We had an important research presentation last month, led by Chris Hendry, about the innovation lessons to be learned from low carbon technology. The title of the event began with the words “The Uncertain Middle”. Separate from this, I noted that a member of the UK government, in talking about the impact of spending cuts, coined the phrase “The Uncertain Middle”.
Being in the middle can definitely be uncertain and squeezed. Do you remember that children’s game “piggy in the middle” where 2 children throw a ball back and forth between them while a third unlucky one in the middle tries to catch it?
There are many examples around of this uncomfortable position in the middle.
Take, for example, the proposal to raise the cap on the fees to be charged in future to EU undergraduate students attending English universities (I have to stipulate English at this point because the situation will be different in Scotland, Wales and Northern Ireland in a way that would make Kafka proud). Students from poorer families and those whose careers lead them to earn below a particular income threshold (around £21000 pa) may get a good deal from these arrangements and may pay back only a fraction of the fees. For those students from wealthy backgrounds and those who go to earn substantial salaries, they are either accustomed to paying for their education or their future incomes will be sufficient to enable them to pay back the fees. But what those in the middle – for example, those graduates whose incomes hover just above the threshold?
Take saving for one’s pension. Those at the lowest income levels can rely on support from the State – through the State pension and means-tested benefits. It is indeed rational for this group not to save at all – any savings would only offset benefits that they would otherwise receive through the social security system. In contrast, those at the highest points on the income distribution will have specialist advisers, offshore accounts and the capacity to optimize their position and best take advantage of any incentives available. As for those in the middle – if in defined benefit pension schemes, they will have seen their schemes being wound up or closed or their benefit entitlements eroded by the interference of successive governments (often the same governments who encourage the poor to save more!); if in defined contribution pension schemes, they will have the pleasure of having to cope with the extra risks being transferred in their direction as well as having to increase their level of savings.
Is there a theme here? Are these schemes ever designed with the squeezed middle in mind? This is after all where most of us sit – so it I strange that we should allow such schemes to work only for the benefit of the 2 extremes! Uncertain and squeezed – just like a piggy.
