Читать книгу Broke: Who Killed the Middle Classes? - David Boyle - Страница 7

‘I still look up to him [the upper-class man] because, although I have money, I am vulgar. But I am not as vulgar as him [the working-class man], so I still look down on him.’

Ronnie Barker, as the middle-class man, in The Frost Report, 1966

Shona Sibary is a Daily Mail columnist who reveals the intimate details of middle-class life, from the woman’s point of view. Her husband Keith and son Monty have regular walk-on parts in this everyday story of suburban folk. But none of her revelations struck a chord quite like the description of losing her £400,000 family home in 2009, after remortgaging four times and seeing the mortgage payments rise by £3,000 a month.¹

It was a moving and honest account, as she described the misery of driving past her old house every day. ‘What I could never have known is how soul-destroying it is to raise children in a house that is not your own,’ she wrote:

Sometimes it feels like we are guests in the one place we should feel ourselves. So when Dolly draws on the wall with crayon or Monty spills juice on the carpet, I know at the end of our lease these normal spots of family life will be totted up as wear and tear and added to our bill. I miss marking the children’s heights on a wall, to look back on in years to come. And, last year, we couldn’t bury our beloved labrador in the garden when he died. I’m pretty sure that digging graves for family pets is not permitted in the tenancy agreement.

Shona Sibary got into the financial mess she did partly by sticking with such determination to the commitment to educate her children privately, and that made her the target for some criticism. The decision to endlessly remortgage is not in her favour either, as the angry middle-class readers of Mumsnet pointed out in furious terms. Of course, lots of people have to bring up children in a home that is not their own, but there is something about this angst-ridden glimpse that will be recognized at once by homeowners everywhere. The terrifying fall from grace that the middle classes dread in all ages. The submission to the power of the landlord. The loss of freedom to manage your family in your own peculiar way if you want to.

There is familiar horror and fascination about any middle-class eviction, and any painful revelations about the gap between middle-class appearance and desperate reality. That may explain why the media have often returned to this theme since the financial collapse of 2008. There is a thrilling there-but-for-the-grace-of-God feeling about it, a relief that – for all our own money troubles – we have so far avoided that particular pitfall.

But there has been a further element to the media coverage, as if there was a bit of a mystery to be solved. Why is it, asked the Daily Mail in another article, headed ‘The nouveau poor’, that families on twice the average UK household income are in such desperate financial straits? ‘We don’t put the heating on very much at all, even during that freezing spell in December,’ said Christina Reynolds, who runs a catering company in south-east London, and earns £60,000 together with her husband.² ‘We snuggled under our blankets to watch TV and took the icy chill off the beds with hot-water bottles. Our utility bills are usually about £100 a month and recently they have gone up by almost a quarter.’

There was a parallel here with Shona Sibary. One reason why apparently affluent middle-class couples could hardly afford central heating was that Christina and her husband were determined to go on paying £12,000 a year for their son to go to independent school, as so many do. It was also true of the middle-class blogger Deborah Lane, who has been going online to explain why she was then struggling financially. This deserved closer inspection. When you have a £900,000 home in west London at your disposal, and the endless leafy suburbs of middle-class book clubs, parents’ evenings and recycling classes stretching all around, why would you worry about money? I went to see Deborah to find out.

Deborah Lane is something of a bellwether. When she wrote the words ‘I’m skint’ on her blog, tracking the peculiarities of a middle-class life in London, her readership suddenly went up from double figures to somewhere in the thousands. It wasn’t that she was looking for sympathy. It wasn’t even that she was claiming that she was particularly unusual or interesting, at least as far as her dwindling wealth was concerned. But it was written as a cry from the heart of the beleaguered middle classes, and those googlers in the ether heard her and responded.

Of course, there are people in the world far worse off than Deborah, even in the London borough of Ealing – probably even in her street. The difficulty when it comes to writing about this is that unearned privilege (which might not be worth saving) and the idea of putting education first, despite sacrifice and struggle (which might), are all inextricably confused.

‘I would say I had aspirations,’ Deborah tells me as we sip our coffee and tea next to the river in Hammersmith. Her dark glasses glint with reflected elevenses. ‘I always wanted to be married. I knew where I was going to live and how I was going to live. I wasn’t really driven by how much money I was going to earn,’ she goes on, explaining that it hasn’t really turned out like that, despite her husband’s earnings as a successful photographer.

‘I never thought we would be struggling in the way that we are, for every little thing. We do get to do some of the nice things, but not without some kind of anguish. I have to get my loyalty schemes and it goes down each time. We can no longer afford to go away. Our main summer holiday is five days in Majorca in the half-term, when the prices are lower [than in summer itself].’

Of course, a great deal of Deborah’s angst is bound up with the banking crisis and the recession that has followed. She agrees that she still leads a ‘privileged life’. But there is something about her predicament which is recognizable to the nation’s supposedly affluent classes, and exactly the same mixture of frustrated aspirations and threatened values is shared a good deal more widely. ‘Just trying to keep where we are, and downshifting a tiny bit; that’s what we’re aspiring to,’ she says. ‘I say to my kids: don’t break that because can’t afford to replace it. We’ve come off the AA. Our gas boiler is playing up and we can’t mend it because our policy still charges a £50 call-out.’

So why is she struggling to educate her two children privately? ‘Long, long ago, when we had savings and pensions, holidays and cleaners, we were in the privileged position,’ she wrote in her blog, ‘not so much to pay for our children to attend a newly founded independent primary school in the next town, as to pay for them not to attend our allocated state version in the next road.’

Once again, this is instantly recognizable. It is easy to disapprove of middle-class parents who baulk at the prospect of sending their children to the school they have been allocated, until it comes to your own children and their welfare – which explains the stressful competition for places in ‘good’ schools, especially perhaps where Deborah lives in west London.³ The allocated state school offered to put her son on the ‘gifted children’ programme just because he could spell a couple of three-letter words at the age of five, she said. It made her absolutely determined not to take up their offer, but the decision costs money. A lot of it.

She describes how she and her husband have stopped paying into a pension in the struggle to keep paying the fees in dribs and drabs. ‘They’re not even instalments; they are kind of random instalments – here’s another £800 to go in the pot. We have already spent £100,000 in school fees, and my kids are only seven and nine, and they are in the cheapest private school in this area.’

It is a huge financial commitment, and Deborah was about to get two jobs to help pay for the summer, when the children would be at home, but here she runs foul of the dilemma haunting all struggling parents. One recent part-time job offer would have paid her £18,000 for the year, but tax and holiday childcare would have gobbled up £17,000 of it.

Only 7 per cent of UK parents pay school fees (much the same as it was a generation ago, though 17 per cent of school places in London are private). The fees at secondary level are beyond all but the very highest-paid, but scholarships and other assisted places are much more available than they used to be. Yet there is something else implied in the conversation with Deborah that is important. It is the fear that this angst, the one described in terms like ‘nouveau poor’, has nothing to do with the temporary economic downturn, and that there is a fundamental shift going on – a permanent crisis that marks the slow decline of the middle classes as an identifiable segment of British life. The fear is that this marks the end, not so much of privilege, but of what the middle classes believe they stand for – education, culture, leadership. Perhaps also imagination, though that is hardly a traditional attribute of the English middle classes – but at least the ability, however un-exercised, to think for yourself.

It isn’t that somehow these values belong nowhere else, and – yes, of course – the middle classes are known for a whole range of attributes that most of us could cheerfully consign to the scrapheap. Snobbery, conformity, curtain-twitching suburban dullness, who wants those? But they also stand, traditionally, for other things which we can ill-afford to lose, and education is often at the heart of them. Not just education, but independence and learning for its own sake – and the need to sacrifice wealth and well-being to achieve it. The fear is that this generation will be the last to live the aspirational middle-class life, that the future will be an endless, heartbreaking succession of small shifts downwards towards a precarious existence, dependent on mean employers, short contracts, demanding landlords and state handouts in old age.

