Money has defined the post-1945 world: how to acquire it, invent it, keep it, spend it. Money conferred power, status, legitimacy. Maybe this has been so since the first settled communities thousands of years ago. The second half of the 20th century, though, saw an important sophistication develop, the ascent of money as a commodity class, containing expansive portfolios of elaborately designed gambling products that made small numbers of people exceedingly rich, all the while damaging the economic prospects of everybody else.

Money is the scenery to the daily life of the Hall family, their relatives and friends. It’s 2010: Janie Hall is 38 and her husband Rob is 40, they usually read the Daily Mail, and are buying a semi-detached house in Reading. They have two children, 11-year-old Joshua and eight-year-old Emily. The Halls are English, professional and I like to think they are ‘typical’ of Middle England, although my understanding of ‘typical’ may be very different from yours.

The construction company where Rob is a ‘human resources’ manager is in the second year of a pay freeze, and its final-salary pension scheme was closed in 2006. Rob was in this (formerly generous) pension scheme for nine years, and expects it to give him about one-ninth of his salary as it was at the closure date, uprated (he hopes) for inflation. The replacement pension scheme has no income guarantee whatsoever, and Rob is reluctant to pay into it. Janie, a secondary-school teacher, still has her teacher’s salary and pension scheme, but government has been dropping heavy hints that it is becoming unaffordable. A chasm between private and public-sector workers opened in the early 2000s, a form of pension apartheid. The public servants, including teachers, kept their costly defined-benefit plans, while workers in the private sector lost theirs (unless of course they were directors or senior executives) Janie felt that her future pension was trapping her in teaching, especially since Rob’s pension prospects had become so dim.

Budgeting challenge

People tend to find numbers dull, unless they are printed on winning lottery tickets or bingo cards. The Halls have always felt that money worries were for other people. Rob and Janie have a combined income of £51,000 a year, but somehow it doesn’t seem to stretch between paydays. While their spending habits have a bearing on this outcome, globalisation is another reason. Globalisation has created a group of super-wealthy persons who can avoid tax by domiciling themselves and registering their companies in tax havens with tiny populations, like Bermuda, the Cayman Islands, Monaco and Lichtenstein. Countries with millions of inhabitants who all expect a high material standard of living, like the UK, need inflowing tax receipts, and to a rising extent it is the people in the middle, not those on the globalisation circuit, who have to pay.

Rob’s net income in 2010 is just on £352 a week, and Janie’s is £361. She earns over £3,000 a year more than Rob, but pays 6.4% of her salary as pension contributions, while Rob is not contributing anything. They also get £32.35 a week in child benefit and £4.80 a week in child tax credit. Leaving out the pence, the total is £750 a week, £3,250 a month. This disappears surprisingly fast, and a huge chunk of it is their mortgage. They bought a large semi-detached in 2004, for £220,000. They borrowed £168,500 of this, easy to do then on their joint income, which at the time was £42,000. The mortgage — interest only — came with a four-year discount rate of 4.50%, but when it expired in 2008 the best rate the Halls could get was 7.00% on a repayment mortgage, a whopping monthly payment of £1,2104.92. Their interest rate bears no relation to the much lower base rate, because lenders are strikingly risk averse.

Holiday downshift

A page from Janie’s notebook

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Household bills, per month

Mortgage £1204.92

Council tax £124.67

Electricity and gas £135.08

Water £33.08

TV licence £12.33

Home and contents insurance £27.00

Fixed-line telephone £28.33

Internet £18.33

Food £382.50

Clothing £75.00

My car (fuel, insurance, MOT, repairs) £210.42

Rob’s car, allow the same, £210.42

After-school childcare for three nights a

week, 39 weeks a year, at £7 a session per

child, worked out per month, £136.50.

Holiday childcare for 2 weeks, to cover

my school commitments, per month over

the year, £33.88

Total: £2623.46

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There’s over £626 a month left, which doesn’t seem too bad, but it’s all gone when credit card repayments and interest, house repairs, replacement furniture, days out and holidays are paid for, and Rob isn’t saving anything for a pension. The Halls are solvent, but looking for economies, and their main annual holiday was a logical place to start. They used to fly away every summer for at least two weeks in the sun – Spain, Portugal, Turkey, Greece – but decided on a cheaper holiday so they could repay a chunk of their credit card debt. “Spending more money that we haven’t got would stress me out,” said Janie. They eventually settled on a camping holiday in Devon. Janie bought a family-sized tent on Ebay for £100 and Rob drove to Oxford to pick it up.

