wind-cowie, m., wood, c. & todd, j. (2013). irrational optimists. demos, london

8/13/2019 Wind-Cowie, M., Wood, C. & Todd, J. (2013). Irrational optimists. Demos, London.

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The economic downturnhas exposed pre-existingfinancial vulnerabilitiesin households acrossBritain

IRRATIONAL OPTIMISTS

Max Wind-Cowie

Claudia Wood Jonathan Todd


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Demos is Britains leading cross-party think tank.We produce original research, publish innovativethinkers and host thought-provoking events. Wehave spent 20 years at the centre of the policydebate, with an overarching mission to bring

politics closer to people.

Demos is now exploring some of the mostpersistent frictions within modern politics,especially in those areas where there is a

significant gap between the intuitions of theordinary voter and political leaders. Can a liberalpolitics also be a popular politics? How can policyaddress widespread anxieties over social issuessuch as welfare, diversity and family life? How can

a dynamic and open economy also produce good jobs, empower consumers and connect companiesto the communities in which they operate?

Our worldview is reflected in the methods we

employ: we recognise that the public often haveinsights that the experts do not. We prideourselves in working together with the people whoare the focus of our research Alongside


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First published in 2013 Demos. Some rights reserved Magdalen House, 136 Tooley Street, London, SE1 2TU, UK

ISBN 978 1 909037 50 2Series design by modernactivity


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IRRATIONAL OPTIMISTMax Wind-CowieClaudia Wood Jonathan Todd


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Open access. Some rights reserved.

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Contents

Executive summary

Introduction

1 Identifying the real squeezed middle

2 Views from the middle lane

3 Prospects for the squeezed middle

4 The squeezed middle and financial produc

5 Concluding thoughts building reasonablehope

Notes

References


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Executive summary

7

This report looks at how the UKs middle ethose in the middle quintile of gross househbetween 31,000 and 42,300 a year havsince the financial crisis of 2008.

The squeezed middle do not look poprofessionally successful, they have often bhouse, and they are aspirational and eager tchildren. But they are struggling now morelives look set to get worse, not better, over What is more, their outward displays of affpolitics into a false sense of complacency amiddle. They are lumped in political discand, too often, policy in with those who cbear more of the brunt. They are confused w

really, they are anything but. Analysis of data before and followingalongside data from specially commissioneevidence from a series of focus groups arou


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families, but the reality is that it has exposed apre-existing financial vulnerabilities more thaones. The fact is that many of these families wcheap credit to keep their heads above water longer available and wont be for some time.

These long-term trends will continue to middle throughout their life cycles hitting thfinancial pressures for which they seem underour qualitative work with the real squeezed malthough these issues are present in the back opreparing for them is on the back-burner. Whethe realities of the risks and costs that they wilreal squeezed middle accept their vulnerabilityplan for it and many have convinced themselvwill turn up. As one focus group respondent ta lets wait and see situation if Im being ho

This irrational optimism was present in While only 22 per cent of the squeezed middlthey feel they need to, 76 per cent of respondeleave their child a property and/or cash assets 50,000. This optimism in the face of harsh fa

squeezed middles attitudes to the macro and msituation as well. When polled in 2012, 60 perthe British economy would either improve, socantly so, or remain broadly the same over the

Executive summary


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to help them buy a first home. Of course, mreasonably focus on preparing for differentstages of life. However, the under-preparedmiddle is further exposed when we look at polling by age. Only 10 per cent of those a

earning between 33,000 and 44,000 annupreparations to cover the costs of social carSome of these people are little more than a needing to meet these costs. Equally, they ameet these and other costs independently. Tunderstandable and praiseworthy aspirationrelatively modest assets and an increasing aon them, there is a worry that these people priorities that has not adjusted to meet the reconomy or policy direction.

Despite their problems, the real squeedefined, attitudinally, by a set of values thatand hugely helpful to politicians. They are reliance and work ethic, and determined noon the state. While 95 per cent of respondebelieved that they are taxed either about rig

per cent agreed that the level of state provistheir own is either about right or too generogroup in search of a hand-out solution to th

The findings presented in this report s

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Introduction

11

The economic collapse of 2008 and subsehave exposed long-term structural problemthe British state and British households. Thnot originally caused by the credit crunch ahave, rather, been exacerbated and brought events. Because for a significant proportionpopulation as well as for the architecture offundamental weaknesses revealed by the subanking and finance sector were a long timwill take a long time to mend.

All of us now face a challenging comterm, pre-crash trends and the more immeddownturn: the long-term stagnation of wagpreviously wide availability of credit, reduc

rising housing and living costs, demographan ageing population, and policies since 20to reduce public service and welfare spendithis combination of financial, social and po


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Of course, there are rival definitions andwho the squeezed middle might be. But manin fact look at the working poor. In an age of sand rising living costs, those in low-paid workattention and concern of policy makers. But it

mistake to do so at the expense of another cateare earning significantly more than the minimwhose lives before the recession looked healthfact struggling badly to manage their living cofinancial security in the long term. This is a grwhom neither cuts to tax nor increased state inlikely to entirely address their problems. As wthe course of this report, they need another, diinterventions from the working poor and thosebottom of the income scale.

The real squeezed are median earners between 31,000 and 42,300 a year. Over therecession their real incomes have dropped steeas 2,000 a year and policy changes aimed adeficit have cut them loose from state supportmore on their wages than ever before and hav

savings to fall back on. With a stuttering labour market, higher iinterest rates, what can be done to give the 4 mearning households in Britain more financial s

Introduction


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down the debts built up when credit was eashort, both the state and middle earning houto deleverage, leaving the state less able to and rendering households more dependent resources, which are also more constrained

But it is not simply the result of the rethe state providing extra support to middle there was more cash in the coffers, the real never the focus of state resources as they nesigns of struggling financially. Instead, therprecarious financial position of middle earncome from a mix of state and financial sectreport explains, middle earners are not currengage with such systems.

Presenting peer research and original explores some of the recent social, economas well as the financial behaviour and attituearners. Chapter 1 gives a broad outline of middle earners, including their financial panalyses the ambitions, expectations and apmiddle earners in order to understand how

longer-term trends have impacted them. Chchallenges middle earners face in the longethe life-cycle costs they will be exposed to.the squeezed middles attitudes towards sav

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speaks for them. Policy makers must engage wsqueezed middle, identify practical solutions fthem build their way to financial security.

Introduction


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1 Identifying the realsqueezed middle

15

Defining the squeezed middle has provokThere is stark disagreement about who beloin what way they are being squeezed.

In interview, Labour leader Ed Milibaagenda of the squeezed middle but failed identify where they reside on the income spcriticisms, Liam Byrne, the Shadow Work aSecretary, defined the squeezed middle as pbetween 16,000 and 50,000 per year.4 ThExchequer, George Osborne, replied:

Lets pass over his [Ed Milibands] failure in his last effort included around 90 per cent of tnot on the middle, but on Labours muddle.5

But this reply demonstrates that the Cfailed not only to engage properly with an iand constituency, but also sidelined a group


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Defining the squeezed middle in this way thmany of the unique concerns of actual middleThis association of the squeezed middle beinmiddle is now commonplace across the publiincluding in the work of the Trades Union Cou

Certainly the individuals and families looked organisations in their research are important asupport. They fall at the bottom end of the incimpact of inflation and rising costs of living htheir financial health. In-work poverty is a groimportant social phenomenon.