‘Once we move out of London, we don’t have a pension, so we will have to sell to realize some cash,’ said Deborah, thinking ahead nervously. ‘We will have to move to a much smaller property and move twice, first time so the children can go to school, and for the second time so we will have some money to use as a pension. We’re never going to be going up again – we’re just going to be going down. My financial planning at the moment revolves around getting a lottery ticket once a week.’

‘All my friends are struggling,’ she adds, and again she is not alone. Two-thirds of middle-income people in the UK are not saving for a pension. Half of them also struggle with bills every day, but the unease goes deeper than paying the bills in the middle of a global downturn.

Here is the point. The middle classes don’t like to mention it too openly, and they find it hard to articulate it even to themselves. But the truth is that they can no longer afford the life they always imagined having. It isn’t that they are greedy or want something for nothing. But they did assume, because that is what they were always told, that they would have a life like their parents and grandparents – a comfortable home, a respected professional position, good schools for their children.

They now willingly submit to a quarter of a century of mortgage discipline – in jobs that frustrate them and force them to buy in expensive childcare – just to pay hugely inflated house prices. And no matter how much they earn, there is a banker’s bonus somewhere that makes their effort look ridiculous (even in these days of slimmed-down bonuses). Worse, they seem unlikely to be able to fund their own retirement, except by the very house-price inflation that will exclude their children from the housing market.

It wasn’t supposed to be like that. Their middle-class parents and grandparents lived respected lives as local doctors, lawyers and as a range of other professionals and managers. Now many of those positions have disappeared outside London, except as unionized supplicants to central government largesse. As a by-product of their own political success, they have also backed the creation of a new privileged class of Übermenschen in the financial sector, who inflate the prices for everyone else – and whose salaries and bonuses make a mockery of the values they were brought up with.

So here is the dilemma for the English middle classes. They are like the proverbial frog in a frying pan, unable to make a leap into the unknown to escape being fried – but knowing it was also them who turned on the stove in the first place. They hate complaining, certainly about losing privileges. But the middle classes believed themselves to be the respectable backbone of a respectable, successful nation. Brought up to stand for something beyond money, they have found their values eroded, misunderstanding the difference between making money and creating wealth. They have colluded in a new dispensation which assumes that shopping is the highest aspiration and which undermines their independence as professionals.

‘The middle class, as we knew it, is not long for this world,’ wrote the journalist William Leith in the Daily Telegraph, hitting the nail on the head.⁴ Leith described the moment the penny dropped for one man when he was looking for a job. ‘Everything’s changed,’ he said. ‘Now you have to be talented, or make people think you’re talented. Being qualified counts for nothing. I mean, these days, everybody’s got a degree.’

Then he described the middle-class credo:

People could be teachers, or civil servants – not rapacious capitalists, but ordinary, quiet, middle-class people – and still live in detached houses, and buy new cars, and go on holiday to the south of France. And they had decent pensions to look forward to afterwards. That was what being middle class was all about. You passed your exams. You got a job. You stayed out of trouble. In return, you felt safe. And now, it looks like all of that is slipping away. And who knows, soon it might be gone for good.

That description feels right. It is the sheer lack of ambition that used to be such a feature of middle-class life that this captures, and it does indeed feel like it is slipping away. Increasingly, the middle classes are finding that they can’t afford it, even when they are earning twice the average income. Why should that be? What went wrong? The answers are in some ways the same as the ones given by Deep Throat in an underground car park during the Watergate affair. The key lies in following the money.

‘I feel like I’m stuck, like I can’t breathe, like I’m in quicksand,’ said Brooklyn Davis, unemployed in Pittsburgh, about his financial plight.⁵ Davis was not middle-class, even in the USA, but it is strange, once you start researching the current plight of the middle classes, how this word ‘stuck’ keeps coming up over and over again.

‘We are stuck,’ one human resources manager told the Guardian newspaper in 2011. ‘At the end of the month, what with rent and extortionate costs of travel, we have nothing left. In fact, less than nothing, which is a bit of a shocker.’⁶ Shona Sibary used the same word describing the plight of her family when they had their home repossessed. As Deborah Lane implied, this feeling of being ‘stuck’ emerged before the banking crisis and the downturn. When the Department of Work and Pensions began investigating the so-called ‘squeezed middle’ in 2006, it found that – even then – a quarter of middle-income earners could not afford a week’s family holiday. Six per cent of them couldn’t afford to send children swimming once a month. According to the TUC, the same proportion of middle-income people were worried about their jobs as were the very lowest earners. Not all of them paying school fees by any means.

Even by the middle of the last decade – years before the financial crisis – the number of middle-class families earning more than £30,000 who were looking for debt advice had tripled.⁷ These were the boom years. It had nothing to do with the global downturn.

When the Bath University professor Guy Standing coined the phrase ‘the Precariat’ in 2011, to describe those on low to middle incomes that exist in a precarious succession of short-term contracts, my impression is that it wasn’t intended to include the traditional middle class (he calls them the ‘salariat’).⁸ But in fact the same precarious existence, struggling with the costs of a respectable, civilized life, while the generous Victorian provision of parks and libraries shrinks before their eyes, is affecting the middle classes too. Perhaps not so corrosively, but as a terrifying future prospect that they can see all too clearly, it is there. The Precariat has no control over its time – that is Guy Standing’s definition – and one definition of the middle classes since the Industrial Revolution is that they have leisure time.⁹ Of course the middle classes still have some control over their time, over-mortgaged and over-indebted as they are, but it is increasingly uncertain.

There is also no doubt that middle-class life has grown more and more precarious, all part of the complicated relationship between the costs of mortgages, childcare and transport which make all the difference in the Micawberesque calculation that families have to go through these days: mortgage payments, food, fuel, childcare, holidays, credit card bills £4,001 a month; income £4,000 a month – result: penury.

Partly because of the cost of accommodation, the plight of middle-income earners is again not that different from the plight of the lower-income earners. Even those on higher incomes (over £66,600 a year) face housing and fuel bills up 110 per cent during the last decade: 17 per cent of them can’t afford holidays and 40 per cent have no savings for retirement.¹⁰ This is, after all, the biggest squeeze in living standards since the 1870s according to the economist Roger Bootle.¹¹ There is a financial squeeze going on, and this is what it looks like:

The Mortgage Squeeze Until 1988, mortgages worth more than three times the joint salaries of couples were extremely rare. By 2005, a fifth of all mortgages were based on multiples of four times joint salaries or more. Almost a third of Londoners say they expect to be driven out of London by rising housing costs (a typical London deposit is now £85,000).¹² Nor is it just London: Dorset and Wiltshire are actually the least affordable places in the UK. House prices in Truro and Edinburgh have gone up by over 500 per cent in the last quarter of a century.¹³ House prices have quadrupled in real terms during my lifetime (I was born in 1958), as I said. If they had stayed steady, the average home would now cost £43,000 at today’s prices, rather than £250,000, which is the actual cost.

The University Squeeze The US middle classes have been hit by an unprecedented increase in the cost of going to university, with fees rising from 10 per cent of median income at US public-sector universities in 2005 to 25 per cent now, and the same process is clearly happening here. Already we have £35 billion outstanding in student loans, and the fees look set to burst through the current barrier of £9,000 a year.

The Childcare Squeeze Childcare in the UK is said to be the most expensive in the world, and takes up to 28 per cent of the average income of a two-income family – it costs £5,000 a year for twenty-five hours a week for a single two-year-old in a nursery. This is the main factor forcing a quarter of parents into debt.¹⁴ Part of the problem is that, unlike Scandinavia and North America, we have lost our mutually run nurseries – mainly through misplaced fears about ‘safeguarding’, and a general and unaccountable feeling that parents are the last people who should be trusted to look after children.

