Setting Out a New Agenda to Tackle Inequality: A Response to Mike Savage's Social Class in the 21st Century

10/05/2016 07:52

In 2013, Professor Mike Savage's Great British Class Survey revealed the seven social classes that make up modern Britain (remember taking this quiz?) Today, I'll be giving a lecture at the LSE looking at the political implications of his book on the topic.

His work tells us how Britain is changing. By looking at the different assets and resources people have - economic, cultural and social capital - it demonstrates the multi-dimensional nature of class today.

In a world where the 1% own as much as the 99% and a country where the wealthiest 10% of households own 45% of the wealth - it's clear we are failing on equality.

These problems are being intensified by a decade of Tory government. But we need to acknowledge that the problems have been longer in the making and simply reversing "Tory cuts" won't do the trick.

Mike's work opens up the possibility of a new approach and highlights the issues we need to address to set out a new agenda for a progressive government of the left.

Mike's findings

A new elite - the 6% - with high levels of every type of capital is pulling away from the rest of society. It is more closed than for several generations and the children of this group will continue to have privileged access to wealth and influence.

At the other end of the scale is a precariat- a huge group of about 15% or 9 million people - facing low pay, insecure and fluctuating work, with no capital or other stake in society.

Furthermore former distinctions between the middle and working classes are disintegrating with the emergence of five new groups 'in the middle'.

Britain is much more unequal than it was 30 years ago. Income inequality grew massively in the 1980s and has fluctuated around the same level since with the top 10% earning 4 times the bottom 10%.

A fantasy has grown up that we can have more equality of opportunity, without having more equality. The GCBS shows why this is untrue in one table: a person with the same professional position, skills and education will earn between £10,000 and £20,000 less than their peers if their father was a manual worker!

Education is no longer the key engine of social mobility. The mantra of the 1997 Labour government "Education, education, education" does not work because it alone cannot tackle the accumulation of other valuable assets such as economic, social and cultural capital.

So the political task is to build up and distribute more equally each category of capital.

(1) Jobs

A good job - one which is secure, pays well and uses the individual's talents - is the most valuable asset a person can have.

Creating good jobs is an absolute priority. But the share of national output going to wages is falling. 40% of national income goes to wages, down from c.55% in 1948. We need a legal framework which promotes better pay, conditions and equal rights at work. Unfortunately, today many people are in a state of insecurity which is detrimental to their incomes, health, wellbeing, and family life. Without a secure income, you can't get a mortgage or even plan your next summer holiday.

(2) Housing

A secure home is the second most important asset a person can have. Today many, even well educated, young people are excluded from financial security and home ownership.
A third of households in the private rented sector are those with children. Meanwhile the increase in house prices in the south has reached crazy levels - the average home in London is over half a million pounds.

So what do we do? Everyone now agrees that we need to build more - 300,000 homes each year. But politicians have been anxious about admitting that we need to bring prices down as a ratio of incomes and return to the provision of social housing at scale.

At the last election Labour proposed to tackle land banking. In London and some rural areas, tying planning permission to affordable housing for local people is under discussion. Meanwhile Frank Field argues that a major housebuilding programme requires the training of 74,000 young bricklayers.

All these ideas need to be developed into a coherent plan.

(3) Redistribution

The IFS have shown that tax and benefit changes since 2010 have hit the poorest 10% hardest - they have lost a higher proportion of their income than even the richest 10%.

The steeper the slope the harder it is move up it - equality and equality of opportunity are linked. The discussion of housing reminds us that inequality is not just about income. Today wealth differences adversely affect both individual life chances and national economic performance. A quarter of the population are in 'negative net wealth' meaning that they have more debts than assets, while the top 10% of households each have over a million.

If we are to avoid becoming an even more unequal society we need a thorough review of the taxation of all wealth, alongside measures to help people to save and access financial services.

(4) Education

A good education is becoming more important in the knowledge economy, even though it may not change relative social positions as it did 40 years ago.

If we want to be the people controlling new technologies, maths and science are very important. At the same time it's worth considering what machines can't do and develop soft skills and creativity. Yet we have a shortage of maths and science teachers and artistic subjects have been removed from the core curriculum. Rather than governance changes in the state school system, this is where a left-of-centre government should invest.

(5) Culture

The GBCS rightly emphasises cultural capital, not just because people use their knowledge of highbrow culture like opera as a social signifier, but because culture is intrinsically valuable.

Frequent library use has been found to be equivalent to a £1,400 pay rise! But in Lincolnshire a couple of years ago, the Arts Council spent 25p per person, meanwhile in London George Osborne has just put £5m of taxpayers' money into a feasibility study for a new £250m concert hall just half a mile from the Barbican!

The availability of good books, plays and concerts on an affordable basis requires an effective infrastructure of national and local support.

(6) Social networks and geography

We have a shared interest in re-balancing this country. For every £5 spent on transport in the North East, £250 is spent on Londoners. Poor northern councils like Liverpool and Newcastle face cuts of 25% while the Home Counties have seen their budgets rise.

It's vital we get this right - handing over power without resources as in the current 'devolution deals' is a sham. The regions must be at the table when the funding allocations are agreed.

In a free society social capital is the most difficult area to influence. Equal opportunities at work; mixed public and private housing; schools which avoid social selection; universities which harness the talents of the whole nation; and cultural institutions which are open and available - should all contribute to building social ties across class boundaries.

Modern Britain is complex - we are more unequal today than for a generation. What this means is that a left-of-centre government needs to expand the range of policies it pursues to create a more equal society. Jobs, redistribution, education, housing, culture, and devolution need to be on the agenda. If we acknowledge that we have big problems then we need to be prepared for big solutions.

If we want a strategic approach we need to have equality as a criteria for every policy initiative. We need to ask of every idea - will it make us a more equal or less equal society?