But that does not mean that other groupsappropriately termed the middle when definearnings are not also struggling, but policy sdiffer from those aimed at alleviating in-work this group are not as immersed in the benefits example, they are less likely to benefit from tatop up the incomes of those at the bottom, andto suffer from unsustainably low wages rathliving and financial preparation for them are bTherefore, discussions about the living wage,

and welfare reform hold little benefit for the rmiddle. As yet, no one has explored the difficult

overlooked group or the types of solutions nee

Identifying the real squeezed middle


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of income are in the 5th decile and their a

17

Figure 1 Average gross household income in UK by d2009/10

Source: Demos analysis of ONS data, 2009/10

120k

100k

60k

40k

80k

20k

0

A v e r a g e g r o s s

h o u s e

h o

l d i n c o m e

( )

In co m e d ec ile

B otto m 2 nd 3 rd 4th 5th 6th 7


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the phrase was an attempt to appeal to a very lpeople:


The bulk of the workforce, ordinary folk. Its notnot your actors and people on benefits and stuff

Friday, 9 to 5.They also understood the political motiv

phrase, which is to try to give as many voters that the attention of the politician using the phtheir attention towards them. However, they resuggestion that its broadness rendered the phrand felt it did speak to their experiences of havthe recession:

To me, the squeezed middle class or the squeezeare those average guys who are just getting hammbecause youre not getting any help with anythineverything.

The squeezeThe 3rd quintile middle earners has beensqueezed in recent years. As figure 2 shows, tsalaries of those on median gross household in


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through increasing access to credit, but man

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Figure 2 Change in average gross household income imiddle earners, 2000/012009/10

Source: Demos analysis of ONS and OECD data

37k

35k

31k

29k

33k

2 7 k

25k

A v e r a g e g r o s s

h o u s e

h o

l d i n c o m

e ( )

2 0 0 0

/ 0 1

2 0 0 1

/ 0 2

2 0 0 2

/ 0 3

2 0 0 3

/ 0 4

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2 0 0 5

/ 0 6

f


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on the most ambitious austerity programmes iorder to repair public finances and reduce the which was 1,185.3bn at the end of March 2075.2% of gross domestic product (GDP).14 Thbeen generous to this income cohort, whose m

ineligible for tax credits (targeted at low incomis now even less able than in most previous pemedian earners through welfare or other direcincome. Tax credits are being made less generBenefit, the last universal benefit for workingmeans tested. While support is less forthcominmiddle must continue to pay down the debts bcredit was easier to access and interest rates lothe state and middle earning households are sedeleverage, leaving the state less able to supporendering households more dependent on theiwhich are also more constrained.

Table 1 shows that households on mediaof problems distinct from those of higher earnwealth protects them from the squeeze, and loare guaranteed a larger proportion of their inco

Middle earners are more income dependent , relsalaries alone to support their lifestyles, and arto any disruption to their incomes. Middle earhave achieved income sovereigntyin that they ar


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21

Table 1Annual income of those in the 1st to 10th decby source

1st4th decile ()

Original incomeWages and salaries 11,329 2Imputed income from benefits in kind 50 248Self-employment income 1,236 2,4Occupational pensions, annuities 425 980Investment income 140 28Other income 291Total 13,470

Direct benefits in cashContributoryRetirement pension 446 92Jobseekers Allowance (contribution 100 19

based)Incapacity benefit a 468Widows benefits 18Statutory maternity pay/allowance 39 154

Non-contributoryIncome support and pension credit b 767Child Benefit 788Housing benefit 1,233 3Jobseekers Allowance (income based) 189 48Carers allowance 103 7Attendance allowance 17 10

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Table 1 Annual income of those in the 1st to 10th deciles,by source continued

1st4th Squeezedecile () middle (

Direct taxes and employees NICIncome tax 1,471 4,288less : tax credits d 297 324Employees NI contributions 725 2,092Council tax and Northern Ireland rates e 1,018 1,155less : council tax benefit and rates

rebates 253 90

Total 2,663 7,121

Disposable income 16,846 29,456

Equivalised disposable income 14,371 25,093

Indirect taxes on final goods and servicesVAT 1,350 2,011Duty on tobacco 450 438Duty on beer and cider 99 172Duty on wines and spirits 110 191Duty on hydrocarbon oils 389 583Vehicle excise duty 113 173

Television licences 139 135Stamp duty on house purchase 44 86Customs duties 27 33Betting taxes 21 33Insurance premium tax 30 48Air passenger duty 26 41

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table 1 this has been equivalised according

23

Table 1Annual income of those in the 1st to 10th decby source continued

1st4th decile ()

Benefits in kindEducation 4,706 3National Health Service 3,483 3,4Housing subsidy 42 1Rail travel subsidy 11Bus travel subsidy 65 6School meals and Healthy Start

vouchers f 111Total 8,416

Final income 21,369

Notes:a Using the modified OECD scaleb Including Employment Support Allowancec Child Tax Credit and Working Tax Creditd Including tax relief at source on life assurance premiumse Council Tax and Northern Ireland rates after deducting discouf The Healthy Start vouchers component includes school milk d

Source: Demos analysis of ONS data, 2009/10



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Of course, income is only half the picturinequality in the UK, as in much of the wester

significant than income inequality. Table 2 shoship between income and wealth with highegreater wealth.

Taken together, these data show that thos


Table 2Distribution of household wealth excluding penswealth, by income per week, 2006/08

Weekly earnings Mean 1st quartile Median

< 100 199,400 15,300 120,200100 to < 200 180,100 15,600 85,500200 to < 300 156,100 18,500 88,500300 to < 400 170,600 33,000 108,700400 to < 500 186,100 47,200 131,300500 to < 600 212,800 65,800 156,200600 to < 700* 233,900 73,700 175,000700 to < 800* 257,900 110,100 196,800800 to < 900 292,600 123,700 226,200900 to < 1,000 352,500 138,700 268,7001,000+ 548,000 204,200 361,500

* Middle earners

Source: ONS, Wealth and Assets Survey

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25

Figure 3The inflation index in UK for different goodsConsumer Price Index, 19802010

Source: Demos analysis of OECD statistics

150

130

90

70

110

5 0

30

1 9 8 0

1 9 8 2

1 9 8 4

1 9 8 6

1 9 8 8

1 9 9 0

1 9 9 2

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1 9 9

All ite m s n o n -foo d ,n o n -ho u s ing

Se rv ices less ho u s ing

En e rg y

All ite m s



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de t y g t e ea squee ed dd e

downturn in property prices. While middlewealth than their higher earning counterparrisk of devalued housing and, at worst, negfalling value of housing equity restricts concredit and otherwise diminishes the amounhouseholds have available to maintain theirthem vulnerable to income disruption and rincome sovereignty.15 Yet what is importantvalue of housing equity shakes the widely hencouraged by successive governments, thainvest their money and savings in assets, paorder to have secure reserves to draw on in report in 2010 by the Joseph Rowntree FouResidential property is also increasingly serather than a consumption good and now cohouseholds financial planning. 16