The Pensions Squeeze The stock-market collapse, and the end of the long boom in stock prices, has meant miserable returns for those private pensions so many of us took out in the 1980s and 1990s. Gordon Brown’s decision to tax pensions income in 1997 looks as if it also reduced the money going into pensions by about £5 billion every year. The number of ‘defined benefit’ schemes open to new members has been falling steadily for a decade and has now trickled down to almost nothing. People are left increasingly with the far less valuable ‘defined contribution’ schemes. Final salary schemes are also being replaced by average lifetime earnings. All this means that most middle-income groups look set to lose 60 per cent of their income in retirement, and low bond yields, low stock-market returns and slowing house prices will put them further at risk.

The Education Squeeze Education is central to the whole idea of the English middle classes, but for a long time now most of them have been priced out of independent education (average fees are now £23,000 for boarders and £11,000 for day pupils, with more for uniforms and extra-curricular activities, and that is for each child) – the ‘preserve of the super-rich’, according to the former High Master of St Paul’s.¹⁵ The result is the extraordinary worry and struggle to get into good state schools, which drives up property prices around the best schools by around 35 per cent (up to £77,000 extra).¹⁶ This is a nightmare labyrinth, according to a report to the Greater London Assembly, where the middle classes ‘play the system’.¹⁷ True, but they play it against each other, putting ever more pressure on their poor overstretched children with frenetic after-school CV-building activities.

The Status Squeeze ‘I feel stuck’ – that familiar cry – said Andrew Schiff, marketing director for the New York brokers Europe Pacific Capital, whose bonus was down to $350,000 and no longer covered private school fees and summer rents. ‘People who don’t have money don’t understand the stress,’ explained the New York accountant Alan Dlugash. ‘I got three kids in private school; I have to think about pulling them out? How do you do that?’¹⁸ These are extreme examples, but the same is increasingly true in the UK. Our parents’ generation could feel reasonably secure once they had reached a certain income. Now it doesn’t matter how successful you are – there is always someone paid staggeringly more who can make you feel as if you are struggling, and who pushes up the prices to make it even worse. ‘These people never dreamed they’d be making $500,000 a year,’ Dlugash said about his clients, ‘and dreamed even less they’d be broke.’

There is the middle-class crisis at a glance. It is about money, and about much more than money, but the heart of all this is still house prices, which are the subject of the next chapter. Middle-class homeowners put up with spending between 20 and 40 per cent of their income on mortgages because the prices are rising, and it seems like a more reliable pension than when they invested so nervously and pointlessly in the stock market. Conventional wisdom also suggests that this will at least mean a huge transfer of value from one generation to the next, just in time to pay the vast deposits on their children’s houses – and 63 per cent can’t buy a house now without help from relatives. And it wouldn’t come a moment too soon, because those born after 1985 are the first UK generation not to enjoy better living conditions than those born ten years before.¹⁹

But we should hardly hold our breaths, because this cascade of wealth down the generations is actually slowing down. Homeowners need the money for other things. For one thing, they are living much longer and their homes are also their pensions. For another thing, about half of them will need their homes to pay for care bills as they get older, and 50,000 homes a year are already sold to pay for care.

There, in a nutshell, is the heart of the fear: that once the middle classes peer towards their children’s future, there seems no way that they will be able to afford a home themselves. Halifax, now part of the banking conglomerate HBOS, calls this next generation ‘Generation Rent’. They mean children whose parents are homeowners but who will be raising their own children in rented accommodation, and at hugely inflated rents, because rents are also related to the cost of buying property.

How will they ever be able to buy homes or shake off their debts, or even the housing debts of their parents? Especially when policy and economic circumstances have combined to provide an extraordinary shift in resources backwards from the next generation to their baby-boomer parents, the phenomenon outlined by the higher education minister David Willetts in his much-debated book The Pinch. Willetts showed how the baby-boom generation benefited from free higher education, low house prices and inflation to eat away at their debts. And now when the debts are almost paid off, they benefit from low income taxes and low interest rates. ‘The boomers, roughly those born between 1945 and 1965, have done and continue to do some great things but now the bills are coming in,’ he wrote, ‘and it is the younger generation who will pay them.’²⁰

The middle classes – those that dare to look ahead – see their children being flung into a proletarian struggle to maintain any kind of roof over their heads. ‘It is as if your parents die leaving a treasure chest,’ wrote Willetts, ‘and, when you open it, you discover a pile of IOUs which you are obliged to pay.’²¹

But there is something else going on here which affects the middle classes, however you define them, in many developed countries. Middle incomes in the USA and Canada have flatlined for three decades now. Even in Germany, real monthly incomes have been falling. In fact, the term ‘squeezed middle’ came originally from the United States, where the term ‘middle class’ is usually used to mean what it says – those on average incomes – rather than the extra superstructure of values and social aspirations that the term has come to stand for in the UK.

There certainly is a middle-class problem in the USA, where 4 million families are believed to be in danger of sliding into poverty and one in four middle-class households are about to drop down onto the lower rung, spending a quarter of their incomes just servicing debt.²² It is different over there, but there are important parallels between the UK and USA, which is why the Labour leader Ed Miliband borrowed the American phrase ‘squeezed middle’ in 2011. The parallel has also been noticed by one of the most important commentators on world affairs. Francis Fukuyama is busily charting the decline of the middle classes in all developed nations.

Into the misty past, the middle classes have benefited from rising above the undifferentiated masses, Fukuyama implies. Now they are being driven back into the undifferentiated mass by a new global elite which is benefiting from the shifts in the financial world over the past generation. Once the middle classes siphoned off wealth to provide themselves with comfortable lives, now they are the victims of the siphoning – and siphoning on a vast scale.

What is happening is most obvious in the USA, where it drove the massive growth of inequality over the past generation. In 1974, the top 1 per cent of families took home 9 per cent of GDP. By 2007, that share had increased to 23.5 per cent. But this isn’t just the USA, because the same global and technological shifts are happening everywhere, says Fukuyama, from off-shoring to replacing skilled jobs with IT systems. ‘What if the further development of technology and globalisation undermines the middle class and makes it impossible for more than a minority of citizens in an advanced society to achieve middle-class status?’ he asks:²³

The other factor undermining middle-class incomes in developed countries is globalisation. With the lowering of transportation and communications costs and the entry into the global work force of hundreds of millions of new workers in developing countries, the kind of work done by the old middle class in the developed world can now be performed much more cheaply elsewhere. Under an economic model that prioritizes the maximisation of aggregate income, it is inevitable that jobs will be outsourced.

We have become so used to the idea that the middle classes are the winners, as they have been since time immemorial, that it is difficult to get our heads around the fact that this has now changed. The middle classes are no longer winning. They are losing out, and losing out devastatingly, to the rise of a whole new class which has become known as the ‘One Per Cent’ (1 per cent may be an overstatement: in the UK, 0.6 per cent of the population earns more than £150,000 a year). It was this phenomenon that the great investor Warren Buffett referred to in 2006 when he confirmed the existence of a ‘class war’. ‘But it’s my class, the rich class, that’s making war and we’re winning,’ he said, fearful of the consequences.

The One Per Cent is dominated by people in financial services, and at the top of the global corporations, plus perhaps a handful of global bureaucrats. It is a deeply interconnected world – one study showed 94 directors holding 266 directorships in 22 corporations.²⁴ But the real point is that they are doing very well. The number of billionaires in the world grew from 225 in 1996 to 946 in 2006. These are the customers for $45 million personal Gulfstream jets. They control two-thirds of the world’s total assets. They are the reason why house prices are so high in London and the south-east.

All this explains to some extent the vast transfer of public money to the banks from 2008 onwards, but we all know about that (£1.5 trillion in the UK alone). What is less understood is that there is something bigger going on: a huge transfer of assets from the middle classes to the new elite. Labour’s business secretary Peter Mandelson once said that the Labour Party was ‘intensely relaxed about people getting filthy rich’, but actually it does matter. House prices are higher as a result, the salaries of those lower down the food chain are squeezed, pensions are top-sliced, while the financial class has become a new kind of landlord, living off the rents and charges of the financial system which funnel wealth upwards – while real wages, and real salaries, haven’t risen in real terms since 1970, and since 1960 in the USA where the process is most established.

