Page last updated at 23:00 GMT, Wednesday, 27 May 2009 00:00 UK

How has Middle Britain fared?

By Steve Schifferes
Economics reporter, BBC News

UK income distribution

Middle-income Britain has lost out in the last three decades to the super-rich and middle-class professionals.

A new TUC report asserts that those earning around the median income have seen a lower increase in their standard of living than higher earners.

Four in 10 of middle-income earners say they have experienced downward mobility, with their job having a lower status than their father's, it says.

The report calls for further government action to tackle inequality.

No wonder there is so much anger at a political system that has seen the super-rich soar away, while too many MPs look to be more interested in joining the wealthy rather than standing up to them
TUC General Secretary Brendan Barber

The TUC defines Middle Britain as the fifth of the population which earns within 10% of the median income of about £20,000 per year for households in the UK in 2006/7, the last year when full figures are available.

The median income - which 50% of the population is above, and 50% below - is £377 per week, compared to the average income of £463, which is skewed by the bigger weight of the affluent.

TUC General Secretary Brendan Barber says: "Those on middle incomes got left behind under the Conservatives, were left out of Labour's boom that has now ended in recession, and are now fearing for their jobs and homes as unemployment bites.

"No wonder there is so much anger at a political system that has seen the super-rich soar away, while too many MPs look to be more interested in joining the wealthy rather than standing up to them."

Changing fortunes

The new report shows that median wages rose by 1.6% annually in real terms during the 18 years the Conservatives were in power, and by 1.9% during the period Labour has been in power - although that rate of growth has now slowed dramatically.

'MIDDLE BRITONS'
Proportion of population: 20%
Homeowners: 77%
Shareowners: 19%
Company pension scheme: 44%
Union members: 28%
University degree: 28%
Average earnings: £377 per week
Source: TUC, Middle Britain survey

But in the same period, the income of the top 1% rose by 3.9% annually under the Tories and by 3.2% under Labour - widening the income gap substantially.

The "Middle Britain" quintile of the population did make some significant gains in the past decades, the TUC survey shows.

Three in four own their own homes, compared with 81% in the top fifth of households, and 44% have a company pension scheme.

However, they have less financial and job security than the top income group.

Only 28% have a degree, compared with 61% of the top fifth of households, and only 19% own shares, compared to 43% of the top quintile.

One-third have suffered unemployment in the past 10 years, and nearly half have savings of less than £1,000.

Many of the available statistics do not cover the more recent period when the UK entered a recession, so the differences may be even greater.

Real living standards

Houses
More of Middle Briain are homeowners

The report points out that although real material living standards have doubled since 1975, with many more people owning homes, cars and consumer durables, a substantial proportion of Middle Britain does not feel their living standards have improved compared with their parents.

When asked to compare their living standard with that of their parents when they were around the same age, only half say it is higher, while 28% say it is lower, with 17% saying the same.

Many more jobs in the middle income quintile are now white-collar rather than blue-collar jobs.

Nevertheless, in terms of job status, 40% say their current job has a lower status than their father's job at the same age, while only 28% it has a higher status.

The TUC says that "for a significant proportion, rising ambitions and expectations have been largely unfulfilled".

Different values

Roman Abramovich
Do the super-rich deserve their wealth?

As well as questioning whether Middle Britain has fully shared in the rise of affluence, the TUC report also questions whether this group has become more right-wing in its values.

It says that the middle-income group expresses strong belief that it is the responsibility of government to reduce inequality, and that the bottom 60% of the population holds broadly similar views when compared with the top 40%.

"Middle-income Britain holds noticeably different values from those above them in the income hierarchy," says the report's author, Stewart Lansley. "They are more pro-state and strongly support government action to tackle inequality."

For example, 55% of Middle Britain believe the government should redistribute income from the better-off, as compared to 35% of the most affluent 20%.

And only 32% say the super-rich deserve their wealth, as opposed to 47% of the top quintile.

However, Middle Britain is evenly split on whether making Britain more equal is a more important goal than "encouraging people to better themselves, even if it makes for more inequality".

And 43% of the middle group would oppose limits on how much wealth an individual could accumulate.

The ambiguity of their attitudes - and their own aspirations to join the upper-income groups - could impose constraints on how far any government might want to go to tackle inequality, which the TUC says should be a top priority.

The pamphlet calls for the creation of an inequality commission, targets for reducing inequality and a return to the principles of progressive taxation, including higher capital gains tax.



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