In sum, those in the real squeezed midthis report are middle earners: those whosmiddle of the income distribution curve, whhousehold are of working age, and whose gincome is between 31,000 and 42,300 pe

suffered a significant drop in their real incorecession. Unlike higher earners, who havestreams and greater wealth, and lower earnreliant on benefits, middle earners are incom

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to their squeeze. It is only through active attitudes and desires that the Government cgaps in the squeezed middles financial welmeaningful, long-term and successful polic


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2 Views from themiddle lane

In order to better understand how those in tmiddle perceived their situation and how thout of it, Demos and IpsosMori polled a sahouseholds who fit into the income bracketreal squeezed middle. Our survey aimed textent to which the financial stresses highliquantitative analysis presented above were households, to gauge their understanding oterm trends that lay behind their direct fina

to assess their attitudes to potential approacthose stresses.17Our findings hold significant lessons

all political stripes. Three important characreal squeezed middle by their attitudes to th

health and the macro-economic situation, wdictates their relative wealth. These charactgeneralisations there are members of thishold different attitudes and views. But the r

Views from the middle lane


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health improvement that does not reflect the gon economic trends or the long-term nature offinancial difficulties. This optimism may reduthese households to take steps to insulate themfor future eventualities. For example, 60 per cin this category believe that the economy at laremain steady or will improve over a five-yeasame proportion predicting that their standardimprove in the same period. What is more, onbelieve that there will be further cuts to publicpublic services in the next Parliament despitbetween all three major political parties that ththe case, with both Coalition parties asserting

The Chancellor used his spring budget inreconfirm his commitment to identifying furthdepartmental spending in all non-ring-fenced

Previous announcements have set the figure aa year in further cuts to Department for Work (DWP) as a focus on reducing the cost of anexpenditure (AME), the budget from which wtaken.18 This suggests that the era of sweeping

far from over.Our focus groups with individuals from middle illustrated this sense of optimism abouand their household finances:

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Proud striversThe real squeezed middle self-identifies as focus group leaders asked participants to demiddle in a number of ways from wealth Many described people in the squeezed miby their work ethic and determination to su

People like us work hard we struggle but walways tell my kids they need to get an educa

families like mine thats the values... you havahead in life.

And the real squeezed middle is not pby the fact that they are hard working. In fapride in this fact about themselves identifbadge of identity and values. Many saw thias separating them from both the poor an

identifying the existence of so-called free-rand (importantly) the top of society:

The squeezed middle are ordinary folk. Its nonot your actors and people on benefits and stu Friday, 9 to 5.

Autonomy prizers



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whole, take pride in their independence and arprinciple) of becoming dependent on state aid

These people on a middle income, theyve got a that gets shattered along with their self-esteem a people on the poverty line who have never had athey dont know what self-esteem is Its a way

This characteristic of the real squeezed mimportant lesson for policy makers looking totions to assist them. A simple expansion of wethose who are in this category, and who see thmiddle ground, is not likely to prove politicaserving to undermine, as it would, their sense only would such an extension prove economicit could be in danger of sapping morale and off

These three themes tell us a great deal abthe real squeezed middle view themselves. Thsee themselves as hard working and are proudindependence. In many ways, those in the realare defined by their economic conservatism

their application, skills and personal investmerewarded. However, the underlying reality of and potentially stagnant economic position doreflect this perception as outlined above, a d

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trends support the quantitative findings preregarding analysis of the economic positionmiddle, explain some of the reasons for thecharacteristics of this group highlighted abothreats to the real squeezed middle in the fu

SavingsThose in the real squeezed middle understaand to acquire a liquid asset to use in times

Of course its important to save money. I knowmoney.

Many focus group participants suggeof reasons the recession had prompted them

money regularly when this had not been a pWhen my husband lost his job I realised that w put aside to look after us. We were lucky, he mwork quite quickly so we didnt lose the hous

think how we should be putting a bit aside, y Its funny because wed always survived fine I think quite a lot of that was based on loans



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Within the real squeezed middle there arextent to which individuals and households msavings aspirations. These disparities are impomakers for two reasons: they show that failurenecessarily borne purely out of financial inabidifferences are not driven by differing incomeparticularly groups within the real squeezed mbe more fruitful to target in the short term.

Women are shown to be marginally betttheir savings targets than men: 25 per cent alwamount they want to save compared with 20 pand only 12 per cent of women rarely save theto save compared with 18 per cent of men. Atolder individuals are more likely to manage tosavings targets regularly 32 per cent of overtargets compared with only 10 per cent of tho

and 44. This perhaps reflects two factors: the vdependants (younger individuals are more likedependent children), and the increased immed As one focus group participant told us (reflectmany older participants):

I started to really save when I hit about 50. My h started to look ahead and think about what life iscant work anymore. We want a nice life. Our pe

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While respondents from social band Amore likely always to keep to their monthper cent compared with 16 per cent in sociathis band who do manage to keep to their tatend to be worse at occasionally meeting thfrom social band DE are more likely to keesometimes 41 per cent compared with 36

What is more, lower-income individusqueezed middle are considerably more liktheir savings targets regularly than those hi72 per cent of those on an individual incomwithin a middle earning household either alsave the amount they want to each month, ccent of those earning up to 17,499 and 53 earning over 25,000.

An emerging and worrying trend id

our focus groups is that while awareness of savings is growing among the real squeeterm factors have caused those who have preduce the amount they save. Very few partthat they would last longer than a month on

should they lose their jobs. Some, with no osaid they would be immediately reliant on bfall out of the workforce. Many with savingbecause of the low interest rates combined



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Ive only got my wage coming in and I cant savto spend or to save.

Some participants explained that havinmade sacrifices in other areas of their lives tconsidered it unreasonable also to put money through saving. As one participant said:

Im working harder than I ever have before. Ivebigger than ever before. My gas, electric, rent, indump everything I enjoy and have no life at all. I dumped my savings first, before dumping goin

Focus group participants overwhelminglreconcile their acceptance that savings are impcurrent non-saving behaviour, through optimis

prospects. Those who were failing to meet motargets (half of focus group participants) offerexplanations about how they saw the future common assumption that disposable income (would improve in the near to mid-term future

Of course Ill save more and make up for the sonce everythings back to normal.

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make interventions that seek to improve savreal squeezed middle need to learn lessons circumstances in which saving rates amongdemographics tend to improve such as prunderstanding of) retirement, likelihood of and low pay.

Cost of livingThe real squeezed middle has experienced in living costs. Outlined above are the trendthese from rising utilities to the impact ofprices and respondents and participants infocus groups described these rising costs anthey have had.

We asked respondents to our polling

costs that had risen most for their householyears. They identified the soaring cost of pexpense of transport and commuting as thrise (65 per cent of respondents raised it), f(61 per cent) and food (58 per cent).

Of the options available to respondenwere personal insurance (3 per cent), leisur(6 per cent) and income tax (8 per cent).

There are particularities contained wi



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48 per cent and 39 per cent, compared with 63per cent. We asked respondents to identify the spe

that have had an impact on their particular houInterestingly, the results for this question are m Again, the cost of utilities and petrol or transpthe top three most cited types of spending thatimpact on living standards however, when ahad most impacted on their personal finances rated mortgage repayments at 17 per cent andper cent.