This all sounds a little like a conspiracy theory, but the figures are stark. And although the phenomenon is hardly ever discussed in the media, it is discussed among the very rich. In 2005, the first of three reports was published privately by the US banking giant Citigroup, especially for their wealthiest clients; they coined a word to describe the phenomenon and tried to explain it. The first report was called ‘Plutonomy’, and it explained the idea like this:

The world is dividing into two blocs – the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest. Plutonomies have occurred before in sixteenth century Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties in the US. We project that the plutonomies (the US, UK, and Canada) will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity, and globalization. In a plutonomy there is no such animal as ‘the US consumer’ or ‘the UK consumer’, or indeed the ‘Russian consumer’. There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the ‘non-rich’, the multitudinous many, but only accounting for surprisingly small bites of the national pie …²⁵

Two more reports followed in 2006, explaining that plutonomy was a result of a kind of financialization of the economy – a huge expansion into financial assets, which are the target for investment rather than real assets, and which the financial sector repackages and repackages, inflating their prices each time. When the financial bubbles burst, they buy back the assets again at a lower cost. Even bursting bubbles make the One Per Cent better off. This is helped by the fact that the most powerful governments of the world see the value of those assets – property, bank shares etc. – as the touchstone of economic success, which is why so much of the banking bailout was designed to reflate their value.

Citigroup came to regret publishing these reports, presumably because it encouraged the idea that they were cheerleaders for plutonomy. Over the years, copies began to leak out via the Internet, much to their horror. There was a concerted attempt to suppress them. By 2010, Citigroup lawyers had managed to remove them all from the Web, only to find them seeping back again. The revelations are important because not only are these vital resources sucked out of the middle classes, just as they are sucked out of all classes, they also affect the middle classes in other ways. Unless they work in the financial sector themselves, they find their factories and real-world businesses starved of investment and their professional skills automated.

Even so, it isn’t really a conspiracy. It is a peculiar twist of the way our economy has become unbalanced towards financial products rather than real ones, and it is a real phenomenon. It is a practical acceleration of the division between two worlds – one where money is infinitely elastic and where mistakes get bailed out, and the world of the rest of us, including the indebted middle classes, for whom money is concrete and unforgiving. There is something about the frenetic generation of outsourcing, streamlining and offshoring, and the whole business of permanent restructuring, that has quietly shifted power and profit away from the middle classes. ‘Instead of democracy widening and deepening as we had hoped,’ writes the eminent Conservative writer Ferdinand Mount, ‘power and wealth have slowly and unmistakably, begun a long migration into the hands of a relatively small elite’.²⁶

When 1 per cent of the world owns a quarter of all the wealth, leaving the middle class scrambling for the crumbs that fall from the rich man’s table, then a different kind of lifestyle becomes necessary. Over the past generation, it slowly began to dawn on the English middle classes – who believed with some reason that the financial service professionals and their institutions were firmly on their side – that it wasn’t like that at all. Something had shifted, very quietly, very dangerously, and actually the signs were there a generation back.

Christopher Stockwell was a successful businessman and property developer. He was the very model of middle-class success, the son of a clergyman and an innovative campaigner for development causes in his youth. But in the mid-1980s he began to be sucked into the peculiar – and now largely forgotten – story of financial incompetence and staggering callousness (and probably worse) at the ancient insurers Lloyd’s of London. Within a few years, he had been made bankrupt, lost his home and found himself at the head of a campaign to unravel what had happened to so many ordinary middle-class families, and get them some kind of redress.

Even now, two decades after the events of the Lloyd’s Scandal became clear, it has a shock value which seems to speak to the plight of the middle classes today. It is somehow the sheer respectability of the families caught up in the scandal that gives it such a peculiar edge, drawn in because they trusted this apparently respectable financial institution, when actually the world had changed.

Stockwell is a tall, imposing presence, six foot six inches in his socks. His upbringing was impeccably middle-class: born in the shadow of Romsey Abbey. As a young man, he was a Labour councillor in Letchworth and one of the founders of the World Development Movement, but he was also one of those people who seemed hardly able to stop himself making money. He had an antiques business, a reproduction furniture business, up to forty properties and much else besides. He describes his property skills as like a sixth sense, being able to ‘see through walls’. ‘I can see the possibilities of spaces,’ he says.

It was also the property boom, as it was with so many other people, that brought him into contact with Lloyd’s of London, which he found had a highly unusual, even archaic, structure. Lloyd’s is made up of a whole number of syndicates, known usually by the name of the underwriter in charge, and each one was supported by a whole range of ordinary investors known as ‘Names’. These Names would need at least £37,500, a third of which would have to be deposited with Lloyd’s, but they would accept a bank guarantee based on the value of your home (£37,500 was worth about £150,000 today). You didn’t have to be rich, and this explained why people whose wealth was almost entirely made up by notional increases in the value of their home became caught up in the scandal.

All this meant that becoming a Lloyd’s Name was within the reach of anyone with some equity in their homes. It was also considered a safe investment. Thousands of ordinary people signed up to become Names after a recruitment drive in the early 1980s. The problem was that the new recruits were actually signing a guarantee that they would underwrite losses as well as profits made by their syndicate. It included the wholly irrational concept of ‘unlimited liability’.

This was a fiction. How could such a thing exist? But the newly recruited Names were assured there was no risk. Nobody had ever been bankrupted and you could sign up for an insurance policy of your own to pay any debts up to £135,000.

‘There they were, sitting on a house which had gone up hugely in value,’ said Christopher Stockwell. ‘They were asset-rich, while their retirement income was going down. They were wheeled around Lloyd’s and the agent got a commission and they would get a five per cent return on the value of their house. It seemed totally secure. This was Lloyd’s, after all, not a bunch of shyster gangsters.’

Stockwell became interested in Lloyd’s as an investment and joined in 1978. The way that Lloyd’s works meant that years had to be ‘closed’, with no more claims expected, before they could distribute the profits. Of course, there might be liabilities to pay for previous years as well – and Names were responsible for previous years before they joined – but, all being well, he would expect his first cheque some time early in the 1980s.

The problem was that all was not well with Lloyd’s. What Stockwell had not been told was that underwriting mistakes were about to threaten the very existence of Lloyd’s – based on a combination of their collective failure to understand how the world was changing, combined with a fatal clubbishness that preferred to shove bad news under the table. Nor had the twenty thousand ordinary Names recruited after 1982 been told either. The establishment had consistently closed ranks to prevent proper regulation of Lloyd’s, and this was about to guarantee financial misery for many of those middle-class investors who had been assured that being a Name might be a good way of helping out with the grandchildren’s school fees. It was also providing a strange dress rehearsal for the far greater banking scandal and collapse in 2008.

The immediate trigger of disaster was the asbestosis insurance claims in the USA, though there were other disasters as well, natural and predictable. Asbestosis should have come as no surprise either to the companies or their insurers. The fact that exposure to asbestos fibres might cause cancer was first noticed way back in 1918 and confirmed in a series of medical studies in the 1920s. But it was a test case in the US Supreme Court in 1969 that made this directly relevant to the Lloyd’s Names and their ‘unlimited liability’.

The case concerned a former asbestos worker called Clarence Borel, and was brought by his widow, Thelma. He had been told so little about the little white asbestos fibres that were to kill him that he used to bring them back to decorate the Christmas tree at home. The Supreme Court found in favour of Thelma Borel, and, as a result, the asbestosis claims began to mount and the ultimate insurers – those with the unlimited liability – turned out to be some of the Lloyd’s syndicates which specialized in reinsurance. In 1979, the US courts ruled that the insurers were liable for all the years between when the workers were exposed and when they fell ill.

Perhaps Lloyd’s could not have reasonably predicted this extension of their liability, or the rise in hurricane damage, though it was clear in the world outside that both cancer liability and climate were changing. But the real problem was how the senior officials at Lloyd’s responded. Exactly who was aware of what, and who was informed of what, was to be the subject of a series of legal actions in the UK, but Lloyd’s bankers NatWest could see, and wrote a warning report – known since as the Armageddon report – about the terrifying implications for their clients. All copies later disappeared. The losses were small by then, but the line on the graph showing their rising impact was terrifyingly steep and getting steeper.

