Recession Britain: Back to the class war

As Britain's financial crisis spreads through the wider economy leaving growing numbers facing unemployment, wealthy City types could be excused for wanting to keep a low profile. A recent study into public attitudes towards the rich will give them fresh cause to fear for their place in the nation's affections.

As part of the Joseph Rowntree Foundation's Public Interest in Poverty Issues programme, the Fabian Society is currently conducting research exploring attitudes to inequality and related policy responses. Early findings of the research so far (taken from a Fabian-YouGov opinion poll conducted last month and discussion groups held in London, Bristol, Sheffield and Glasgow over the last six months) provide some clues: there are signs that media exposure of corporate excess and rewards for failure has started to shift the public mood, opening up space for political action, such as a heavier tax hit for high earners that even three months ago would have looked untenable. But a hardening of attitudes towards the rich does not necessarily mean a softening of views towards the poor. Temporarily at least, there are signs of greater sympathy towards people who are losing their jobs, but as yet, this is not shifting the old negative stereotypes about those on lowest incomes.

In focus groups conducted before the current recession took hold, participants have not generally been opposed to high rewards, expressing only partial support for the idea of setting a limit on how much people earn. There was a strong tendency to assume that people at the top generally deserved their high pay. High salaries tended to be seen as compensation for the time, stress and worry that extra responsibility entails. Furthermore, compared to those on lowest incomes, people are far more willing to give the benefit of the doubt to those at the top. Asked to guess the number of benefit cheats and tax dodger, for example, people tend to massively overestimate the numbers making false benefit claims, while significantly underestimating the number of wealthy people who cheat the system through tax avoidance.

What has changed, mid-credit crunch, is that the size of the "undeserving rich" has expanded in the public’s mind. Bankers and traders have joined footballers and socialites at the bottom of the public’s deservingness list. Asked to assess the pay of people in different jobs and professions, 87 per cent of respondents in the poll view City bankers as overpaid, second only to Premier League footballers at 96 per cent. By comparison, the salaries of lawyers, MPs and estate agents all attracted less disapproval.

But unlike footballers, City bankers are widely held to be personally to blame for behaviour that has had a direct negative impact on other people. People point to evidence of underperformance and, in some cases, blatant mismanagement within banking through reckless, irresponsible lending. Participants have also highlighted excessive rewards given for market failure, viewing banking executives as profiteering at the expense of ordinary people.

By being seen as violating a basic rule of fair reward, bankers have exposed the vagaries in pay and remuneration processes at the top. As a result, a clear majority of the public want to see tighter rules on corporate pay: more than three quarters agree that bonuses should reward long-term success rather than short-term performance. 56 per cent of Britons approve of a more radical proposal – to make executives of failed companies pay back their bonuses from the last two years.

The government appears to have captured this popular mood by introducing a new higher top rate of tax of 45 per cent for people earning over £150,000 – a move supported by more than three quarters of the public. There is some evidence that the government could have gone further, with almost seven in ten respondents expressing support for a new top rate of 50 per cent for people earning over £250,000.

But while the extraordinary events on the global financial markets have focused attention on people working in banking and related financial sectors, they have not yet resulted in a wider debate about economic inequality. As the threat of unemployment spreads more widely than at any point over the last decade, we have seen greater sympathy and support being expressed for people affected by the downturn, and, temporarily at least, greater empathy and understanding towards those who have been laid off.

Yet despite this shift, we still see the same expectation as before: that anyone who is out of work will dust themselves off and get back into work as soon as possible. People are still blaming the poor for not having the wherewithal to "pick themselves up" and lift themselves off the breadline. Thus, while a new category of villain has emerged in popular discourse, the old stereotypes about the feckless, undeserving poor are still alive and well. To win the public argument for tackling inequality at both ends of the income spectrum, campaigners must broaden the debate about income inequality and about how different types of work—and different types of contribution, paid and unpaid—are valued in society.