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Wealth inequality & Classism
Class and income influence your lifestyle, your habits, your chances at school and even how long you’ll live.
A black woman from a wealthy middle to upper-class background will (usually) have a more comfortable life and more opportunities than a white working class man. A disabled person from a wealthy background is likely to have a more comfortable life and access to better treatments, aides and care than someone with the same condition who lives on a social housing estate on welfare.
The standard system for determining a household’s social class are ONS classifications, which are based mainly on occupation. In 2013, the BBC launched a national survey which identified new social class categories. The categories were based on economic capital (physical wealth and income), social capital (the social status of friends, family and associates) and cultural capital (the type of cultural interests favoured by them).
- Elite – Very high economic, social and “highbrow” cultural capital, including qualified professionals. This might include the judiciary/legal professionals, professional politicians, CEOs, company directors, senior managers, professors, doctors and dentists.
- Established middle class – High economic and social capital with emerging highbrow cultural capital, such as engineers, qualified nurses, teachers, local government officers and probably military officers and senior police officers too.
- Technical middle class – High economic and social capital but moderate cultural capital, usually as a result of training in/use of emerging technologies. So here you would find scientists, IT professionals, pilots, researchers, administrators and allied health professionals (i.e. radiographers).
- New affluent workers – Good economic capital but poor social and cultural capital, including skilled trades (plumbers, electricians), retail supervisors, caterers and most roles in advanced manufacturing and quality assurance.
- Traditional working class – Relatively poor economic, social and cultural capital but with some assets at hand, including care workers, hourly-paid service jobs like bar work, healthcare assistants, logistics and routine manufacturing.
- Precariat – People with very little economic, social or cultural capital, particularly those on casual/zero hours contracts, the low-income self-employed and those who’ve never worked, are unable to work or who are reliant on welfare.
Of course, class in the UK can’t be based entirely on occupation or personal wealth – members of the aristocracy might have never worked a day in their lives but are undoubtedly upper class, while someone from the lower classes might win the lottery and become wealthier that many professionals – yet they might still consider themselves working class.
Classism, Wealth Inequality & Wales
As I’ve covered before (How rich in Wales?) average household wealth in Wales is relatively good; median household wealth in Wales (from 2015) being £214,000 and placing us mid-table in the UK’s nations and regions.
But it’s a median figure – the middle value. That means the majority of people in Wales will have household wealth either higher or lower than it. It may also be something of a mirage as it’ll likely be based mainly on house prices and public sector pensions.
More important measures are income inequality and relative poverty.
In terms of income inequality, an analysis by the Wales Governance Centre’s Guto Ifan (from March 2017) suggests incomes are better distributed across Wales than the UK as a whole – meaning to be in the top 10% of earners in Wales you need to make £42,600 a year (UK = £50,600) and to make the top 1% you need to earn £100,100 (UK = £159,000). In terms of equality this is “relatively good” news, but could we do better?
On relative poverty, the news is less good. The poverty line for the UK in 2017 was a household income of around £17,160 (though based on a Welsh median income of £25,896, the Welsh poverty line is £15,538). In 2015-16, 23% of households in Wales were in relative poverty. In addition, 28% of children in Wales were growing up in poverty, with the Institute of Fiscal Studies suggesting this could rise to 40% as early as 2020.
The common stereotype of people in poverty, particularly in the right-wing press, if of “workless wasters” living on council estates, but Wales’ dirty little secret is that many of these households are actually in work and aren’t “scroungers” at all. According to the Joseph Rowntree Foundation, 25% of all jobs and 45% of part-time jobs in Wales – mainly taken up by women/single parents – pay below two-thirds of the UK median hourly salary.
Where are the problems?
Cost of Housing & Cost of Living
Although housing is generally more affordable in Wales than the rest of the UK, according to the Joseph Rowntree Foundation, in the period 2013-2015, the 20% poorest households in Wales were spending 42.2% of their income on housing and far more were renting privately (41%) and subject to market prices than from a social landlord (25%).
Fuel poverty is defined as spending 10% or more of household income on energy, and the latest estimates matched relative poverty with 23% of households in Wales estimated to be in fuel poverty.
