'Middle class earners' - struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000- Guardian

[fluffykittens208]

https://www.theguardian.com/business/2024/mar/04/middle-class-workers-mortgages-bills-tax

Excerpts:

'Scott was just one of scores of middle-class earners who shared with the Guardian how they are struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000.
A report last month from the abrdn Financial Fairness Trust highlighted how Britain’s insecure jobs market and high housing costs are leading to the growth of a precarious middle class. These households are struggling to maintain a decent living standard on joint incomes as high as £60,000 a year. That compares with the median gross annual earnings for full-time employees of £34,963 last April.'

“It does seem that the only way to be on a middle income and doing OK at the moment is to be a Dink and living in the north.”

'Although respondents with children reported more precarious finances than those without, millennial childless couples say they barely have any disposable income either.'

Personally we am coping ok with a household income of £120k and still eat out/have a lot of city breaks, but I wonder if that is only because of our specific circumstances

1. small 2 bed flat in zone 3 London so we don't have a car and where it is possible for DH to cycle to work. Would probably always stay in a flat even if income doubles so it makes more sense to stay in zone 3 if living in a flat.
2. were able to live at DH's mum for 3 years while working in London and bought in 2019. We were able to overpay a mortgage on 2% interest during the pandemic and plough our pandemic savings into it which means the new mortgage rate isn't as painful.
3. fertility problems so we are still DINKY and unlikely to have more than 1 child (am already 32 this year).

As a disclaimer i don't think the chancellor should cut taxes despite us all feeling the cost of living crisis as 40% of tax revenue comes from NI and income taxes so if they cut taxes, they would have to cut services and I have no desire to pay for healthcare privately in my old age.

But it feels very strange to read about people struggling in the news on our household income, probably means that the income threshold to be 'comfortable' (without very specific circumstances that lower your cost of livin) is much higher! Would hazard around £150k to £250k now. Basically we are going to be a hugely unequal society where only the top 5% can expect all the middle class fixtures and the rest of us have to pick and choose or live a life of penury and no luxuries i.e. car or property in expensive location; 2 children and no savings or 1 child and savings. Far luckier than those in the bottom 50% obviously but i am not sure how you can say you are middle class when the only reason you can afford to eat out and have nice holidays is cos you purposefully cut back on things people used to expect if you were doing semi well i.e. 2 kids in a suburban semi and a car on the driveway.

Sorry I quoted wrong was actually to the person you quoted.

I actually think the USA middle class is better off in some ways esp re housing. Housing isn't massively unaffordable outside of places like San Francisco and New York (latter has rent control apartments too). Their earnings are also higher.

Of course healthcare and higher education as well as childcare are huge issues. Esp healthcare-50% of americans struggle to afford healthcare including those who are insured. That is massive.

For us its mainly housing and childcare that is the issue. Childcare is relatively short term so its really housing. would rather deal with expensive housing than expensive healthcare though as expensive housing can be mitigated somewhat with multigenerational living and portions of it can be paid for or saved in your 20s and pre children. However with expensive healthcare you are kinda stuck even when insured and it tends to hit you when you are least economically productive. There is also less you can do about it e.g. disabled child or difficult pregnancy or infertility.

Chunkycookie stated: “I for one am sick to the back teeth of my life suffering to pay for ungrateful people's benefits, and I know for a fact that I am not the only one.”

I concur, but sadly we are beholden to politicians, who keep taking more and more of our money. And we see Sweet FA, with tangible outcomes.

I feel this way but it seems taboo to say it these days.

I dont begrudge people who genuinely do need benefits. Thank God benefits are there as a support net.

But I have a group of former school friends who've done very well scamming the system and mocked those who prop them up.

The system is definitely exploited, probably only by few, but it adds up. Along with those who exploit from the top down. It really is a mess.

I'm not sure what the solution is as people in need shouldn't need to beg for their benefits. Equally IMO a 17 year old shouldn't make the choice to become a single mum for the financial benefit rather than because she's that bothered about being a mum.

I'm basing this on three women I know, now in their 30s so I don't know what benefits are like now. If they're harder to claim, easier to claim etc. All I know is where I went to school it was seen by some as a legitimate lifestyle choice.

These were healthy, young, able girls whose grown into young women.

some lifestyle elements like kids' hobbies etc can't just be stopped.
Of course they can. Kids can live and thrive without expensive organised "actibities".

