Deborah Orr: We despise the poor, but not the rich

Sparing a generation from poverty would cost a fraction of the bank bailout
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Peter Mandelson doesn’t seem to be quite so relaxed about the “filthy rich” as he once was. Well, he’s not very relaxed about Howard Schultz anyway. The head of Starbucks said some unflattering things about the British economy and, according to reports, the Business Secretary got very annoyed indeed.

It’s hardly surprising that this should be the case. Back in the day, at the dawn of the New Labour project, the idea was that intense relaxation about the filthy rich would keep the filthy rich onside. That was the deal. No one in the Government would poke around too much, asking annoying questions about where all the money was coming from, or where it was going to, because an expanding economy provided jobs. And enough people would carry on voting for Labour, because it would make such a fine job of redistributing all the prosperity, and “making work pay”.

It is now agreed that one or two questions ought to have been asked about where all the money was coming from, and where it was going to, because eventually even the filthy rich had no idea at all. But it’s not quite true to say that prior to the crash, everyone was relaxed about the filthy rich.

It may have been fleeting, the fact that London was New York’s great rival as the richest and most expensive city in the world. But what was most noticeable about that mad, hubristic moment, when those enjoying the exhilaration of the ride hadn’t noticed that the yacht was about to go over the waterfall, was that there were plenty of complaints. The most vocal and bitter of them came from “the ordinary affluent”, who bleated pitifully about the way they had been denied the sort of standard of living that their parents had been accustomed to.

It was to appease such voters that the Conservatives decided that there was no need to be quite as relaxed about non-domiciled residents, and no need to be quite so punitive on inheritance tax. By the time it all went pear-shaped, the filthy rich had become a threat even to the rich, who were experiencing the reality of “trickle-down” and not much liking it.

It was quite something, an economic boom that made even the very comfortable feel poor, because they could not keep up with the super-rich. Yet even now, few people in power seem to understand the corrosive import of those attitudes.

They revealed a country that was not just in economic denial, but also in social denial. While the Government has been forced to come to its senses on the former (or start to), the latter seems as intractable as ever. The poor and feckless are still despised much more than the rich and reckless.

On Newsnight last week, the reporter Paul Mason took a journey inspired by Orwell’s The Road To Wigan Pier. In the course of his investigation, he interviewed a former ceramics worker (with an MA in ceramic design), who had become a mini-cab driver. This man spoke, to Mason’s incredulity, of a local salary of £20,000 being extremely good money indeed. In the downturn, he said, he didn’t feel sorry for himself, and the other local people, for they had been squeezed to the limit years ago, and had no more to lose. It was, he said without irony, the people of the South he felt sorry for. They had been used to earning £50,000 a year, and would find it hard to adjust.

Mason himself candidly admitted that until he’d done the story, he’d not quite grasped the degree to which low-pay, casual work and acceptance of “employment flexibility” had permeated parts of Britain.

One can only assume that he had being diligently reporting on government policy for all these years, and believing the politicians when they insisted that they really were “making work pay”.

Yet a report published yesterday by The Joseph Rowntree Foundation attested only too clearly to the failure of Labour’s oh-so-urbane plan to be relaxed about the filthy rich, and make “work pay” for the least affluent.

Research from the Foundation, one year shy of Labour’s “historic” pledge to half child poverty by 2010, has found that the majority of children in poverty have at least one parent who works.

This is another gift to us all from the filthy rich, who demanded that their entrepreneurial largess could only be granted if a flexible, and financially undemanding workforce was made available to it.

The Rowntree Foundation does not make radical demands in its report, for such things as an improved minimum wage, or the rolling back of casualisation (although it does warn that in the long-term only improved job quality and sustainability will solve the problem). It merely suggests that a larger sum than the Government has already ear-marked must be made available if the catastrophe of yet another generation born and raised in poverty is to be avoided.

That sum is £4.2bn a year in benefits and tax credits above its present plans, and is needless to say a fraction of the money that has been spent so far on bailing out the banks.

Perhaps it really is that much more important to have a functioning banking system than it is to have a economic system that is socially inclusive and provides working people with an income that even modestly reflects the cost of living. But what I, and many people see, is a financial system that collapsed precisely because it did not wish to embrace such encumbrances as mutually beneficial transactions between humans.

What else was the “sub-prime crisis” except a scheme dreamed up whereby institutions could take the commission on arranging a mortgage without waiting around to see if their negligible little client actually got the sustainable roof over his head he was promised in return?

Maybe those who cheerlead capitalism so enthusiastically should start wondering if it is they themselves who created the “big state” that they believe is hampering them so greatly, by insisting that social responsibility is nothing to do with them. They insist that the private sector is better equipped to fulfil social needs, but when they had their great chance, they proved the opposite, and Labour was dismally eager to assist them.