Welfare reform – such as a shift to monthly payments for certain benefits and the introduction of a welfare cap – will have had a negative impact on household incomes and household budgeting. In addition, flat pay rates and increasing inflation will have put even further pressure on budgets, with more than 98,000 emergency food parcels handed out to Welsh residents via food banks in 2017-18 – an increase of 3% on the previous year.
Health, Lifestyle & Life Expectancy
There’s a clear link between deprivation and how long you’ll live. The difference in life expectancy between the poorest areas of Wales and the wealthiest can be up to 3 years or more in some cases (xls) and you’re also likely to have more years in good health in a wealthy area.
Figures from The Guardian show that children and adults from poorer neighbourhoods are also more likely to be overweight or obese – with a more dramatic correlation amongst women.
The assumption is that: processed foods high in fat and sugar are generally cheaper than fresh food; single-parent households reliant on part-time or zero hours/casual work may not be able to plan meals effectively; children from deprived areas may not be able to afford to take part in organised sport and exercise, or they may develop health problems linked to deprivation which may put them off exercising.
However, the link between income and obesity isn’t as clear-cut. It may be down to how neighbourhoods are laid out, the mix and quality of food retailers in an area and access to sport/exercise facilities – all of which will disadvantage the already disadvantaged.
Child Development & Educational Achievement
Earlier this year, Save the Children reported that children living in poverty “may never catch up” with their peers educationally. There’s a proven causal link between deprivation and poor economic performance. In 2017, 41.3% of 15/16-year-olds who were eligible for free school meals attained the equivalent of 5 A*-C grades at GCSE, compared to 73.6% for those who weren’t eligible.
If you include an A*-C pass in English, Welsh or maths, then the percentage falls even further to 28.6% – with boys coming off worse than girls.
The recent decision by the Welsh Government to scrap the £700,000 a year school uniform grant underlines how even that can have a big impact, as many schools have effectively trademarked their school badges/logos and forced the cost of uniforms up.
Education is absolutely key to breaking the poverty cycle, but it’s not just about qualifications. It’s just as equally about preventing people at risk of falling into the poverty trap from making bad life choices at a young age – “Education for Life”.
Where are the improvements?
Although rates began to rise in 2016-2017, the proportion of pensioners living in poverty has consistently fallen since the 1970s, from around 40% to 20% now – though, as usual, Wales has higher rates of pensioner poverty than the rest of the UK.
Pensioners are by far and away the main recipient of welfare spending in the UK. That’s not just the state pension, but also top-ups for disability, pension credit, the winter fuel allowance, schemes like free bus travel and Motability. Also, many final salary pension schemes were particularly generous and, as a result of retirement at the right time and the rise in property prices, many pensioners have been left with a financial windfall and “have never had it so good”.
There’s a ticking time bomb, however, with the retirement age being moved back, demographic change in Wales which will see more and more pensioners reliant on fewer and fewer working-age people to support them and massive pension deficits in many big employer’s pension funds.
Tax Credits (….until they were phased out)
They were complicated to claim and unloved, but tax credits were one of the more positive policy initiatives of New Labour as they helped address in-work poverty – a problem that’s been largely ignored since by successive Conservative (and Lib Dem) governments in favour of simply getting people into work regardless of the pay and contract type.
It’s likely that tax credits – working and child – will have played a big role in general reductions in poverty over the last 15 years, but it was still flawed. Firstly, because it didn’t address the causes of in-work poverty by effectively subsidising low pay and secondly because it didn’t go the whole hog and become a negative income tax (which might’ve made the system less bureaucratic). The replacement – universal credit – has had similar problems, if not worse, because of a British insistence that there are “deserving” and “non-deserving” poor.
A government that at least tries
The Welsh Government’s actual success in addressing poverty in Wales has been patchy, if not an outright failure. However, I don’t think there’s any doubting the Welsh Government and Senedd’s commitment to reducing poverty – especially when compared to the UK Government.
Some programmes – like Communities First – have flopped, mainly because they were too ambitious and not thought through enough. Other programmes, like Flying Start, have had mixed success and have come under criticism for lack of monitoring and data regarding the impact they’ve had on the ground.