Young people felt that mortgage and rena greater impact on their living standards thanrespondents (36 per cent for those aged up to 6 per cent for over 55s), whereas older peopleconcerned about prices of utilities (35 per cen

compared with 16 per cent of those aged up toThe cost of utilities was of a greater conand the North than London and the South (61 compared with 36 per cent), whereas mortgagexpenditure was more of a concern to those inSouth than those in Scotland and the North (4London or South to 29 per cent Scotland or N

The reasons for the disparity between wperceive as the greatest overall rises in costs a

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insurance costs have had an impact on theirOne focus group participant explained:

Ive shopped around on my insurance and Ivneed. So weve dropped the husbands life insthe car. Of course itll make it more difficult iexpensive, but it saves us money day-to-day.

A similar pattern to that driving downfound in other areas of the real squeezed mNecessities those costs that are unavoidto pay for may be met with some form of pprioritised while families identify cut-backexpenses. So it is that despite the importancsecurity and protection, those products thatequip households and families with assets a

being deprioritised, alongside savings.In the same way that those in the real expect their saving behaviour to improve intoo they predict that the cost of living will cperhaps making financial protection affordNearly two-thirds (60 per cent) of polling rthat long-term economic change will have positive impact on their personal living stanper cent believe that the economy will have



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outlined in detail below. But before approachiof these costs, and their relative significance, aimportant to understand what those in the realexpect to spend significant sums on over the c

Those in the real squeezed middle believsignificant costs they will face over their life ceducation for their children (37 per cent), assionto the property ladder (31 per cent) and thei(30 per cent). They expect to spend least on locare (19 per cent) and health costs (5 per cent)

It is interesting and significant that thosesqueezed middle are highly concerned about tsupporting children into young adulthood thfees or potential support for buying a home relatively little concern about the potential cosunemployment and social care for themselves

described in detail below, that covering a subsof the cost of long-term social care will be ineindividuals and families within this bracket ofscores relatively poorly as a concern. On the othe funding mechanisms for university have cpass on a greater proportion of the cost to the family is compelled to finance the most expen(tuition fees, which are paid via a low-interestmost young people from squeezed middle bac

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responsibility for bearing the brunt of thesethe profound effect of persuading some squto look on university as desirable but ultim

I was thinking to myself, Ive got twins, thatway youre going to university.

On the question of pensions, long-termhealth and unemployment the focus groupsbut also gave insights into why some of thethese important and expensive life-cycle munderestimated. There is a certain amount oconfusion among the squeezed middle withageing, and as this is mixed with a level of about the likelihood of state intervention, sunder-protecting themselves.

Many focus group participants stated ceased saving for retirement or had minimiinto pension schemes, in some cases entirelaffordability:

Im taking a break from my pension contributluxuries like going on holiday I just cant af

But others had a degree of defeatism



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Similarly, there is a level of disengagemlong-term social care, which is particularly woprogress to a more explicitly self-funded mod

I havent thought about it at all to be honest. I hawould cost if me or my wife needed care I suphouse which would be a shame because I alwaysthe kids.

I would think that my pension would pay for anyan old folks home, surely I wouldnt need my p pay for that, right?

We asked people in our focus groups to believe they will receive from the state in old expressed frustration with the likely level of s

will be entitled to and there was considerable perception that despite their life-long economand non-reliance on state benefits their pensioinsufficient:

I think its like 100 a week or something. I donthat. You get more on benefits which is the wronasked anyone for anything, I look after myself, bthe pension which obviously Ill probably need

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I try not to think about it. Theres no point woold Ive seen my parents manage on their peto sort out care and stuff theyve managed. Ilooking forward than it is in reality.


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3 Prospects for thesqueezed middle

In chapter 1 we describe how those in the sthrough a combination of income dependencredit and limited assets, are particularly vucurrent economic climate and are unlikely

welfare state. In chapter 2 we explored the view of their present situation. In this chaptterm view, and consider the challenges faceover their life course.

During several key parts of the life cy

needing childcare, sending children to highthen requiring old age care middle earnerdisproportionate financial burden.

For old age care, they are too wealthyfunded support, but will find the average 3later life a substantial financial burden to mcap of 72,00020 may well help those with costs, but for average care users and middlewill be an entirely private outlay, perhaps re

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This increasing burden placed on middlehouseholds to pay their own way, coupled witstate support in their current situation (throughChild Benefit) and if they fall on hard times (wgenerous out-of-work benefits), has contributeerosion in the middle earners feelings of ownservices and representation by the state. Middcontributors to the state coffers, paying aroundearned income in income tax and national insutherefore unsurprising that a 2011 study of mi40 per cent agreed with the statement that Go

do anything for people like me. 23Yet despite this recognition that the statesupport them in difficult times, middle earnerssufficiently protecting themselves against keyThis chapter explores the key financial outflow

earners during the life cycle and the likely impincome on their ability to maintain their standafocus on five key areas in particular: educatioincome and job security, ageing and care for o

We draw on OECD data, the British Soc(BSA) survey and other data sources to identibehaviour and values of middle earners, in cohigher and lower earners at respective stages iBSA survey is an annual cross-sectional surve

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Middle earners have long recognised education as a pathway into employment anhave strong aspirations for their children toeducation. A 2008 report for the former DeChildren, Schools and Families found,

Parents from higher socio-economic groups inand occupation placed a relatively greater emconcept of parental push. Around a third of mChildren should be pushed if they are to reacopposed to Children should be allowed to de

feeling pressurised.25

Almost 60 per cent of middle earnerslatest BSA asking education-related questioorder to get ahead, having a good educati

essential or very important. Interestingly, malso the most likely to say that they had leftto return to education: 6 per cent of those cited this, compared with zero higher earnequintile earners and 4 per cent of 1st quinti

Participation in higher education is suamong middle earners than low earners, buamong higher earners. In the BSA, 18 per cunder 65 said that they had a degree, com



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despite their aspirations and the clear benefitshigher education, because of changes over themiddle earners are not benefiting as much as tlower earning counterparts. Figure 4 shows fivrepresenting income quintiles based on the proin the household in receipt of income-related bthat the highest level of growth in the number entering higher education over the last 15 yea

Table 3 Index of average income by education level for differgroups and gender

Below upper Post-secondary All tertiarsecondary non-tertiaryeducation education

Age Age Age Age Age Age Age2564 2534 5564 2564 2534 5564 2564 25

All people 71 72 69 100 100 100 154Males 68 70 72 100 100 100 145Females 73 73 70 100 100 100 177

Index: 100 = income of those with post-secondary non-tertiary education highest qualification, A level or equivalent

Source: OECD, Education at a Glance, 2010, based on 2008 data

49


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3,000 per year. Average fees are now arouchildrens attendance at university a signific

Figure 4 Trends in young participation for areas groupproportion of children in lower-income house1994/952009/10

Source: HEFCE 27

20%

30%

40%

50%

45%

15%

60%

10%

0

Y o u

t h p a r t i c i p

a t i o n r a

t e ( b y

i n c o m e

q u i n t i l e )

1 9 9 4

/ 9 5 1 9

9 5 / 9 6

1 9 9 6

/ 9 7 1 9

9 7 / 9 8

1 9 9 8

/ 9 9 1 9

9 9 / 0 0

2 0 0 0 / 0

1

2 0 0 1 / 0 2

2 0 0 2 / 0

3

2 0 0 3 / 0



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reconsidering the viability of university educathe Governments plans: over half (51 per cenreforms will have an impact on their childrenuniversity, and 31 per cent believe it is not woinvestment.30