''@portico

@Chunkycookie stated: “I for one am sick to the back teeth of my life suffering to pay for ungrateful people's benefits, and I know for a fact that I am not the only one.”

I concur, but sadly we are beholden to politicians, who keep taking more and more of our money. And we see Sweet FA, with tangible outcomes.''

Benefit fraud and error is estimated to be 3.6% in 2023. Which means the large majority of people receiving benefits are genuine and perfectly entitled to what they are getting.

I am always shocked at how many people just fall for the right wing press propaganda that they are struggling because of benefit claimants and migrants. Or before that because of EU regulations...

Those are just the scapegoats that governments use to avoid scrutiny for their incompetence and why our standards of living are really falling.

The biggest scroungers these days are sitting in Parliament and are the ones who waste billions of our money on dodgy contracts for their mates, allow tax loopholes for the rich, fail to curb energy prices increases and dream up silly/unworkable Rwanda schemes.

Spot on. And the amount of unclaimed benefits exceeds those claimed fraudulently.

And the cost of seeking fraudulent claims, costs far more than the fraud they catch. The DWP pay more out via the DWP's own mistakes than they do fraud.

What about music lessons- affording your children opportunities is facilitating childhood experiences. My DC are older now and did plenty of playing and are amazing at amusing themselves but if they show an aptitude for something, in my DD's case, playing the Piano and DS, playing the Guitar, if you are not a musician there is only so far doing their own thing can go. I do play the Piano and Cello but I'm not good enough to provide lessons at this stage in the teenage years. My DS has given up the guitar as we couldn't afford the lessons in the 6th form but he's not studying music anymore so he was not fussed about it but DD is talented and wants to continue. What impact do you think cutting back on these things has on the incomes of the people providing these lessons.

Yes they can but do we want to be a nation where children don’t do organized activities. Children learn a lot from out of school activities and it helps keep them healthy.

Hard agree. I have a relative and also a very close friend who have benefits. Neither of them are able to work due to severe and chronic mental health issues. They're not exactly living in the lap of luxury, one has a council property for life which albeit in a nice area is very basic. The other pays private rent which is covered by HB but that doesn't mean she doesn't struggle! Both appreciate the 'safety net' they have but they don't go around being slavishly grateful and I don't see why they should. The benefits system is there for a reason.

We have a joint income of roughly 80k (both public sector workers so not particularly high salaries) and 1 child. We live in the north and just recently bought our house for 240k - bog standard 3 bed semi. (I appreciate this is cheap compared to down south!) We used to be paying just short of £1000 per month for childcare for 4 days but luckily DC is now in school. The only reason we could even afford this property is because we bought ridiculously cheap at 100k for our first property and saved the deposit whilst renting. This made some profit and so we had 50k ish deposit. I think it's difficult when a lot of people have purely benefitted from being a few years older than us and now have much better disposable income/lifestyles. I have a colleague who lives in the same estate as me but who is approaching 50, bought their house (almost identical to ours) when it was built for 50k. Both are part time public sector workers so not huge incomes, their mortgage is paid off, holidays to America 2-3 times a year etc. our next door neighbours bought their house for 50k, one doesn't work, one is a paramedic and they have 4 (now adult) children. Mortgage paid off and if they sell their house is likely to go for 250k. They haven't done anything different to us or 'smarter' than us other than buy years earlier (when we were literally babies). We are paying £1000 a month mortgage due to interest rates and unlikely to pay it off until we are in our 60s. We could not afford for only one of us to work and have the same lifestyle, I think that is where the frustration is. It's just not possible now to not have both people earning to maintain the cost of living which then having both earning means there is so much less time for everything else and we are shattered. I am from a tourist city in the north where property is ridiculously priced (for the north). none of my friends of the same age have been able to buy unless they have had inheritance/gifted deposits from parents - it's just not possible to do compared to the salaries.

Startingagainandagain, are you saying the whole of the remaining 96..4% are legitimate claims?! Even if they are legitimate, there is something wrong when a hefty chunk of our income is given to benefits recipients. Also, why is tax uplift usually generated from income tax, rather than going for the Starbucks et al.

Yes they are legitimate claims. And the 3.6% is less than the amount allocated for legitimate claims which aren’t made. Yes there is something wrong, the country’s broken.

because globally corporate tax is taxed at origin, not at where the sale takes place. Also a global entity like starbucks can charge its british outlets for using its IP and that reduces the taxes it has to pay.