Any government of any colour is going to find it difficult to address poverty when they don’t have full levers over the economy, employment law and welfare. All they can do is tweak things and shout from the sidelines.
Policy options to tackle wealth inequality & classism
This is such a broad, cross-cutting topic, I can’t do it justice by simply listing a number of possible policy options. There’s no single magic bullet – and I’ll be returning to the economy in October and a possible Welsh welfare system at a later date. Nevertheless, here are some of the smaller “tweaks” which might go some way to reducing income and class inequalities within the current economic model (there are of course alternative economic models, comrades).
Rent controls – As housing is often the biggest area of expenditure for people at or below the poverty line, it may be time to introduce rent controls or a rent cap. There’s an argument that this may disincentivise investment in new rental housing and could even force prices up, but factors such as the deprivation in a neighbourhood could be taken into consideration when calculating a rental cap (which would apply to both private and social sectors). Other factors could include the number of bedrooms, the type of accommodation (i.e. HMOs, detatched house) and the mean average monthly salary in a given area. Rents should only increase as the prosperity in a neighbourhood does.
New housing models – Moves have already been made to change tenancies and clampdown on slumlords in Wales via new laws, but this could go further (i.e. banning practices such as “No DSS” notices for private tenancies – particularly where the prospective tenants are in employment). There are also alternative housing models such as locally-owned co-operative housing, pre-fabrication (to reduce build costs) and a “housing first” policy for homelessness – some of which are being actively discussed in Wales already.
Citizens Income – A citizens income, where most benefits are folded into a single payment and everyone receives a guaranteed minimum income, is currently under active discussion if not close to being piloted in Wales. Such a regime would reduce the stigma and bureaucracy around claiming benefits and help Wales deal with issues like automation and low pay. As mentioned earlier, introducing a negative income tax is another alternative under the same principle.
Fines based on income (aka. day fine) – Some countries already use this system where summary fines (i.e. speeding) are based on personal income – presumably with a minimum floor. Introducing such a system in Wales will ensure that when people are fined they take the same proportional “hit” to their pocket, so the wealthy can’t just laugh them off.
Planning out inequality – Can the planning system reduce inequality? Mixed neighbourhoods where privately-owned housing is located next to privately rented, affordable and social housing; large communal open spaces which have good natural surveillance; allotments instead of private gardens; community-owned local facilities and clubs; direct democracy at a community level and ensuring all homes are built to the same or similar standards.
Maintaining universal benefits – They may not be popular all the time (particularly amongst those on the right), but universal benefits, such as free prescriptions and winter fuel allowance, reduce bureaucracy and ensure those on low incomes have access to services that would otherwise take a chunk out of their incomes.
Parity between vocational and academic qualifications – Creating stronger vocational qualifications from the age of 14 may address the problem of those from poorer backgrounds not achieving educational benchmarks. It could include the option of splitting time between undertaking structured training with a local employer and the classroom (with a pared-back academic syllabus focusing on numeracy, literacy and IT skills alongside PE and PSE). A three or four-year apprenticeship like this – known as a duel system in Germany – may lead to people who would otherwise have dropped out at 16 with few GCSEs achieving a practical, job-related qualification that’s at least the equivalent of A-Levels.
Make more of the Foundational Economy – Following on from the apprenticeships mentioned above, many of them could be focused on the so-called Foundational Economy (more here). Essentially, these are jobs that are “mundane but essential”, are usually based locally with local supply chains so are more resilient to economic shocks. So alongside traditional apprenticeships like mechanics, food services and cosmetology, apprenticeships should be offered in retail, customer service, social care, logistics, administration and tourism (with a view to automation).
Caste-based discrimination should be constitutionally outlawed – This would include the traditional class-based system in the UK, not just the castes associated with southern Asia. Such a move may improve the lives of immigrants who move here from countries with a caste system and could include measures such as a ban on arranged marriages, as well as protection from indentured servitude and modern slavery. It’s already covered in the Equality Act 2010 but could be included in any Welsh Bill of Rights.