However, the burden of higher fees mayissue these are only paid off when the child income (and in this they are more generous thsystem). A potentially bigger problem is the laparents have to help their child cover immediaMiddle earners are less likely to be eligible fo

bursaries offered by universities to boost partistudents from low-earning families. Those ear25,000 receive full bursaries for their childrethe squeezed middle would get partial bursari

Table 4 shows the average annual living

students face. According to a 2010 NatWest report on expenditure, over half of students receive somsupport from their parents to meet such costs. support parents have been giving has been squfour students reported receiving less from theione in ten more. This is particularly problemaaverage student rent had risen on average by year.33 The maximum state support of 524 pe

51


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Table 4 Average annual student living costs, 2012/13

Inside London()

Rent 5,069Food 1,788Household goods 289 28Insurance 65Personal items 1,896 1Travel 1,393Leisure 1,197Total living costs 11,697

Source: NUS study 32

to cope with the costs: 20 per cent said that

overtime to be able to help; 26 per cent wotheir child to live at home during their univcent would even downsize their home. 36

Supporting the new labour force with childcareThe cost of childcare is rising disproportio

families, though because of their income d particularly likely to require it.



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Figure 5 Women in employment as a proportion of the fepopulation in the UK and six other countries, 19

Source: OECD data 39

90

80

60

50

70

4 0

30

P r o p o r t i o n o

f w o m e n i n e m p

l o y m e n

t ( % )

1 9 8 0

1 9 8 2

1 9 8 4

1 9 8 6

1 9 8 8

1 9 9 0

1 9 9 2

1 9 9 4

1 9 9 6

1 9 9 8

2

Canada

Swe d e n Uni te d St a te

It a lyGe rman y

F ran ce

53


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childcare.42 In order not to forgo the econogreater female participation and not to creafamilies to work and improve their incomeneeded to help cover the costs of childcare.squeezes the potential earnings of middle eforcing them to choose between career and counter to the Prime Ministers ambition tomost family-friendly country in Europe.43

The Daycare Trust ran a survey in 20of childcare on families. The average cost ochildcare is in excess of 100 in England. P

the highest reported costs, up to 11,050 a week, or 22,100 for 50 hours.44 Average Eexpenditure on childcare is 4,576 in EnglaScotland and 4,056 in Wales for 25 hours week for a child under 2. This is a substant

household income for middle earners. Avercosts equate to 18 per cent of equivalised hincome for the squeezed middle. 45

The Coalition Government has soughthese spiralling costs, with the March 2013plan to offer government funding for childcmum value of 1,200 a year to all two-eaup to 300,000 a year. 46 However, while suspread up the income scale, those in the squ



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Demos also analysed the costs associateleave. At present, the cost in lost earnings of pmiddle income parents is up to 20,000 per yeless than 15 per cent of an averaged waged pafathers take their full allocation of leave. Thesimmediately crippling to families, while not taleave can hamper the longer-term developmenTables 57 illustrate this squeeze, showing thewith different leave options, and contrasts it wsystem where four-fifths of income is guarantparental leave.

In response to this squeeze Demos has pthe creation of a carers account to help pareassociated with parental leave in the first year This is a critical year in the development of thand behavioural capabilities. 51 The carers acc

opt-out tax-free account into which the individduring their working life, with matched contriemployers, to help cover up to two-thirds of thof parental leave. If the savings are not used th

Table 5 Situation 1: Mother takes parental leave for 52 wreturns to work; father takes two weeks of paternleave

55


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Table 6 Situation 2: Mother takes parental leave for 2returns to work; father takes two weeks paterand additional paternity leave from week 27 treturns to work

Mother 6 weeks pay at 90% of wage20 weeks at SMP rate (124.88 pw)Total maternity pay for 26 weeksTotal wages for 26 weeks employmentParental pay replacement rateLost earnings

Father 2 weeks at OPP rate (124.88 pw)13 weeks at OPP rate13 weeks unpaidTotal paternity pay for 28 weeksTotal wages for 28 weeks employmentParental pay replacement rateLost earnings

Table 7 Situation 3: Icelandic model for the UK monon-transferable three months, father takes notransferable three months, mother takes threeshared leave

Mother 13 weeks at 80% of wage13 weeks at 80% of wageTotal maternity pay

Career



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Career Middle earners, more dependent on their incoearners in order to maintain their lifestyles, ato the current climate of job insecurity.

Middle earners face a significant drop inbecome unemployed, with state benefits too locosts of living and possibly debt repayments. a dramatic drop too; however, both categoriesprivately insured against unemployment (see bother assets and investments to draw on. Loweother hand, will find state benefits less of an inexample, a single person without children earn

pays under 20 per cent of their wages in incominsurance contributions. If they were to becomstate would replace 70 per cent of their after-taof-work benefits. If that person were instead o37,000 they would pay a quarter of their inconational insurance contributions, but the state 35 per cent of the individuals income.53 This where contributors are no better off than non-seen as a driver for reduced public support for(halving over the last 18 years).54 Whereas in us said that we believe government should be for ensuring unemployed people have enoughcurrently only 59 per cent of us agree.55 Furth20 years, the proportion of us who say we wan

57


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If youre used to living on [the] minimum wa you get. So you need less to keep you afloat w

Table 8 The index of financial protection for OECD coun2009/10

Country Replace- State Total State Priment benefits accident pro- pratio (%) pa () health tection te

(adjusted) indexandpecuniarylosspremiumvalue ()

Norway 66 23,318 4,591 95Sweden 48 14,553 12,330 59Netherlands 74 24,490 8,954 100 40Canada 63 17,336 28,795 71USA 51 16,738 202,335 68Germany 60 17,852 39,355 73France 67 18,050 19,877 74UK 38 14,991 20,637 61Spain 60 16,333 6,023 67Italy 59 14,887 2,663 61Australia 31 10,106 2,129 41Poland 45 6,206 2,797 25

Source: Demos analysis of OECD statistics, 2009/10



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unemployment was minimal. The number of plabour force with unemployment-related insurquarter of that of the best nation, Sweden.