The appeal court ruled later that there had been a gross misrepresentation to the Names, but not fraud, and – although more evidence has come to light since – that is where matters now rest. The decision was important because the Conservative government of John Major had by that stage rushed through legislation giving Lloyd’s immunity for negligence but not for fraud. They were not therefore responsible for ruining so many Names, yet this was another sign for the future. Among the huge privileges of the financial industry, as we have seen more recently, is that they have been so deregulated that they also have immunity for the results of their negligence, though not, so far anyway, for their fraud. In practice, it is hard to distinguish between the two.

The British establishment closed ranks, and for the first time – but definitely not the last – ordinary middle-class investors found themselves on the outside. Even when the implications for the Names should have been growing apparent, Lloyd’s continued their recruitment campaign to attract new ones.

In his Oxfordshire home, running his businesses, Christopher Stockwell knew nothing of this. He realized at the start that it made a big difference which syndicate he joined. He met one of the rising stars of Lloyd’s, Dick Outhwaite, liked him and joined his syndicate – and then joined others too. The first sign that there might be anything wrong appeared when it came to closing the books on that fateful year of 1982, because the Outhwaite auditors insisted on leaving the year open. Stockwell was angry about it and remonstrated with the auditors. By 1987, it was clear that something was extremely wrong and that losses on other syndicates had somehow been diverted onto one of his syndicates as the bearer of the ultimate risk. The following year, he summoned up his old campaigning experience and formed an action group.

Even so, he wasn’t too worried. The losses at the troubled syndicate were being covered by profits from others. Never one to do things by halves, Stockwell was by now a member of many other syndicates, but more accounts for more years were being left worryingly open. Not until the end of 1991 did the penny drop. He had been expecting a cheque for £250,000. Instead, he got a demand for an immediate £500,000. Most ordinary investors would baulk at anything remotely on that scale, but Stockwell was no ordinary investor. The trouble was that, six weeks later, there was a similar letter. By February 1992, in the run-up to the election stand-off between John Major and Neil Kinnock, the demands were pouring in at the rate of £100,000 a week.

‘It coincided with the collapse in property values and astronomical interest rates after Black Wednesday, and I was facing total wipeout,’ he says. ‘I had no income coming in. All my businesses were in receivership. I was spending 30 or 40 per cent of the time with the receivers, just picking up the pieces out of the chaos.’

The Stockwell family lost their home, which was then sold by the bank later in the summer, while they rented a cottage on what had been their land. In July, his bank made him bankrupt too. It was a desperate situation for a self-made man, and a huge strain on any marriage and on the children, especially when the furniture had to be sold.

‘It was a catastrophic blow,’ he says now. ‘It was emotionally traumatic, leaving your home and everything, totally unclear about where the next meal was coming from.’

By then, Lloyd’s was threatening 39,000 Names with legal action for failing to pay up. They could have approached the Lloyd’s hardship fund they had set up under the fearsome chairmanship of Mary Archer, novelist Jeffrey Archer’s fragrant spouse. But like Stockwell, many desperately resisted that fate too, because they would have had to accept all their losses, abandon any appeal over their fairness, and hand over all their other assets to Lloyd’s.

Behind that 39,000 figure, the suffering was also now widespread. Elderly couples who had been persuaded to invest their money as Names found themselves evicted from their homes and living in caravans. There were very public suicides and very quiet divorces and evictions. People who had saved for their retirement their whole lives were finding themselves effectively on the street. Yes, they were a privileged class with family to fall back on. Yes, they had been chasing unlimited profits in return for those unlimited liabilities, but they had not been told the risks and were often no wealthier than the theoretical rise in value of their homes.

Within eighteen months there were more than twenty-five action groups, and Stockwell was involved in many of them. At one meeting of the activists, there was a stand-up row between two prominent Names. Stockwell, towering over both of them, told them to sit down and shut up. He attributes to this the decision to ask him to chair the meeting, which led him to chairing the Lloyd’s Names Association and made him the obvious choice to chair Lloyd’s Open Years Working Party, Lloyd’s own attempt to hammer out a compromise.

Either way, it put him at the heart of a whirlwind. The phone rang at home all the time, and his young children had to learn how to deal with the outpourings of fear and betrayal that came down the line.

‘I spent hours and hours listening to tales of human misery,’ he says. ‘From people who had just done what they had been told. Who never intended to take any real risks and who were losing everything. They just couldn’t understand how this could happen.’

In that same year, 1992, the Sunday Times concluded that ‘the professionals at Lloyd’s are not fit to regulate a flea circus, never mind a multi-billion market’.²⁷

But it was worse than that. It was quite clear by then that some Lloyd’s professionals regularly kept the most profitable business for their own mini-syndicates, for their families and relatives, and shifted the loss-making ones onto the absent Names. It was also clear that the leading underwriters were themselves avoiding the worst-hit syndicates and warning friends and family away from them. They knew, but said nothing in public. The nod-and-wink culture that the English middle classes specialize in was being turned against them. ‘Many members of the Lloyd’s community in senior positions’, concluded the 1986 Neill Report to Parliament, ‘were not even vaguely aware of the legal obligations on agents to act at all times in the best interests of their principals, not to make secret profits at their principals’ expense and to disclose fully all matters affecting their relationship with their principals.’²⁸

The journalist Adam Raphael, himself a Name, described the plight of a secretary who had worked at one insurance brokers for twenty-five years. As a reward, the company chairman had asked her and a colleague if they would like to be Lloyd’s Names, promising to provide the guarantee and an insurance ‘stop-loss’ policy. As her losses began to mount, she contacted the retired chairman, who had completely forgotten her existence. The new chairman replied in 1988: ‘I am afraid there is nothing to suggest any sort of commitment to indemnify you against losses incurred by that membership. Indeed it would be highly unusual if any such arrangement did exist.’ Her insurance policy would not pay out because the wording was wrong. When, in desperation, she contacted the chairman of Lloyd’s, he warned her to do nothing that might ‘prejudice the reputation of Lloyd’s’.²⁹

Julian Tennant attacked the underwriter of his syndicate at a meeting of Names in the Albert Hall in May 1993. ‘Our faith in Lloyd’s has been totally destroyed,’ he said. ‘It’s bad enough to be forced to move out of your house into a small cottage, but it’s even worse to learn that Mr Brockbank’s salary [underwriter of his syndicate] was £430,000 last year. That is obscene.’³⁰ In 1988, the Lloyd’s market made a loss of £500 million, but the managing agents and members’ agents earned £124 million in commission. As late as 2009, another group of thirty-five Names were bankrupted at the end of their legal process.

Two decades on from the eye of the storm, Stockwell accepts that there were aspects of the experience that provided some compensation for the lost years and lost money. It was fascinating to work at the cutting edge of the law, dealing with some of the cleverest lawyers in the country. But in the end, the establishment shut the door on the Names and bolted it, and, despite the new evidence that he had amassed, the Court of Appeal refused to reopen the case against Lloyd’s. Now, viewed with hindsight, the Lloyd’s Scandal looks like a curtain-raiser for the banking scandal – the same refusal to provide proper regulation, the same scramble to cover things up, and to provide immunity for the financial community rather than to protect vulnerable people.

‘The legal system let us down badly,’ says Stockwell now. ‘I understand why. I understand their need for the legal system to give some kind of finality. I understand the need to protect the Lloyd’s market so that it could get back on its feet. But nevertheless, allowing the establishment to cover up was what made the banking crisis possible.’

Here is the conundrum of the story, and the paradox for the middle classes today. They believe the great financial institutions are on their side, believe they understand the way the world works, pride themselves even on their ability to navigate through it – they had welcomed the deregulation of financial services and all the other changes since the 1980s. But they have been horribly deluded.

