With yet another election kicking off after last year’s referendum, multiple party leadership debates, and two years after the last general election, ludicrous arguments over small details of party policy have begun in earnest.
This week, shadow chancellor John McDonnell announced that Labour, if elected, planned to increase tax rates for the rich. Pressed on how he defined “rich”, McDonnell said: “We believe the rich will be above £70,000 to £80,000 a year and that’s roughly defined as what people feel is an earning whereby people feel they can pay more.” There ensued on social media an argument that earning £70,000 did not constitute being rich: the Guardian crunched the numbers and came down on McDonnell’s side, which did little to quell vocal masses who insisted it was almost a piddling sum.
In 2005, I had a job in a bank’s call centre earning £8.52 an hour, up from the £5 an hour I’d earned selling shoes in River Island at weekends. All my friends with weekend jobs to fund our pub trips while we did our A levels were on the minimum wage. I felt absolutely minted – and I was, compared to the hourly rates of both my peers and most people in my home town. Now, in London, the lowest paid of my friends are on a similar rate – classroom assistants, administrators and care workers. It’s all relative and even though the defensive person earning £70,000 a year is paid more than the vast majority of the working population, their peers are unlikely to be earning the minimum wage so they place themselves in an artificial squeezed middle.
Rich people rarely consider themselves rich, and having more does little to sate the desire for wealth but only increases it. However, in the unlikely event you do earn £70,000 a year, or £1,348 a week, why don’t you feel rich? You are, according to the Office for National Statistics, raking in a bigger pay check than 95% of the country. If only one in 20 people earn more than you, surely you are rich?
The answer lies in housing. Whereas in the 90s, buying a property, even in London, was relatively cheap and easy, costs have boomed and many wealthy households find their pay cheques, while staggering compared to average earners, are buying them only modest homes or extravagantly mortgaged semis in more salubrious postcodes.
So being in the top 5% of earners may make you feel as if you aren’t wealthy: everyone apart from millionaires can say they feel squeezed by dint of not managing to feel as if they can splash their cash with abandon.
But if people on £70,000 feel their earnings aren’t sufficient to house themselves as they’d see fit, where does that leave the rest of the country? In London, with the average salary hovering around £36,000, your earnings are half that of the “squeezed” £70k worker facing McDonnell’s increased taxes for high earners.
It’s even worse news for the lowest earners. With the reduced benefit cap, the highest a family can receive if unemployed or long-term sick or disabled is £20,000 a year, or £23,000 in London. So three London households at the maximum of the benefit cap are expected to survive on less than £70,000 a year. Yet far less pity and sympathy is extended to those struggling to get by at the bottom of the income scale: the benefit cap has been shown in surveys to be one of the most popular benefit changes the Conservatives have unveiled, far more popular than the bedroom tax.
Many will happily argue it’s difficult to get by on £70,000 while maintaining that poverty doesn’t exist in the UK. The proliferation of food banks and the sharp increase in evictions and arrears should be seen for what they are: evidence that the cost of living has soared, while the ability of many to get by has collapsed thanks to the erosion of workers’ rights and the exponential rise of housing costs.
Too often, people only care about those in the middle and upper income brackets, and their ability to fund their lifestyle. They do not care about the people at the bottom, trying to raise children on ever smaller sums of money while being buffeted on all fronts by hiked fuel, housing and food prices and receiving less support from the state.
Put simply, if you earn £70,000 a year as an individual, you are rich. If you don’t feel rich, that’s because of a broken housing system. But it’s broken for everyone, and complaining about being squeezed while earning that much will get you short shrift unless you extend the same sympathy to the vast majority of people who earn far less and are experiencing real hardship.