A thing for the New Statesman here
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The British middle class is sinking. Is our politics big enough to meet the challenge?

An interesting statistic crept out of the Department for Work and Pensions last week, while the pubs of Britain no doubt buzzed with discussion about Jean-Claude Junker or how someone in Ed Miliband's office may or may not have recognised someone at a FT summer drinks reception.

According to the DWP, the average household income in 2012-13 was £440, unchanged on the year before. It represents the third consecutive year of stagnation or decline (depending on how you cut the figures). As the IFS have noted, in real terms this leaves median household income in roughly the same place as it was in 2002, and comes off the back of painfully slow wage growth from the start of the 2000s.

In the same week the increase in the price of homes reached an all-time high. Add in that a majority of people on typical incomes now have less than one month's income as savings, plus the slow hollowing-out of middle income jobs, and a pretty clear picture emerges. The foundations of middle class life – a decent income, assets, savings, pensions – are getting harder and harder to attain, especially for those just starting out. In many cases, debt has filled the gap.

This goes beyond just failures of the private sector. The welfare safety net has also become residualised. People on reasonable incomes can work their whole life and receive only paltry amounts when they lose their job. When it comes to both work and the state, people in the middle have been putting more in than they've been getting out for a long time.

It should go without saying that working class communities have had it hardest over the last thirty years. But the idea of middle class decline too is too often met with derision, especially among progressives.

Part of this is down to a distorted view of what "middle class" is, a popular association with what is in effect the upper middle classes; the world of piano recitals and Waitrose where "struggle" means difficulty meeting school fees. Of course, the middle class contains many like this too and they are doing more than fine. In fact, the most interesting development that experts havepointed to in recent years is the fracturing and polarisation of the middle class, between the upper echelons and those at the lower end. And previous generations who started out at the lower end of the middle class, bought a house at the right time, settled into a profession and now face retiring near the top may well be the last to make that journey en masse. In short, the bottom is falling out of the British middle class.

There's been a lot of talk about "narratives" recently. There's also been a lot of talk about how Ed Miliband doesn't have "a narrative". But in his defence, he's one of the few at the top of British politics to grasp this phenemenon, whatever his other difficulties. He's not totally alone – some figures on the right, for instance, including the brilliant Peter Franklin at ConHome, have twigged too. But wider interest is otherwise conspicuous by its absence, in Westminster at least.

Instead we get slightly echoey outdated debates about Europe, whether X or Y is "pro-business" or "anti-business", whether a particular view of public services is sufficiently "reforming" and so on and so forth. But surely the shape of that discussion changes in the face of such huge societal shifts? No doubt this failure to catch up is partly because the senior ranks of the commentariat are largely made up of those at the comfortable end of things (themselves probably among the last who can expect to make a good living out of a profession like journalism) - but it's depressing all the same.

To be fair, the answers are neither easy nor obvious. The likes of Resolution Foundation have been fantastic at laying out the problem of stagnating wages and ways to ameloriate it, but no one has come up with a wholesale plan for reversing the trend. Some of this is because it rubs up against global head winds and the modern divorce between power and politics. It probably requires trans-national solutions, or at least a revisiting of the way Britain approaches globalisation – a debate that hasn't even been opened here.

But those who over-play the inability of national government to fix things are also wrong, and usually have a vested ideological interest in doing so (in this sense the argument between those favouring a "bigger" or "shrunken" Labour offer in opposition is mostly phony, and a proxy for a bigger one about what can be achieved in government). Ideas that would be both effective and achievable include wholesale reform of corporate governance to include a significant role for workers; profit-sharing and other ways of spreading wealth; lower-cost routes into home ownership; breaking up and remaking British banking; decentralisation to cities; the prioritisation of vocational "middle skills"; prioritising British industry in procurement; reform of takeovers etc. When it comes to welfare, there is IPPR's National Salary Insurance scheme or SMF's "flexicurity" proposals.

All of this can only start, though, with a recognition that our current journey back to basically the same political economy as we had before the crash is not what success looks like. It wasn't good enough then and it isn't now.

Marx famously wrote:

The lower strata of the middle class... all these sink gradually into the proletariat, partly because their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with the large capitalists, partly because their specialised skill is rendered worthless by new methods of production. Thus the proletariat is recruited from all classes of the population.

Things may not be as apocalyptic or revolutionary now, but they are bad, and contradictions within modern British capitalism mean the lower end of the middle class is sinking. The entire middle is being stretched, squeezed and polarised as never before. The result is entire neighbourhoods – which on the face of things look serene – in fact struggling to keep their head above water, facing futures significantly less secure, less stable and less well-off than their parents. This shapes millions of people's everyday lives and influences their political attitudes, and it should influence our political discussion too. At the moment, though, it doesn't seem to be. Future generations will surely look back and wonder what on earth we were talking about instead.