The truth is that the world has changed, and the middle classes failed to see it. Their sturdy English conservatism has not served them well in this respect, because the financial sector is not on their side at all, and has not been for some time, and for reasons that go way beyond the shenanigans at Lloyd’s. Through no one’s fault and no one’s conspiracy, their collective failure to see the world clearly has made them vulnerable – so vulnerable that their survival as a recognizable class is now in doubt.

There are two big objections to the thesis I have set out here, and we need to look at them now. Doing so will also force us, and not before time, to look at the other big question: who are the middle classes these days anyway?

There have always been middle classes, right back to ancient times. They were the professionals, the shopkeepers, the tax-collectors and all the rest of the population between the peasants and the aristocracy. There they were in Britain too, through the centuries, running the pubs, owning property, riding to hounds. But the great influx into the middle classes coincided with the development of the railways, so that – for the first time – they could move away from their place of work. They no longer needed to live over the shop. These were not so much gentry as commuters, setting up home in the suburbs, and their emergence coincided with a new kind of middle-class society, dedicated to independence from the tyranny of bosses and landlords. From Mr Pooter to Captain Mainwaring, they thrived well into the twentieth century, but not smoothly or universally. There was always the chance, as they were well aware, of a politician determined to squeeze them until the pips squeaked.

Perhaps the biggest shift came after the war when, thanks to the 1944 Education Act, the upper middle classes began to shift from the grammar schools to fee-paying independent schools, until the prices shot up out of reach at secondary level – while the new middle classes filled their places.

The first objection to the idea that the middle classes are disappearing is that, for as long as they have existed – and even Aristotle warned that it was important that they survived for the good of the state – there have been warnings or bleatings from inside them that their days were numbered. This is a collective peril for anyone who writes about the death of the middle classes. In fact, there have been so many predictions of their demise, all of them premature, that it is hard to imagine them expiring at all – despite everything I have set out so far.

The Marxist critic and novelist Raymond Williams famously talked about an ‘escalator’ that took every generation back nostalgically to a golden age a few generations before.³¹ The same phenomenon seems to work the other way around for the struggling middle classes. For more than three decades I have until now left unread on my bookshelf a book by Patrick Hutber, one of the cheerleaders for Margaret Thatcher, called The Decline and Fall of the Middle Class.³² This was at least subtitled ‘How it can fight back’, which did imply some hope.

The 1970s were certainly a tough period, especially for anyone practising ‘thrift’, which Hutber called the defining characteristic of the middle classes. For Hutber, the middle classes were the ‘saving classes’, which was difficult for them when inflation was then only just down from 25 per cent and the top rate of income tax stood at 83 per cent. He put a note in his Sunday Telegraph column asking for people to write to him, and was deluged with accounts of the mid-century middle-class life.

One correspondent described himself as ‘up against the wall’. ‘I haven’t seen a play in London in two years. I only eat in restaurants on business. I can’t afford the gardener once a week any more. You start adding it up and it amounts to a social revolution.’³³ ‘It is my belief that, the way things are going, the middle classes are doomed to a gradual extinction over the course of the next generation or two,’ said another. ‘We are mainly living like the camel in the desert does on the fat stored in its hump.’³⁴ Another reply added, in typical middle-class self-deprecating style: ‘I hope to receive the “final call” before the roof falls in.’³⁵

Even the great egalitarian playwright J. B. Priestley was worried. ‘The full effect in our culture, largely based on the middle class, has not been felt yet, but many of us are feeling gloomy about our prospects.’ Who would have thought it: the Sage of Working-Class Bradford brought down to such a level of pessimism?³⁶ In 1974, the prominent Conservative MP John Gorst set up the Middle Class Association (he sent out a mailshot to people he knew might be interested, but the two or three replies he received back all said that, although they were interested, unfortunately they were upper-class).³⁷ It was taken over by a small right-wing group who kicked him out, renamed it and allowed it to collapse the following year. The middle classes are not good at political movements at the best of times.

You might think, given Hutber’s fears, that the middle classes had never felt quite so embattled. Yet go back on the escalator another generation and you find a fascinating 1949 book by the future playwright and Washington editor of The Economist Roy Lewis and the future Conservative cabinet minister Angus Maude, father of the current Cabinet Office minister Francis Maude.³⁸ Like Hutber, they were writing at the end of a period of Labour government, in the austerity years, immediately after the abolition of most fee-paying in primary schools and grammar schools.

‘We thought of calling it “The Decline and Fall of the Middle Class”,’ they wrote, ‘but they are kicking so hard they must still be alive.’³⁹

Again, you might think that the late 1940s were a unique moment of fear and anxiety for the middle classes, because of uniquely high taxation and government on behalf of another class. Not a bit of it. Travel back on the time conveyor belt another generation and there was the Daily Mail castigating David Lloyd George’s People’s Budget, the one that introduced old-age pensions, under the headline ‘Plundering the middle classes’. Three years before had seen the launch of the Middle Class Defence Organisation which ran candidates in the London County Council elections and eventually became the Middle Class Union. This was a branch of Middle Class International, though the existence of such an organization does make the mind boggle a little.

Here is a letter written to the Daily News just after the First World War, which might have come from Patrick Hutber’s files:

My wife goes ‘sticking’. That saves the expenses of firewood, our holidays are generally imaginary. That saves too. My wife gets bargains at remnant sales, and rhubarb from the garden does yeoman service. Also my wife murders her eyes with sewing sewing, sewing. Saving is out of the question.⁴⁰

The truth is that the middle classes have always felt beleaguered, and perhaps that isn’t surprising, since they are almost by definition putting their money away for a rainy day, a home or the children’s education. They are bound to be fearful of the future. Angus Maude and Roy Lewis talked about the middle classes always approaching the future with a mixture of ‘dread and confidence’. What is different now?

Perhaps they were always indebted. Perhaps there have been periods when the middle classes exhausted themselves and their children with the desperate struggle for school places – though I’m not sure of that. Perhaps previous generations doubted that their children could lead a middle-class life. I don’t know. But there is something different now. It is that, as we shall see and without their noticing, the very engines of thrift – the savings and financial sector – have turned against the middle classes and are actively funnelling their wealth out of their reach. They have disguised their fears of the future from themselves with ever greater debts, and their education, cars and holidays – core features of a middle-class life – are more often now funded by increasingly big loans.

There is no doubt that the English middle classes have an extraordinary gift for absorbtion and reinvention. Over the centuries they have integrated Roman Catholics, Jews, Nonconformists and a whole range of other domestic and immigrant groups, and are still doing so today. On the other hand, if the middle classes were really dedicated primarily to thrift – an idea that seems to have been banished by the credit card – you might reasonably wonder whether they still exist at all. In my own generation, in a period of rising prices, those who have done better financially are those who borrowed the most. Whatever that amounts to, it isn’t thrift.

Which brings us to the other objection. Maybe there is no longer any such thing as ‘the middle classes’ anyway. Maybe they have long since been subsumed – along with the working classes – into a large lump of Middle England, with our two children each, our front gardens paved, our wii machines churning out the detritus from American and Japanese culture.

Struggling with this same question in 1949, Angus Maude and Roy Lewis suggested, tongues slightly in their cheeks, that the difference between the middle classes and the rest was that they used napkin rings – on the grounds that the working classes never used them and the upper classes used a clean napkin at every meal.⁴¹ It is one definition. I have to admit that, although there may be napkins somewhere in my own house, there is nothing remotely like a napkin ring (though my parents use them). But don’t let’s dismiss this too quickly. This is one of the respondents to a modern version of the wartime survey Mass Observation talking about class in 1990:

I was ill at ease … when invited to the home of a girlfriend who lived in a wealthy quarter of Wolverhampton. I was there for lunch, and while I was quietly confident my table manners would stand scrutiny, I was disconcerted to find a linen table napkin rolled in an ivory ring on my side plate. It was my first encounter with a napkin and while I knew it should be laid on the lap and not tucked into the shirt collar I could not think what to do with it when the meal was finished. It worried me greatly and finally I laid it nonchalantly on my plate in a crumpled heap …⁴²

This was quoted in a study by one of the leading sociologists of class in the UK, Professor Mike Savage of York University, comparing how people talked about class then and in the 1940s, in the original Mass Observation surveys. His conclusion was that class is now not so much a designation as a starting point in a long story about your identity. You can try the experiment yourself. Ask someone what class they come from, preferably someone you know well to avoid a clash, and after some agonies – there is still a huge reluctance among the middle classes about declaring themselves as such – they will tell you the story of their life. Researching this book, I found that to be true over and over again.