Janie was reading the paper as they drove to Barnstaple in Rob’s seven-year-old Vauxhall Astra, the tent on the roof rack and the boot crammed with food, clothing, utensils and bedding. “Look at this,” she said, “pages of huge discounts on cruises, although still too expensive for us.” “I heard something about the shipyards – in Italy I think – that build cruise liners having to sack most of their workers,” mused Rob. “They had a demonstration that turned nasty, the riot police shot six people. It was on the news the other night.”

Down at the campsite, the Halls soon realised that this was not going to be a tranquil holiday. The place was heaving, the lifestyle campers outnumbered by cash-strapped parents and their children. “It’s like a mini Glastonbury without the music,” said Janie, who in her younger days was a regular at the Somerset festival. Joshua and Emily had a surprisingly good time, accompanied by new friends for swimming, cricket, rounders and speed trials on the assault course. Janie wrote on a postcard to her mother Shirley:

“Josh and Em haven’t asked for TV once, they are out playing all the games that you played when you were small in the 1950s. The weather’s dry so we don’t yet know if the tent is waterproof. It’s not that much of a holiday for me, as I’m providing three meals a day, but at least the scenery is different, and Rob does the washing up. We are going to Clovelly tomorrow, apparently the fall in value of second homes is giving some hope to locals who had been priced out of the property market, but like all first-time buyers they need a deposit of at least 25%.”

Means testing under pressure

Even in comfortable Newbury, life is changing. Janie’s mother Shirley, a former primary-school teacher, and her father Bill, a retired accountant, have paid off their mortgage and live in a pretty, if draughty, tile-hung cottage. Their pensions are enough to live on. They are increased annually in line with ‘inflation’ although often the ‘official’ inflation measure used for uprating seems lower than the inflation that Bill and Shirley experience.

“What’s in the mail?” asked Bill and Shirley picked up a wodge of paper from the doormat. “Postcard from Janie,” Shirley answered, “gas bill, my gardening magazine, bank statements.”

Retirement is pleasant for them both. Bill, who is 65 and fit, gardens expertly, and he is a volunteer driver, taking pensioners to hospital appointments. Shirley, 64, is in the Women’s Royal Voluntary Service and two days a week works in the WRVS-run outpatients’ café at the general hospital. They look after Emily and Josh every Saturday, and take two or three holidays a year.

Rob’s parents Beryl and Tim are older, 70 and 72, and depend on the state pension, on the married couple’s pension in fact, because Beryl in her working years paid reduced National Insurance contributions, an option that ended for new workers in 1977. They receive pension credits too, and all the benefits that go with it – housing benefit because they live in a rented house, and council tax benefit. They don’t have a car, but can go on buses for free, and the bus services are plentiful in and around their home town of Bracknell. Overall , there is not much difference between their living standards and those of Bill and Shirley, who do not qualify for any benefits.

The Pension Credit and other means-tested benefits are a Political Issue in 2010, because for at least two decades middle-earners have watched with some annoyance as their efforts to save only bar them from the benefits that go to people who have not bothered to put anything aside, as well as to those whose incomes were too meagre for any cash to be ‘spare’. In truth, until the credit catastrophe that hit in 2007, government wanted the consuming public to spend as much as possible, to maintain the statistical apparition of continuous economic growth. New tax income from an expanding economy helped to compensate for the tax losses to globalisation. Janie could not help feeling a little jealous of Tim and Beryl, off to Spain for six weeks in the sun, while their own holiday had been two weeks in Devon. “If I had more time,” she moaned to Rob, “I’d get involved in politics.” Rob thought it prudent to agree with her. “These days you’ve either got to have nothing at all, or be loaded,” he said. “If you’ve nothing you get extra benefits, if you’re loaded and don’t fancy paying tax you just need to threaten to move to a tax haven, and government backs down. I’m amazed there’s any standing room in Lichtenstein, or Monaco.”

The put-upon inhabitants of Middle Britain were championed by the Daily Mail and the Daily Express all through 2010, without much real impact. The General Election in May returned a Conservative majority of 20 over all other parties, but like Labour before them, in a globalised economy their autonomy was curtailed.

“It’s about time our government stopped blaming ‘global events’ for everything and started doing something for us,” Janie moaned. “What’s the point of a government if all it’s good for is to borrow money and say that taxpayers – us — will repay it, later!”

to be continued…..