, the banking crisis and perhaps even Brexit can be traced back to this. Not all middle class people started bending the rules, many simply gave up and moved to where the few remaining grammar schools were or bought houses on the coast in Deal – now populated by more than its fair share of senior civil servants. But, enough decided to stay in the game and make enough money no matter the risk or the contradiction with traditional middle class values and morality this involved.
The amping up of this new definition of wealth was seen when top girl’s boarding school Benenden provided parents with information about where helicopters could land when visiting their daughters. Another story is that one of the Russian pupils kept a permanent driver outside the school gates to fetch her pizza. The school also provides stabling for horses. Parents didn’t just have second homes in France but ski chalets and a nice little place in Cornwall. Private jets and super yachts abound. So, even if you can afford to send your children to these schools, to keep up with super rich parents a £1 million salary is probably the very minimum.
This was already happening in 2008 when the banking crisis struck. At the time, traders in the City had base salaries of between £120,000 and £150,000. Many had children at public schools, second homes in the UK, a house in France and a Range Rover. This would have been completely impossible on their base salaries. It all had to be paid for from their bonuses, which were based on commission.
At that time, the average commission for traders was around £350,000. It is difficult to be sure, as regulations about recording them was lax, but a number of traders interviewed confirmed the figures. The traders would get their bonuses once a year. They spent their salaries and then built up huge overdrafts against their expected bonuses, placing a huge pressure to make the bonus or everything would come tumbling down. This led to the pressure to cut corners across the whole banking sector and sell sub-prime mortgages.
And it didn’t stop there. Lawyers and accountants spotted that they could make many times their normal salary by helping people hide money offshore and be less conscientious about spotting dirty money. Incorporating shell companies became big business. Speaking at a Byline event last year, Bill Browder observed that the “UK (especially London) is one of the most corrupt countries in the world in terms of money laundering”.
Even middle-class politicians are not immune from this attempt to keep up with the new super rich. openDemocracy has revealed that “the Conservative party received at least £498,850 from Russian business people and their associates between November 2018 and October 2019” – versus less than £350,000 the year before.
The middle classes are nearing extinction and, in their bid to survive, seem to have split into two groups. The first: genteel poverty, where they cling to middle class values in straitened circumstances. Or the second: a group that has aped the super rich, taking on risky business behaviour, or found a way to feed off them.