On social mobility, we can't ignore the flaws of the tuition fee system

Latest piece for Shifting Grounds
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On social mobility, we can't ignore the flaws of the tuition fee system

Ed Miliband and Nick Clegg have both used this week to fire the starting gun on a debate over social mobility. Both, for different reasons, want to push past a focus on tuition fees. But as universities prepare nervously for the era of 9k fees to begin in September, the summer will inevitably reignite debate on the impact on the aspirations of kids from low income backgrounds. It remains vital that the left do not turn their backs on this debate – and the intellectual failures of the tuition fee system more broadly.

Higher education leaders have taken refuge lately in the fact that applications from disadvantaged groups are ‘only’ slightly down, rather than in total collapse. But this merely massages a deeper, structural problem – which is that far too few kids from working class and poor backgrounds go to university in the first place. Fifteen-year-olds on free school meals are around twice as less likely to pass on to higher education. As pressingly, woefully few attend our top universities.

For this the buck is often passed to schools and lower levels of attainment. But even BIS confess that “young people from disadvantaged backgrounds who achieve qualifications that would allow them to attend a selective university are [still] less likely to apply than their peers.” Research consistently shows that tuition fees influence this decision, with pupils from low income backgrounds far more debt averse and likely to have their aspirations suppressed as a result. Fees can also have some knock-on effect on attainment – if certain kids feel they have less to aim for, why study that bit harder?

These arguments are generally met with short shrift by Government or leading universities, who eagerly believe more time simply needs to be spent “explaining the system” to young people (the NUS or such like tend to cop the blame for ‘scaremongering’ at this point, too). Millions of pounds are poured into outreach schemes for this exact purpose. Huge efforts are made in an attempt to ensure students won’t ‘see the fee’ when weighing up the decision to apply. The argument goes that the headline tuition fee is irrelevant since the debt accrued isn’t normal debt: it’s only paid in small slices each month after people graduate and earn over a minimum amount; repayment is linked to income; it’s written off after 30 years, and so on. In addition, they point out that a range of generous – if complex – bursaries are available for the least well off.

All this is true enough. And most university management is populated by good people who genuinely care about social mobility. But, with the tuition fees system, they are simply pushing a very large boulder up a very steep hill.

This is ultimately because it relies on a vision of prospective students acting as perfectly informed rational consumers in a marketplace. This is improbable enough when dealing with something as ingrained as debt aversion. But it’s made even more difficult by the very discourse and architecture of reform that the tuition fees system rode in on.

Introduced by New Labour but really stepped up by the Coalition, this has seen a shift in the ideal of higher education away from one based on the common good – with publicly funded universities built largely on the shared pursuit of learning and knowledge – towards one orientated to what Stefan Collini calls a “purely economistic calculation of value, and wholly individualistic conception of ‘consumer satisfaction’”. In short, the relationship between student and institution has basically become transactional.

Leaving aside the resulting flaws and contradictions in terms of learning and teaching (which Collini brilliantly takes apart here andhere), this shift intrinsically creates huge problems for those claiming that fees need not deter low income students. Under this system, universities explain fees to students in terms of an ‘investment’. They market their different prices (which from 2012 generally vary from £7,500 to £9,000 a year) on their prospectus – the individual fee linked directly to the individual institution – and fix their entire message on encouraging students to weigh up the costs and benefits as consumers; ‘getting bang for your buck’ and so on (most of which travels under the rubric of the ‘student experience’).

This is marketised language for a marketised system. Fine. But is it surprising, then, that many students continue to ‘see the fee’, tot it up (which can be over £40,000 in all) and factor it into their decision making? And that as a result the more debt averse – many of whom live in households where the assumption is they won’t go to university – are put off by it? The whole organisation of HE pushes them to do so. You cannot set up a system which treats people like consumers engaging in a conventional transaction, as if popping into your local supermarket, while at the same time asking them not to think of the fee as a conventional transaction at all.

That’s why, when it comes to social mobility, all the good intentions, efforts exerted, money spent and (unambitious) targets set will only amount to running to stand still under the present system. If we totted up what the average person is likely to pay for the NHS or the police, presented it to them when they were 17 and required them to take out a loan to fund it or opt-out all together, what would the results be – no matter our exhortations on the progressive nature of the repayment?

The only socially just solution is to take the headline fee/debt out of the calculation all together, and to claim back higher education as a public service. As Miliband rightly says, if young people want to pursue a different route than university, they should have the option to do so. But money must be taken out of the decision. A limited graduate tax – partnered with proper public investment – is the only realistic way to achieve this.

It’s disappointing that despite flirting with this idea, Miliband’s has since turned away from it. But it was Jon Cruddas, his new policy chief, who argued recently that it was the debate around university fees, not Iraq, that marked the real change in the character of the last Government:

“The language was [now] of a rational economic exchange, of a derived utility, discounting for the future and of calculus. No discussion at all of the virtue of creating wiser more knowledgeable citizens; what intermediary institutions- such as universities- are there to achieve.”

It’s vital that as Cruddas puts his feet under the desk, this issue is not filed away or ignored. The flaws of the tuition fee system are a difficult subject for Labour, for obvious reasons. But, along with the Coalition and the whole HE establishment, they must face up to them.