Britain is now suffering the longest fall in living standards since Queen Victoria sat on the throne. If this Great Squeeze isn’t the key issue of the day, the entire political system might as well dissolve itself on grounds of irrelevance and moral bankruptcy. It would be easy – but wrong – to lay all the blame at the feet of the wicked Tories, however wicked they may be. The truth is the Great Squeeze began six years before David Cameron and Nick Clegg hooked up in the Rose Garden, and four years before Lehman Brothers toppled. From 2004 onwards, the incomes of the bottom half began to flatline; for the bottom third, they actually started to drop.
But the Great Squeeze has been given renewed intensity and prolonged duration by the Tories’ hijacking of the financial crisis. As the Resolution Foundation has uncovered, one in five workers now toils for below the living wage: since 2009, the numbers have rocketed from 3.4 million to 4.8 million. On the eve of Cameron’s assumption of power, 18 per cent of women worked for less than the living wage; it’s now a quarter. Nearly four out of five jobs created under this government pay less than £7.95 an hour. These jobs are often precarious, too: there is now a million-strong army of zero-hour contract workers, a return to a supposedly bygone era when dockers would trek to the yard, sticking their hands in the air in the hope they might get some work that day. Real wages are, on average, £1,500 a year lower than when the Tory-Lib Dem cabal bedded into power, and inflation is higher for essential items, punishing the poorest most. More than a million children are set to be plunged into poverty by government policies, according to the Child Poverty Action Group. And for the first time since Berlin fell to the Allies, the next generation faces being poorer than their parents.
The symptoms of the Great Squeeze are everywhere. We can only speculate as to how Wonga executives chose to celebrate their 36 per cent surge in profit. Vultures have rich pickings in Cameron’s Britain: a million families a month now depend on legal loan sharks – allowed to charge extortionate rates – often to pay for food, heating, mortgages and rents. Half a million people depend on food banks, while the Energy Bill Revolution campaign earlier this year found nearly a quarter of families having to choose between buying food and heating their homes. Here’s to the seventh richest country in the world, whose poorest people struggle to feed themselves. Politicians of all stripes constantly preach work as the route out of hardship, but most of Britain’s poor have to work for their poverty. And although the Great Squeeze hits those at the bottom hardest, the pandemic of sleepless nights over bills, rents and mortgages is consuming the lives of millions of Britons.
If Labour had a set of courageous policies to tackle this Great Squeeze, it wouldn’t have left a whopping big vacuum filled with personality-driven tittle-tattle. Indeed, the absence of answers has had even more disastrous consequences: the devious, reprehensible redirecting of anger at immigrants, public sector workers, unemployed people – anyone except those responsible. But such is the scale of the crisis that it needs radical solutions, breaking with the free market consensus established by Margaret Thatcher: a new wave of bread-and-butter socialism.
To begin with, the case has to be made for trade unions, including changing a law that automatically presumes against them. They may be Britain’s biggest democratic movement – representing, as they do, more than six million call-centre workers, supermarket shelf-stackers, nurses and other workers – but they are routinely demonised by the media, portrayed as all but illegitimate pariahs. The past few months have seen yet another attempt to drive them from political life, on the now demonstrably false pretext of alleged vote-rigging in Falkirk. But trade unions are the most effective means for workers to collectively organise for better wages and conditions: it is their weakness that allowed wages to drop even in boom time. In another economic crisis, President Franklin D Roosevelt – no socialist – trumpeted trade unions for these reasons. If a party established by the labour movement fails to do so, it might as well book an appointment at Dignitas.
The need for a living wage is painfully obvious. There has to be a reckoning, at some point, when it is seen as unacceptable to pay wages that do not allow individuals to live a decent life. The establishment of a living wage would reduce the billions currently spent subsidising low pay through tax credits and other in-work benefits. It is an economic stimulus, too: the rich celebrate tax cuts by topping up bank accounts in the Cayman Islands; the poor are likely to spend whatever extra money ends up in their pockets.
Then there’s the housing crisis. Five million are trapped on social housing waiting lists; millions are left at the mercy of unregulated private landlords, many of whom are hiking rents as wages fall. According to the Yes to Homes campaign, rents will soar by 46 per cent by the end of the decade without radical action. Allowing councils to build homes – creating jobs and reducing housing benefit in the process – would prevent living in an affordable home being a far-fetched ambition.
British parents spend a third of their income on childcare: no wonder, then, that the average child now costs £148,000 to raise. Compare this with Sweden where costs are capped at 3 per cent of income, and all can enjoy an excellent standard of state-funded childcare. A similar system would pay for itself by raising the number of women in work and increasing the tax revenues flowing to the Exchequer.
The disastrously privatised railways are an unaffordable luxury for large swathes of the population, and rail fares are set to soar 9.1 per cent on some routes. That’s why Labour should bow to popular opinion and take each franchise back into public ownership as it expires, allowing revenues to be used to reduce ticket prices rather than topping up executives’ bank accounts. Similarly, energy bills have gone up £100 a year since 2010, and a quarter of the population put up with “unacceptably cold” homes in the winter because of financial woes. No wonder 69 per cent want energy renationalised: time for Labour to champion a new, democratic form of social ownership with consumers in charge.
More radicalism is needed, too. Why not learn from Germany with an interventionist industrial policy, creating hundreds of thousands of renewable-energy jobs to fill in the “missing middle” of properly paid, secure jobs? Why not cap the interest rates of legal loan sharks? Why not turn bailed-out banks into a public investment bank to rebuild the economy?
Labour will not win the next election by simply pointing out that the Tories have emptied the pockets of the electorate. Mourning its plight will convince no one. Voters must believe that Labour can finally end this Great Squeeze. And without bread-and-butter socialism, the remorseless turning of neighbour against neighbour will only escalate – and, against the odds, it will be Cameron who emerges victorious.