Apple is a simpler example, given that it is taxed at origin not on the sales of its products. Apple products are assembled over a multitude locations, starting from the factory in shenzhen, product design in silicon valley, semi conductor chips from taiwan etc.

In places like singapore and HK, income tax is much lower cos a much larger proportion of revenue come from corporate taxes (financial hub) and stamp duty and property taxes (million dollar property though in both countries a significant proportion live in government built housing, 85% in singapore's case). This is possible in a city state not a country.

Unfortunately in the uK, the public sector and nhs and education (including higher education) are the biggest employer (and main industry) so they don't pay corporate taxes in the same way. The other big employer is banking/finance (20% of employees) but mostly based in the city of london, so the revenues from it can't support a whole country of 70 million people. Another sector that is important is retail but they are mainly owned by private equity these days and loss making so would not pay many profits. So the bulk of the taxes have to be paid by the top 30% of paye cos there isn't much else to tax.

This is the reality of a services economy except in the UK services means banking and finance (concentrated in the UK), public services and education (need government funding) and retail (private equity vultures ruining it).

I am always amused when British people speak with utter horror about the American private healthcare system, but don't realise most of Europe speaks about the British private childcare system in similar terms (and the school system too, to be honest - you want education, you have to pay one way or another) exactly in the same way.

With the exception of Switzerland, who are a world in themselves.

Excellent post.

Isn’t it just? 👏🏻

“With the exception of Switzerland, who are a world in themselves.”

Switzerland has great education but extortionate private health care. Perhaps you just cannot have both? In Switzerland I read they are now discussing making health care costs based on earnings and wealth (rather than age/health). That is causing some outrage there.

The young are screwed because everything is too expensive and they are being squeezed by politicians who are voted for by the elderly and middle aged. Now they are no longer having children. I find that outrageous. The middle aged and elderly need to start paying their way where they can. There is no way around it.
The young cannot afford housing, childcare and know they will never get a pension. So we need hefty inheritance taxes for all. I really do not see a way round it. Everyone should pay at least 10-20& of inheritance tax. It is so easy because everyone files for probate anyway so why are none of the parties mentioning this? I just do not understand this aspect!

um no, that WAS NOT ME! I just quoted someone else in bold. I don’t hold that option.

I was one of those terrible, “ungrateful” people working full time and relying on top up benefits when I lived in London, and treated like a scumbag when trying to pay overpriced rent on a home just to keep a roof over my children’s heads.

“It is in the governments interests to keep the rest of us finger pointing and fighting amongst ourselves over the scraps we’re being thrown whilst they pocket everything they can. Blame the Dinkies, blame people on benefits, blame immigrants. Anything to stop us blaming the bloody government who are the people we should all be bloody rounding on.”

It isn’t that simple. People are scared to become MPs now because of all the threats and social media bullying. Your standard MP is not rich because they are an MP. Usually they stand because they have already got money and wealth behind them. Because an MP salary itself is not great. Yes, if they make it into the Cabinet they may have years and years of lucrative speeches etc but being a standard MP is not going to make you rich. It is going to get your threatened all over. Look at Angela Rayner being hounded for possibly not paying some CGT on her council house.

I didn’t state that disgusting comment about ungrateful benefits claimants.

I quoted someone else in bold.

Regarding corporates not paying taxes, I thought Ireland has managed to create massive artificial wealth for its small population in a very short time period by attracting those same corporates?

the boomer's grandchildren think they will get the money to buy houses. when i first started working in London, some of my colleagues said they weren't super worried as they all had london grandparents with big houses.

Also inheritance tax is the least popular tax. I remember my BIL saying 'how many times can you tax an asset, presumably meaning that the owner has paid income tax on the income used to buy the house, as well as stamp duty'. I pointed out to him that I would never have been able to buy my flat in London using our income if there had been no inheritance tax( I know enough people with gifted houses as it is). my BIL is someone with zero access to bank of mum and dad and is moving back to live with his mum with his wife and baby daughter at the age of 35 so not sure why he thinks this way. I think a lot of people from previously comfortable circumstances have a hard time adjusting to this new world where two incomes (my BIL and his wife both work) do not equate to a comfortable life at all but they still want to believe that they are comfortably off.

Again, that wasn’t me! I quoted someone in bold.

I had to claim top up benefits while working full time when
I lived in London. I was treated like scum.

Fucks sake. I knew I should have quoted the post properly. I don’t hold that abhorrent view of people who need to claim benefits. I was one of them.