One area where this lack of protection isdamaging is in the case of disability. Around 4population is struck with disability during theidisability itself is not the only difficulty disablspill-over effects are most clear when lookingsomeone in work in the squeezed middle, disacut in excess of 50 per cent of their income anlifetime of dependency on the state for financi

savings or assets to fall back on.Demos has argued in the past that one wthe out-of-work incomes for middle earners, wsceptical about their ability to survive on stateunemployment benefits, is through the promoprotection insurance. Currently, 11 per cent osuch policies, but they are concentrated amonMiddle earners would also benefit substantiallproducts, but the low take-up is a result of sevincluding cost, lack of awareness of risk by coconfusion with mistrusted insurance productProtection Insurance. 60

Alternatively, James Purnell, the former for Work and Pensions, has put forward the id

59


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Britain is ageing. Over the past 25 yepeople aged over 65 has increased by 1.7 mthe population, this is a rise from 15 per cecent in 2010, projected to rise to 23 per cennumber of centenarians is also rocketing estimated that there will be half a million. 63

more than others, are not saving enough to their welfare across their lengthening lifetim

Research by Chatham House projecteearners could expect to see their income in more than half from their pre-retirement inc

holds without significant savings or otherwith few sources of income beyond the basonly is their retirement income low, but thequintile most affected by worsening retiremperiod to 2050, as a result of being more aftrends such as the impact of low bond yieldgrowth and an accelerated shift out of definscheme membership.64

Interestingly, middle earners tend to bresponsibility for retirement belongs to the in 2009 by the DWP of attitudes to pensioncent of people in this income bracket consiindividuals responsibility to provide for thretirement (compared with 56 per cent on a



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Indeed, in 2012 private sector pension savingslow, with just 1.9 million contributing to their with 5.9 million in 2000. 67

The household saving rate (the proportioincome households saved or used to repay loawas 4.6 per cent in the first quarter of 2011, anhigh of 7.5 per cent in 2009.6 8 By contrast, the1990s was 9.2 per cent and 8.7 per cent in theimportant to note that household saving as a pincome did increase marginally in the third qu0.3 per cent year-on-year but this increase eq

79 in savings for an individual earning 35,0year.69 The latest figures show that the savingsbelow 8 per cent of disposable income still pre-1997 levels and lower, even, than in 2009household savings ratio in the UK between 19

We have already identified numerous rehousehold saving may have declined in recent WRIC indicates another barrier to greater penattitudes towards financial products. Trust in tservices industry and by extension financial been shaken as a result of the 2008 crisis. Thefound that the proportion of the public who beand building societies will act competently hper cent and with care by 18 per cent since 2

61


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The WRIC report concluded that ignooptions was to blame for low savings rates,pension schemes, as a means of providing f

Figure 6 Household savings ratio in the UK, 199720

Source: ONS 70

10

8

4

2

0

6

-2

S a v

i n g s r a

t i o

1 9 9 7

Q 1 Q 3

1 9 9 8

Q 1 Q 3

1 9 9 9

Q 1 Q 3

2 0 0 0

Q 1 Q 3

2 0 0 1

Q 1 Q 3

2 0 0 2

Q 1 Q 3

2 0 0 3

Q 1 Q 3

2 0 0 4

Q 1 Q 3

2 0 0 5

Q 1 Q 3

2 0 0 6

Q 1 Q

2



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public considered themselves to have good knpension issues, while 29 per cent considered tor no knowledge. Even the highly educated fecent of those with a degree found pensions sothey did not know how best to save, and 77 pwith no qualifications felt the same. Men and were more likely to believe themselves to havof pensions than women or the young. 73

Here again, the squeezed middle are at ahigher earners are much more likely to have fihelp them navigate the complex world of savi

annuities and other long-term vehicles. Lowerbenefits and basic pensions or pension credit ihave the same need for savings advice and areby the voluntary sector for their financial infothe squeezed middle not wealthy enough forneed of advice all the same to maximise their are left exposed.74

Social careThe current system of means-tested support fmiddle earners who have saved, and there is selection of financial products to help middle

The other aspect of an ageing population

63


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The system as established is perceived by thoexample when they have to sell their home or penalises savers, offering almost no help to thmeans-tested limit, but who require home carunderstood (the authors note that many peoplelater life will be free). Even if individuals undthere is little they can do to prepare, given thecare might cost. There are currently no pre-funcare, partly because of this uncertainty, and pa potentially huge care costs that insurers would

In response to this inequity, which falon middle earners, Dilnot recommended a mprivate sector support. He suggested that into 35,000 towards the cost of their care, bustate steps in to cover any further payment.this will prevent the need for care users to sHe also pushed for a rise in the level of mefrom 23,250 to 100,000, which he states system whereby

no one would see their assets depleted due to more than approximately 30%, due to the capextended means test. (Under the current systeof 150,000 could lose up to 90%.) 77



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subsidised rate for individuals with assets low(including the value of their home). Considerivalue of a home in the UK is now 238,293, wfew people in our middle-earner category are themselves immune from meeting costs.7 8

For those with assets higher than 118,0

apply of 72,000. This means the maximum atowards their care is 72,000, after which timein and pay. This plan creates some level of proper cent of older people needing care each yeacatastrophic costs.

There are, however, some limitations to the means test for domiciliary care will remain(excluding ones home), so for those not needresidential home, eligibility for free care remaungenerous (although the same 72,000 ceilinSecond, the 72,000 cap does not include hotaccommodation element of residential fees whave to pay for themselves. Therefore, many pfind ways to afford much more than 72,000 bbecomes available. Middle earners savings wto stretch to a possible 72,000 and many wuse the value of their home in order to meet adcosts or pre-residential domiciliary care costs.

Until now, the potentially unlimited cost

65


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implementation of the [cap cost model] andmodel and the implications for users meansmarket at all.8 0

Even if the market for such products wwould likely face a degree of ambivalence In chapter 4 we will explore the phenomen

apathy towards insurance products and savis particularly telling: only 10 per cent of thearning between 33,000 and 44,000 annupreparations to cover the costs of social carSome of these people are little more than a

needing to meet these costs, and have yet tothey assert determination to meet these andindependently. These are understandable anaspirations, but in a group with relatively mincreasing amount of risk levied on them thpriorities that have not adjusted to the realitor policy moves in this area.

With this in mind, it is clear that a twoto tackling the long-term care crisis and iton middle earning families is required.

First, we would need to create a mixereduce the financial shocks of requiring carwould need to build up long-term resiliencepopulation in order to better finance care in



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charges or to make it possible to afford a wider roffered by the local authority. This would make i

free at the point of use, and to repay charges, plurate), when the person eventually sells their hom8 1

But such an approach would need, also,

demonstrating affinity for the values of the sqmany of whom told us in focus groups that a kemotional flashpoint for them was the though(after a lifetime of work) to leave even a smalchildren from the equity theyve accumulated

The second strand of an overarching appconcern itself with promoting long-care produaggressively and to individuals much youngercurrently involved in these conversations. Theon the Draft Care and Support Bill in its interia national campaign to raise awareness of whand support offer is, how people can plan andown care needs, and what rights they have to c

Government must find ways of raising acrucial and often devastating life-cycle cost ammiddle as home owners with low savings, th

position of being both ineligible for state supptheir home) but unable to pay for their own cathey lack sufficient savings). Their scepticism

d t hi h i ht t t th f i

67

4 The squeezed middl


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4 The squeezed middland financial produc

This chapter explores the attitudes and behearners around finances and insurance. Thiunderstand why middle earners are failing tagainst key risks in the life cycle and how w

greater responsibility. It will be shown that lies with the short-termist behaviour of midresult of the macro-economic choice of govof planning, and part due to lack of a substainfrastructure to support them. This analysikey areas: savings, debt levels and attitudes

Savings and debt Household savings are historically low an further steps to plan for long-term costs. Nbenefiting from low interest rates.