Despite people’s reluctance to say they are middle-class, the Future Foundation’s Middle Britain report in 2006 found that 43 per cent identified themselves as middle-class. Another survey concluded that about a quarter of the population were middle-class but preferred not to say so. It is hard to find a lucid definition these days, certainly when we get beyond the napkins. You can’t do it in the way people used to.

White collar versus blue collar? Most of our traditional working-class jobs have long since been outsourced to China or India.

Salary versus wage packet? Who gets a wage packet these days?

Homeowner versus renter? Three-quarters of trade unionists now own their own homes.

Even earnings just confuse the issue. One recent study found that 48 per cent of those calling themselves ‘working-class’ earned more than the average salary and a quarter of them earned more than £50,000 a year. In some cities (Leeds for example) people calling themselves working-class are better off than those who see themselves as middle-class.⁴³ A third of bank managers in one recent survey identified themselves as working-class.⁴⁴

To confuse things further, those calling themselves ‘upper-class’ seem to have disappeared altogether.⁴⁵

My own sense, having talked to lots of people while I was writing this, is that there are now many different kinds of middle classes. Sociologists talk about the different wings of the middle class – the conservative and radical wings, the consumerist and the avant-garde middle classes, not to mention the managers and the intellectuals. There is even the London middle class, a different animal again. But it is even more complicated than that. Twenty-first-century middle classes might also include any of these:

The Old Middle Classes These are the old gentry, still the backbone of the community, often with a forces background. They remain understated, modest, and you can tell them immediately because their kitchen units and labour-saving machinery seem to date back decades before anybody else’s – they are immune to marketing – and because they keep their regimental photos, and former ships tossing on the high seas, hung firmly in the downstairs loo (a middle-class word, if ever there was one). The pictures are then prominent enough to inform visitors, but not so much as to imply that life stopped dead when their owners became civilians. Caricatures of the English, they hanker successfully for the countryside.

The Designers These are the London middle classes, and as different from the old middle classes as it is possible to be. They are streetwise (or so they believe), sophisticated, early adopters of technology, and have kitchens done out entirely in matt black. They sneer slightly at provincial life, but they keep their eyes glued to the value of their homes, aware that it is also their escape route to a less stressful life, outside the metropolis, where they no longer have to renew their resident’s parking permits and can abandon the agony of finding acceptable schools for their invariably talented offspring.

The Creatives Look at most newspaper journalists and writers (this doesn’t apply to TV journalists for some reason). Their hair uncombed, their clothes unironed (I speak partly of myself of course), they are not obviously members of the middle classes as we might have understood it in the 1960s, and they often roam widely in and around the class system. They exist as a group because of the huge success of UK export earnings in the creative market, from Shakespeare to Comic Relief via the advertising and film industries, among the biggest export earners for the UK economy. There is an inverted snobbery lurking here that explains why so few films are made about middle-class life. Yet the Creatives are highly educated and are clearly part of the increasingly exotic creature known as the middle class.

The Omnivores This was an aspect of the class system identified by the sociologist Tony Bennett, and it explains some of the hesitancy when you ask people about class these days.⁴⁶ These are the people who tasted working-class club culture in their youth, and middle-class classical concert culture in their middle age, and have an eclectic music collection of musicals, country and western and drum and bass. They enjoyed working-class drinking holes in their student days, and posh gastropubs in their affluent middle age. They move quite freely across the class system, but are not quite at home anywhere. Most of us these days are omnivores, to some extent, but some of us get stuck there, half in, half out, uneasy with middle-class values yet clinging to them at the same time, our accents uncategorizable and varying with company.

The Multis I live in south London, the capital city of Multi culture. The first two couples we met through the children’s school were a German missionary married to a Ghanaian doctor and a Swedish-speaking Finnish artist married to an Algerian chef. This section of the new middle classes covers those people who live in the UK but were born elsewhere and who find our class nomenclature utterly baffling. Equally, these are often mixed-race couples who have chosen to live in the UK because it is relatively tolerant – and because they met somewhere in the UK melting pot, and the thought of going back to the Middle East or to northern Europe, and dealing with the disapproval there, was too exhausting to entertain. South London is, despite everything, a huge success story in multiracial, multicultural living. It isn’t traditionally middle-class, but that is the way it is going.

The Public Servants They don’t fit the caricature either, but all those frontline professionals – local government managers, charity executives, nurses, teachers, trading standards officers and all the rest – are plainly a large niche in the middle classes, perhaps usually overlooked because they might vote Labour, Liberal Democrat or Green before Conservative. They are less squeezed financially, though their pensions are not quite what they were, but they have been squeezed in other ways – their responsibilities and dignity eroded by the blizzard of targets, standards, guidelines and directives. Also included are the university lecturers, squeezed in their own way by the Research Assessment Exercise which forces them to publish like crazy to prove their worth. And the new charity and social enterprise managers who deliver so many aspects of public services, perhaps more enslaved by targets than all the rest put together.

The Crunchies These are the British equivalent of the American ‘cultural creatives’, doyens of what used to be called the ‘inner-directed’ approach to life.⁴⁷ They are people who are no longer interested in keeping up with the Joneses over their material possessions, but are overwhelmingly motivated by health, independence and education. They vote across the political spectrum, but they are concerned about the environment, join Friends of the Earth, sign petitions, have food allergies and have often managed to downshift – deliberately earning less for a better lifestyle, increasingly outside London. It is thanks to the Crunchies that the fastest-growing areas in the UK over the past generation have been the Muesli Belt (a term coined by Martin Stott), the counties that circle London beyond the Home Counties, in a huge circle from Dorset to Norfolk.⁴⁸

Mike Savage and his colleagues are conducting a widespread survey through the BBC about modern class, and he and his colleagues normally now determine class in rather different terms, dividing people according to what aspects of culture they enjoy, into professional classes (hardly ever watch TV), the intermediate class (which would be the professional class except that it shares a much lower life expectancy with the working classes), and the working class (watches four times as much TV as the professional class, but never goes to musicals).⁴⁹

This nomenclature slightly muddies the water, because 29 per cent of all three classes still go to the pub once a week. It also omits the emergence of the new class, the international One Per Cent that is hoovering up the money from the middle classes (I am self-employed, which should make me officially ‘intermediate class’).⁵⁰ Then the house prices began to rise, until the point where that keynote of middle-class life – the partner at home doing the housework – became unaffordable, just when housewifing became unacceptable to many women. But through each twist of policy, they adapted.

In short, the middle classes cling on. Reports of their demise are premature and, although the blow may not have been fatal yet, we still need to search for the weapon used to fell them. They cling on also in a variety of forms and versions, highly eclectic and quite impossible to define. The middle classes are like elephants: you know one when you see one.

The key question is whether there is anything any more which holds these disparate identities together. Patrick Hutber’s thrift may have disappeared. Even the sense of deferred gratification which used to define the middle classes is not quite as secure as it was.

The famous experiment by Walter Mischel in the 1960s offered four-year-olds one marshmallow now or two in twenty minutes and found that those who waited went on to enormously outperform the others in the US scholastic aptitude tests. For a moment this seemed to be a justification for all those middle-class efforts at saving for education, a way to glimpse the essence of middle-class life actually there under the microscope. But the revelation that those who are not able to resist the instant marshmallow are often children of single parents, where the father is absent, rather undermined it as a middle-class definition. It isn’t that the instant marshmallow children are psychologically different; they are just more worried about the future. They have learned to grab their chance while they have it.

