UK middle classes ‘struggling despite incomes of up to £60,000 a year’

The abrdn Financial Fairness Trust report said problems of middle-class insecurity were especially acute for single parents. Photograph: Kaan Sezer/Getty Images/iStockphoto

Britain’s insecure jobs market and high housing costs are leading to the growth of a precarious middle class struggling to maintain a decent living standard on household incomes as high as £60,00 a year, a report has said.

A study released by abrdn Financial Fairness Trust, a research body set up by the fund manager, said the uncertain nature of work meant there was a one in three chance that someone earning a middle income today would not be doing so next year.

The report – Caught in the Middle – said that problems of middle-class insecurity were especially acute for single parents, with those in employment more likely than not to be in an insecure job.

Donald Hirsch, a policy adviser at the FFT and one of the report’s authors, said 20% of those in the middle fifth of the income distribution were struggling to pay for food and other essentials. “It is people earning between £30,000-£60,000 a year, depending on the type of household, people who you would expect to be doing OK,” he said.

“Being on a middle income does not make people secure. In the present cost of living crisis, the vulnerabilities of people on modest incomes have become more apparent. They face significant uncertainties, and are rightly encouraged to save both for rainy days and their retirement,” Hirsch said.

“Yet if they are also paying off student debt and have high housing costs, it becomes difficult to maintain a decent living standard today – even at the minimum level often associated with lower income groups.”

The report defines work as “insecure” if someone is either self-employed or has been working for their present employer for less than two years, or less than three years if working part-time. It also classifies very low-paid full-time jobs – where pay is less than half the full-time average – as insecure.

Working-age adults became more likely to be in work, but less likely to be in secure work, during the 2010s.

Worklessness – combining unemployment and economic inactivity – fell from 20% to 18% over this period, but secure employment also fell, by 1.5 percentage points, while insecure employment rose by four percentage points.

Hirsch said the problems of the precarious middle classes were not as severe as for those further down the income scale, but that it was important for the government to act to tackle growing insecurity.

“Measures to improve predictability, stability and the right to flexible working had been promised for the present parliament, but were not delivered. In the coming parliament, this should be a priority.”

The study found that more than one in four people in the middle of the income distribution were not in secure employment, and one in seven were not in secure housing. One in three of those in the middle quintile in a given year will have slipped down to a lower quintile the following year.

While financial pressures on middle income families were not new, some issues had become more important. Childcare costs had outstripped other prices and earnings; housing had in many cases become less affordable; student debt had increased significantly and pension savings were becoming more important to retirement security.

“Some groups are clearly more vulnerable than others. Single adults and lone parents have less security and resilience than couples. People in privately rented accommodation face the double disadvantage of high housing costs and low security,” the report said. “Younger adults are more likely than older ones to have insecure work, higher housing costs and be repaying student debt.”

In addition to measures to provide greater employment security, the report said more needed to be done to boost the protection given to tenants in the private rented sector. The renters reform bill – which is going through parliament – was an important step, the report said.

It argued that more should be done to ensure the rising earnings of those on middle incomes were not cancelled out by childcare costs, and to increase the amount of contributions made by employers and government to pensions.