British households were unprepared fIn 2008, the average UK home had one of t

f 16 000 i li ibl f l i

The squeezed middle and financial products


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excess of 16,000 are ineligible for several intested benefits in the event of job loss or illnesbecause of low interest rates and rising inflatiotheir savings and investments are depreciating

Further, table 10 shows that middle earnsavings and investment devices. Nearly all mi

current accounts, and a majority have another society account. Yet less than half have an ISAownership is limited. This demonstrates the lalooking financial behaviour among middle ea

As outlined at the beginning of this repo

middle were not big savers before the downtureadily available credit to maintain their standfinancial crisis disrupted access to credit, withEngland reporting a 5 per cent rise in the propconcerned about the availability of credit. 8 5 Ttransmission mechanisms for credit accessed bhouseholds are mortgages, particularly amongbut loan approvals for those on middle and lowfallen significantly. Lending criteria tightenedbottom end of the market, and mortgage approthe 750,000 price bracket. Deposits required2011 remain at levels near those required duricredit crunch. 8 6

The reduction in the Bank of England B

69

Table 9 H h ld b t f i g d i t


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Table 9 Households by amount of savings and investm

total weekly household income (percentage ohouseholds)

Total weekly household income

Amount of savings Less than 600 but 700 but and investments 100 (%) less than less than

700 (%) 800

No savings 45 26 22Less than 1,499 16 22 22

1,5002,999 5 8 103,0007,999 11 15 178,0009,999 4 4 410,00015,999 6 8 916,00019,999 2 3 320,000 or more 10 15 14

Source: Family Resources Survey , 200910 8 3

Table 10 Households by type of savings and investmenweekly household income

Tot

Types of savings and investments 600 butless

spending on luxuries severely and 17 per cent



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spending on luxuries severely, and 17 per centspending on basics severely; 7 per cent wouldtheir mortgage; 11 per cent would work more would extend the term of their mortgage; and have to tighten their belt. Only 20 per cent shave no impact. 8 9

The fall in mortgage interest rates and inshould make debt more affordable to househoproportion of households who were spending cent of their gross income on mortgage repaymonly slightly over the previous two years, a tre

to declining incomes, the high proportion of fixand the wish to pay off more of ones mortgagIt is also becoming increasingly expensi

While mortgage payments have fallen in recenreports that mortgage repayments are the onlyhomeownership to have fallen between March2011.90 After a decline in the costs associated whome after 2008, between March 2010 and Mrose by 1.4 per cent. The rising cost of electric(by 68) was the biggest contributing factor tohome expenses. Utility bills have risen by 19 since 2008.91

71

Figure 7 Reasons for not ha ing life ins rance b inc


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Figure 7 Reasons for not having life insurance, by incUK, 2006

S ABI 92


Table 11 Views on whether government or private compan


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Importantly, those on middle incomes arsceptical about the ability of private providersterm unemployed find work. When asked by t

you think is best at getting the long-term unem the Government or private companies? (tabearners were the most likely to say the Governthey may be least likely to take out private pro

Views on whether government or private compan

best at getting the long-term unemployed into woquintile, 2011

Definitely Probably Probably government government private(%) (%) compani

(%)

1st quintile less than15,000 pa 39.2 35.7 18.52nd quintile 39.5 37.6 17.6

3rd quintile middle earners 39.9 42.7 12.64th quintile 35.6 42.5 16.85th quintile over56,000 pa 35.9 42.2 19.2

Source: Demos analysis of BSA survey, 2011

73

5 Concluding thought


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Co c ud g t oug tbuilding reasonable

This report has outlined the financial challesqueezed middle both immediate and relaover the life cycle the perceptions of theirattitudes to resolving it. It is not a particula

picture. The group remain overly optimisticprecarious situation, which is highly incomlow savings and few other assets besides thcredit reliance, which has now dried up butand under-use of insurance, this group is extodays unstable labour market and stutterin

Unsurprisingly, the squeezed middle athose who literally fall into the middle quinUK are not the obvious targets of Governthe most part, they get by. They are autonsufficient and proud of that fact and to ttheir lives do not smack of poverty or depripeople, the much vaunted strivers of the Utrouble. Contrary to their own assumptions

the foreseeable future. With this in mind, this

Concluding thoughts building reasonable hope


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the foreseeable future. With this in mind, this explored two issues: the nature of the predicamearners face now the immediate squeeze, alife-cycle challenges they will face from chichildren to university, and preparing for later l

Helping the squeezed middle will be ext

challenging. First, this group is not a priority owhose focus on strivers and squeezed middaimed at the working poor or below-average eproblems and required solutions look very difthose in this group are not open to direct state

prizing as they do autonomy from the state. Thnot motivated to help themselves, through savinsurance products to mitigate the risks they faunemployment or ill health in later life. This idangerous, irrational optimism found among tsqueezed middle regarding the transitory natuproblems and their ability to cope should thingworse. Their optimism is belied by the projectmarket and economic growth, their ill-preparelife-cycle costs, and trends related to pensionschanges, which will see them consistently losetheir poorer and richer counterparts.

It is clear that no single policy interventireal squeezed middle. It is not a matter of brin

situation. Our research shows how savings,

75


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. g ,protections are often the first to fall off the priorities and the last to make it back on to

While we have not provided any spechere, the findings in this report suggest thatthe real squeezed middle will be most effec

the grain of their instincts towards optimismexample, using targeted rebates to encouragbuild their life-cycle protections and resilieautonomy, help individual independence anthe Exchequer a win-win situation. Innov

building the insurance and equity release mencourage the use of income and assets whrewarding the positive values of the squeezbe fruitful avenues to explore.

But we also need government to be diwith middle earners about their individual afinancial vulnerabilities. Using the revoluticommunicate more effectively with individdemographic groups about the impact of thdecisions and of government policy on theirobustness is a promising way forward thatSuch an approach will require coordinationand the private sector, but it is neither impolarly costly. If government cant solve the lo

Despite their problems, the real squeezed

Concluding thoughts building reasonable hope


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p p , qdefined, attitudinally, by a set of values that arand hugely helpful to politicians. They are proreliance and work ethic, and determined not toon the state. While 95 per cent of respondentsare taxed either about right or too much, 66 pe

the level of state provision to families like theright or too generous. This is not a group in sesolution to their troubles.

The truth is that the squeezed middle neeinsure more and protect themselves better th

but they need help to achieve it. Government hplay in driving this crucial change.

77

Notes


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1 Demos and IpsosMori polling, 2012.

2 Ibid.

3 Guardian Datablog: Public sector net debtend of March 2013, equivalent to 75.2% ofproduct (GDP). Guardian, 22 May 2013 (a

4 P Wintour, Labour says Squeezed Middle Guardian, 28 Nov 2010, www.guardian.co.

nov/28/labour-squeezed-middle-liam-byrne2013).

5 G Osborne, Labours reality deficit, Guarwww.guardian.co.uk/commentisfree/2011/fdeficit-ed-balls (accessed 26 Jun 2013).

6 M Whittaker, Squeezed Britain: The 2010 earners, London: Resolution Foundation, N

9 ONS, Annual Survey of Hours and Earnings , ww

Notes


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ons/rel/ashe/annual-survey-of-hours-and-earn(accessed 26 Jun 2013).

10 HouseWeb, UK interest rates, 5 Mar 2009, wco.uk/house/market/irfig.html (accessed 26 Ju

11 Benito A, The role of household debt and balmonetary transmission mechanism, Bank of Bulletin, Q1, 2007, www.bankofengland.co.ukquarterlybulletin/qb070105.pdf (accessed 26 JNeilson et al, The financial position of Britishevidence from the 2006 NMG Research surveEngland, 2006, www.bankofengland.co.uk/puquarterlybulletin/house.htm (accessed 26 Jun

12 BBC News, UK inflation rate nudged up to 2

costs, 19 Mar 2013, www.bbc.co.uk/news/bu(accessed 26 Jun 2013).