Even so, there is still something here about a distinctive middle-class approach to thinking ahead and their obsession with education – not always as an ideal but as a way of defining themselves against the other. So many people I talked to about this book began their replies to me: ‘I don’t want to sound snobbish, but …’ As if the very act of defining themselves as middle-class was somehow aggressive and disapproving. As if the heart of middle-class identity, even now, stems from a fear of fecklessness, disorder and ignorance. No wonder people sound apologetic, and no wonder the middle classes feel so embattled – defending themselves against the encroaching tide at the same time as battling with each other for the scarce resource, the edge in education.

‘The middle class family has become both citadel and hothouse,’ wrote Professor Cindi Katz, describing the American documentary Race to Nowhere by the San Francisco lawyer and mother-of-three Vicki Abeles, inspired by the suicide of a local teenager and describing the panic attacks of middle-class children pushed beyond the limit by their competitive parents. She describes the American middle classes ‘cultivating perfectly commodified children for niche marketing in a future that feels increasingly precarious’.⁵¹

Cindi Katz urges an ‘unplugging’ to rescue children for a proper childhood, but she doesn’t see how. ‘It seems almost impossible to unplug while others are plugging away (taking advanced placement classes, studying in high achievement school tracks, attending sports clinics, and the prize is university admission).’

This desperate panic is part of the same ‘squeeze’ phenomenon. It is considerably less intense than it is in the USA, but it is happening in the UK too. We have all seen the poor middle-class battery hens in their uniforms, weighed down by satchels of homework and the cares of the world.

Perhaps this begins to explain the embarrassment about claiming middle-class status, the implied disapproval – the failure to celebrate its best values, the inverted snobbery directed at suburban values in so much British culture, even the ad breaks. ‘Never has a section of society so enthusiastically co-operated in its own euthanasia,’ wrote Patrick Hutber back in 1976.⁵² Still so today, perhaps even more so.

I don’t quite understand this. It is true that the English middle classes can demonstrate a debilitating snobbery and a boneheaded dullness – their failure to understand the changing world about them is at the heart of their current problems. But they also represent enduring values from generation to generation, which I inherited from my parents and grandparents and am proud to have done – about learning and tolerance, a determination to make things happen, about courage and leadership and, yes, even creativity. I have a feeling this double-headed set of values goes to the heart of the problem, as the middle classes maintain their principles in the face of constant self-criticism, in case they are espousing the wrong ones. Are they approving of scholarship or criticizing people who refuse to learn?

The problem is that saying that they are middle-class seems to be admitting to a whole shedload of prejudices, snobberies and pursed-lipped disapprovals. Some of this is clearly caricatured – most middle-class people these days are among the most tolerant people in the world, not just in the UK – but some of it is undoubtedly real. The middle classes may be unfailingly polite in public, but there is definitely an undercurrent of grouchiness, which might explain the apology. It is the impression they give themselves that they are somehow the thin red line that prevents the nation being overwhelmed by fecklessness, brutishness or a branded nightmare of violent computer games, dominated by Tesco, McDonald’s or Virgin.

I have to be honest about myself here. I have looked unflinchingly in the mirror and it is true: I also harbour this quite unjustified disapproval. Of how people dress, how they shop, how they spit on the pavement or scream at their children. So, if there has to be a hint of an apology about being middle-class it is because of this fear at the heart of it, that we all know about but do not articulate – that drives us in our financial decisions, or our choice of schools and places to live, in what we buy, how we dress and how we behave.

But let’s not go overboard here. Even those who apologized to me about sounding middle-class are among the most open-minded people I know. There is an extraordinary inverted snobbery in British culture about this, which is far tougher on the fantasies of the middle classes than on anyone else, and it has turned the middle classes in on themselves. It is hard to see any portrayal of middle-class families on TV in the UK where there is no hideous secret under the carpet or in the closet. I don’t think I’ve ever seen a happy middle-class family portrayed on Casualty without it turning out that the father is a child molester or the mother a secret addict (though sometimes it is the other way around).

None of this suggests that the pursed lips are justified, or that other classes are any less loving. You only have to watch the mixture of classes and races struggling to teach their children to swim in my local swimming pool on Saturday mornings to realize that. I certainly don’t suggest that there are no neglectful middle-class parents either. It is all very sensitive.

It may always have been a bit like this. When the English middle classes emerged as we might recognize them now, in the 1820s, it was a process driven by geography. The middle classes were those who were geographically separated from their workplace. But they had also discovered the joys of political economy and took it up with a moral fervour. ‘Political economy’, said the Reverend Thomas Chalmers, the great Victorian exponent of charity, ‘is but one grand exemplification of the alliance, which the God of righteousness hath established, between prudence and moral principle on the one hand, and physical comfort on the other.’⁵³ There it is again – that same duality: values, but bound up with unforgivable smugness.

For those early middle classes, the way that money worked, and its apparent moral behaviour – rewarding hard work – brought economics almost to the level of religious truth. It drove the boom in self-help and self-education and it carved out both the drive and the fears of the middle classes in the future. It made the great middle-class ideal – what the sociologist Ray Pahl called ‘the dogs bounding round the lawn, the children with their ponies, a gentle balanced life’ – seem almost a moral one. The more embattled that ideal becomes, and the more embarrassed they are about it, the more the middle classes seem to cling to it.

Behind all the clichés, this is in many ways the life so many people want – independent, peaceful, leisured, safe, where they can create the home and the life around them, stay healthy, and pass some of those values of imagination and independence on to their children. It is precisely this ideal, and the best values that lie behind it, that is now in danger.

The thrift has gone. I no longer go into my friends’ houses and find that their fridge or stove is older than I am, and sometimes older than their parents. But the Crunchies give a bit of a clue. The middle classes, whoever they are, are absolutely committed to health, independence and education and whatever will promote it, even if they interpret the path to that ideal – working harder or working less – in very different ways.

It still requires sacrifice, saving and planning ahead. It still means deferred gratification. It still means the middle classes turn out independent-minded, intelligent children quite capable of understanding the world, even if sometimes they don’t. But it also explains that embattled sense that goes beyond economics. This is a cultural struggle for survival as well as an economic one. As Paul Ray said about the American ‘cultural creatives’: they demand authenticity, but they tend to believe their tastes and beliefs are shared by themselves and a few friends – and beyond that, the wasteland.⁵⁴

The terrible truth is that the key to this health and independence is education, that the opportunities and advantages it can give are more and more scarce and competitive, and that they require investment in bricks and mortar.

Christopher Stockwell used a trust fund set up years before the Lloyd’s Scandal broke, which he had intended for his children, to buy another house. He also managed to claw back some of his businesses, but he says it has taken him two decades. He says that making the house habitable, and creating a garden in the field next door, was what kept him sane during the desperate years. When I met him there, the whole story was finally coming to its end in the European courts. The legacy of the scandal that engulfed Lloyd’s of London is that there are now only a few hundred Names left. Their place has been taken by institutional investors who are better able to look after themselves.

It was Stockwell who suggested the parallel with events around the 2008 banking collapse. I had previously seen no further than the ‘lie’ of unlimited liability and its terrible human consequences. But there are other parallels with the moment when the financial system tottered.

For one thing, the whole weight of government action was thrown behind preserving the status quo, at all costs. We have come to believe that governments govern on behalf of the middle classes. That clearly isn’t so any more. In their terror that the whole system would unravel, Western governments outdid themselves in their desperation to protect the guilty. The Lloyd’s Scandal showed that they would, and if the middle classes must suffer to preserve the system, they were a necessary sacrifice.

The scandal showed something else as well. If willing and naive investors were required to fill the yawning financial gap that threatened the Lloyd’s insurance market, then they would be recruited. Like First World War generals, they herded the little investors over the top – into the path of the machine guns.

Ever since they discovered political economy in the 1820s, the English middle classes have felt secure in their financial knowledge. They might not have enough money – yet – but they trusted the system that would allow them to invest it safely and sensibly. The problem at the root of their serious decline, and present crisis, is that something has happened, decisions have been taken over the past generation, that have turned that position upside down.

We now have to find out how and why.