Survival skills

The middle class is changing. Labour’s vision of the state must change with it, writes Jonathan Todd

As leader of the Labour party, Tony Blair was keener than his predecessors to align his party with the idea of aspiration. This was both a conviction that background should not limit anyone and a pitch for the support of the striving middle classes, so important in many marginal seats.

But the middle class has changed since Blair was prime minister. They are more anxious and convinced that the economy is not working for them. They are less concerned with the advancement that the former prime minister promised and more with holding on to what they have.

In his first speech to Labour party conference as leader, Ed Miliband promised to ease this squeeze on the middle class. In his latest speech, he committed to getting tough with those who drive up house prices by hoarding land and with energy companies that burden households with ever-rising bills. If this is left populism, it is not hard to appreciate why it is popular among our sinking middle classes.

Such policies will go down well on the doorstep, helping Labour into government. But the next Labour government will need more than populism if it is to remain popular. It will need a robust understanding of what has happened to the middle class and an encompassing plan for improving their condition.

In a seminal mid-1990s paper, the Harvard economist Richard Freeman investigated whether the entry of China and other developing world countries to the global economy from the 1970s onwards was determining US wages. ‘In the past,’ he concluded, ‘other factors have been more important than trade in the wellbeing of the less skilled: technological changes that occur independently of trade … In the future, I expect that these factors will continue to be more important.’

Since that paper was published, adapting to globalisation has been a central Labour motif, driving and responding to technological change less so. Yet Freeman attributes more importance to technology than globalisation. This is a lacuna that Labour Digital, a network of Labour supporters working in technology, aims to fill. The network wants Labour to champion digital inclusion, prioritise the training needed to avoid future skill shortages in digital and programming, and be in the vanguard of the big data and open source revolutions.

Broadly speaking, in the future there are likely to be three kinds of job in Britain: first, jobs in tradable sectors, like financial services and tourism, which are increasingly dependent upon success in rapidly emerging regions, like Asia and Africa; second, jobs in the tech sector that Labour Digital anticipates; and third, jobs in sectors, such as hairdressing and childcare, that are neither internationally tradable nor particularly involved with technology. Perhaps the most successful will straddle the first and second categories, while those in the third may risk being cut adrift from the rest.

The ‘IT crowd’– the second of these job categories – is undoubtedly getting bigger. Until recently, national newspapers, for example, had whole floors of people selling advertising. This is increasingly outsourced to a much smaller number of people who build programmes to match the buyers and sellers of advertising space. One kind of middle-class job, which required limited IT skills, is being replaced by another, which demands high levels of IT. And the number of those who once held the former kind of job dwarfs the number who now hold the latter.

The Financial Times’ John Gapper compares Google today with General Electric in the 1890s: the company doing more than any other to bring the future into the present. But it might be doubted whether Google will ever employ as many people as GE once did. The likelihood that Facebook will create as many jobs working for it as Ford used to certainly seems a vanishing possibility.

As the companies heralding the next industrial age sustain far fewer jobs than those who created the last, there is evidence that China may be able to compete in these most cutting-edge of sectors. Alibaba is a Chinese internet company, headquartered in Hangzhou. ‘In a city which most people in the west could not place on a map,’ the economist Paul Ormerod has noted, ‘a company unknown to many is planning a public offering which will make it worth nearly as much as Facebook.’

Nonetheless, no matter how many western customers Alibaba gains, and how few of them work for Facebook, there will be jobs in Britain that do not depend on trade with China or digital skills. For example, an ageing society needs more care workers. In this context, it is worrying that Bill Mumford, head of the care home charity Macintyre, can report that: ‘There’s a view now that if you can’t do anything else you do care.’

A future Labour strategy must give sufficient status and reward to such jobs that they become careers chosen by the middle class, while also forging the links with China that the shadow higher education minister, Liam Byrne, stresses in his recent book about the world’s soon-to-be biggest economy, and developing the digital skills that Labour Digital demands. The changes in trade, technology and demographics that encourage these responses show little sign of fostering a renewed collectivism among the middle class.

In contrast, the term ‘middle-class survivalism’ was coined by the associate editor of Prospect, Andy Davis, earlier this year. This is the practice of the middle class increasingly living on their wits to get by, as the things that have kept them afloat – steady wage growth, decent pensions, the welfare state – drift ever further out of reach.

These people are not waiting for Labour to build in the UK the collective institutions that have traditionally defined social democracy in northern Europe; they have little expectation that such a future is even possible. They are too busy working for themselves, putting aside the little that they can for their retirements and forgoing family holidays to afford childcare.

These people are intent on being their own saviours. And if they can survive, they will do whatever they can to prosper. So what might Labour offer them? Here are three examples: digital skills, trade delegations to China and career pathways in currently low-status sectors. In other words, routes to economic advancement that both correspond to where the jobs of the future will be found and work with the grain of the survivalist instincts of the middle class.

We are talking here about an ‘enabling state’, one that is both realistic and idealistic. Realistic about the ways in which the world is changing, the rise of China and the digital revolution, for instance,   and about its own limitations: sharp fiscal constraints and the impossibility of government action alone being the solution. Yet the enabling state is also idealistic about what is achievable once these realities are adapted to. It is confident about the talents of the country’s people and always seeking to unlock barriers to them being fully realised.

The new book by contributors to the Labour Uncut website, Labour’s Manifesto Uncut, identifies £34bn of additional savings in 2015-16 – both cuts and some targeted tax rises – that might be reallocated to taking down these barriers. Those who say that globalisation and technological change must inevitably erode the position of the middle classes are wrong. An enabling state could make a difference. And such a state can be afforded if bits of the public sector that make less of a difference are pruned.

Making these savings would also reassure the middle class that Labour is not profligate. Because they have made economies to ensure their household budgets add up, they are suspicious of politicians seemingly unwilling to do so when it comes to public sector budgets. They want a state that mirrors their strongest virtues – dependability, pragmatism and resourcefulness – and one which recognises both its limits, as well as where it can add value. However much it is changing, the middle class remains as important to the prospects of a Labour majority as when we last had one.

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Jonathan Todd is a contributing editor to Progress and economic columnist for Labour Uncut

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Photo: Albertize

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