13 Quoted in D Milliken and O Dmitracova, Brihigh inflation, meagre growth, Reuters, 14 Nhttp://uk.reuters.com/article/2012/11/14/uk-bridUKBRE8AD0X320121114 (accessed 26 Ju

14 Guardian Datablog: Public sector net debt wa

79

18 N Watt and J Treanor, Budget 2013: Osbor


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deeper spending cuts after election, Guardwww.guardian.co.uk/uk/2013/mar/20/budgspending-cuts (accessed 26 Jun 2013).

19 S Coughlan, Tuition fees set to rise again n

26 Jul 2012, www.bbc.co.uk/news/educatio26 Jun 2013).

20 N Triggle, Analysis: why social care has to10 Jul 2012, www.bbc.co.uk/news/health-1 Jun 2013).

21 M Wind-Cowie, Of Mutual Benefit , London

22 OECD, Benefits and wages: tax-benefit cawww.oecd.org/document/18/0,3746,en_264

1_1_1_1,00.html (accessed 26 Jun 2013).23 Britain Thinks, Speaking Middle English:

classes , nd, http://britainthinks.com/sites/defSpeakingMiddleEngish_Report-print.pdf (a2013).

24 The BSA asks respondents their gross housBased on the responses of those people of w

25 N Gilby et al, National Survey of Parents and

Notes


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aspirations and engagement with learning , DeparSchools and Families 2008, https://www.educpublications/eOrderingDownload/DCSF-RR026 Jun 2013).

26

J Browne, Securing a Sustainable Future for Hhttp://webarchive.nationalarchives.gov.uk/+/ hereview.independent.gov.uk/hereview/report/2013).

27 HEFCE, Trends in young participation in higcore results for England, Higher Education FuEngland, Jan 2010, www.hefce.ac.uk/pubs/he(accessed 26 Jun 2013).

28 L Clark, Middle class priced out of university

fees as applications fall by nearly 10%, Dailywww.dailymail.co.uk/news/article-2093836/TMiddle-class-priced-university-applications-fa(accessed 26 Jun 2013).

29 BIS, Changes to tuition fees and higher educaannouncement, Department for Business, InnoDec 2010, www.bis.gov.uk/news/topstories/20fees-student-finance (accessed 26 Jun 2013).

81

33 NatWest, Capital surprise as London tops


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effective university cities, 16 Aug 2010, wglobal/media/y2010/m-8.ashx (accessed 26

34 HSBC, One in ten parents will not help pauniversity education, 11 Jul 2011, www.ne

press/release/one_in_ten_parents_will_not_ Jun 2013).

35 ING Direct, Consumer savings monitor, p2010.

36 HSBC, One in ten parents will not help pauniversity education.

37 R Prince, David Willetts: feminism has heTelegraph, 1 Apr 2011, www.telegraph.co.uk

educationnews/8420098/David-Willets-femworking-men.html (accessed 26 Jun 2013).Class Counts: Comparative studies in clasCambridge University Press, 1997.

38 ONS, Mothers in the labour market, 2011ons/dcp171776_234036.pdf (accessed 28 J

39 OECD online statistics database, http://stat

43 C Hope, Britain worst place for tax burden o

Notes


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families, 7 Mar 2011, www.telegraph.co.uk/Britain-worst-place-for-tax-burden-on-single-(accessed 26 Jun 2013).

44 Daycare Trust, Childcare cost surveys 20112

45 V Alakeson and A Hurrell, Counting the Costwww.resolutionfoundation.org/media/media/dCounting_the_costs_of_childcare_2.pdf (acce2013).

46 HM Treasury, Budget 2013 policy decisions 2013, https://www.gov.uk/government/publica2013-policy-decisions-table/budget-2013-poli(accessed 7 Jul 2013).

47S Twigg, Why todays childcare changes wonmiddle, New Statesman, 19 Mar 2013, www.nepolitics/2013/03/why-today%E2%80%99s-chwon%E2%80%99t-help-squeezed-middle (ac

48 Alakeson and Hurrell, Counting the Costs of

49 J Ball, Is Britains childcare expensive, and wquality?, http://www.theguardian.com/money

83

54 Poverty and Social Exclusion, Public attitu


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55 Ibid.

56 Ibid.

57 TUC, Support for benefit cuts dependent ocommissioned poll finds, press release, 4 Jwww.tuc.org.uk/social/tuc-21796-f0.cfm (a

58 Demos focus group, Average earners and w

59 Ibid.

60 Wind-Cowie, Of Mutual Benefit .

61 P Wintour, James Purnell looks to reinventsalary insurance, Guardian, 27 Jul 2011, wpolitics/2011/jul/27/labour-james-purnell-s(accessed 26 Jun 2013).

62 ONS, Population ageing in the United Kincountries, and the European Union, Office

65 E Clery, A Humphrey and T Bourne, Attitude

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66 J McFall (ed), Building a Strong, Stable and System, Workplace Retirement Income Commihttp://wricommission.org.uk/wric/private-sectvalue-for-money-from-its-pensions (accessed

67 E Simon, Private pension contributions hit alTelegraph, 19 Sep 2012, www.telegraph.co.uk/personalfinance/pensions/9552710/Private-pecontributions-hit-all-time-low.html (accessed

68 ONS, Growth in gross disposable household

2011, Office for National Statistics, 7 Jun 20ons/rel/regional-accounts/regional-household-2013/sty-gross-disposable-household-income.2013).

69 ONS, The economic position of households, for National Statistics, 14 Jan 2013, www.onsdcp171766_295084.pdf (accessed 26 Jun 201

85

74 P South, Closing the Advice Gap: Providi


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on low incomes , Resolution Foundation, 200www.resolutionfoundation.org/media/mediClosing_the_Advice_Gap_Reportfinal.pdf 2013).

75 D Brindle, Cost of old age care rises to avGuardian, 21 March 2011, www.guardian.c21/care-old-age-funding (accessed 26 Jun 2

76 A Dilnot (chair), Fairer Care Funding: Theon Funding of Care and Support , Departmentwww.dilnotcommission.dh.gov.uk/2011/07report/ (accessed 26 Jun 2013).

77 Ibid.

78

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79 Dilnot, Fairer Care Funding .

80 J Dunning, Dilnot proposals will not delifor care, Community Care, 24 Oct 2011, wco.uk/articles/24/10/2011/117658/dilnot-pr

83 DWP, Family Resources Survey 200910, Depart

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84 Ibid.

85 Bank of England, The Financial Position of B Evidence from the 2010 NMG Consulting Su,www.infohub.moneyadvicetrust.org/resource.278&rPath=cat&r_id=615 (accessed 26 Jun 2

86 E.surv, press release, August 2011.

87 Bank of England, The Financial Position of B

88 Whittaker, Squeezed Britain.

89

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90 Halifax, Cost of housing rises to three year hi16 May 2011, www.lloydsbankinggroup.com/halifax/2011/Cost_of_housing_rises_to_three_(accessed 15 Oct 2013).

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