Stephen Byers

Labour Party | North Tyneside

Social mobility and class

This speech was given to the Social Market Foundation.

At the beginning of this year Tony Blair made a speech on the need for reform in order to achieve social justice. He said that:

“Our party's vision is of a society where there is opportunity to all and responsibility from all, regardless of background, class, race, or gender. That is the true meaning of equality. Not equality of outcome but an equal chance to make the most of your natural ability; equitable access to public provision; equal states as a citizen; equal responsibility back to society.”

What I want to explore today is the extent to which social mobility exists from one generation to the next. In particular what are the chances of a clever child being born into poverty being able to make their way in the world and better themselves. Or is it the case that children who are born into disadvantage will remain there.

This intergenerational mobility on which I intend to focus is crucial to any society that wishes to see itself as a meritocracy. Where people make progress and advance as a result of their own worth and not as a consequence of accident of birth.

Social mobility matters because opportunities should be available to all and that in order to succeed economically in the modern world we need to make the best use of the abilities of all our people and society itself benefits when people can see the prospect of improving their own life through their own hard work and ability.

So what then are the facts concerning intergenerational mobility?

Surveys over the last few years indicate that it has become increasingly difficult to be upwardly mobile. We are witnessing a silent and secret revolution where to a greater extent than before those born into disadvantage and poverty will be condemned to it for the rest of their lives. It is a state of affairs that the government cannot and should not ignore.

Stephen Aldridge in his paper on Social Mobility for the Performance and Innovation Unit at the Cabinet Office concludes that the growth in the rate of absolute social mobility, especially upward social mobility appears to have been halted in recent decades and that relative social mobility (the relative chances of people from different social backgrounds making it to a given social class) has been fairly stable. But this is one of the most positive assessments.

Recent work by Jo Blanden and others for the Centre for Economic Performance at the L.S.E. has compared and contrasted the social mobility of those born in March 1958 with those born in April 1970.

They conclude that even though these cohorts are only twelve years different in age there has been a sharp fall in cross generation mobility of economic status between the cohorts. The economic status of those born in 1970 being much more strongly connected to the economic status of their parents than that of the 1958 cohort. Ironically they find some evidence that the fall in mobility can partly be accounted for by the fact that a greater share of the rapid educational upgrading of the British population has occurred for people from richer parents and that this unequal increase in educational attainment is a factor that has acted to reinforce the link between earnings and income of children and their parents.

So the children born in 1970 are more likely to follow the path set by their parents than those born in 1958. Those born into families on low pay are now much less likely to be able to lift themselves into better paid jobs.

Abigail McKnight's analysis of the same cohorts concludes that the labour market penalty associated with growing up in poverty has increased over time. With young adults from low income backgrounds born in 1970 facing greater disadvantages in terms of being in work and the level of their earnings compared to those born in 1958.

The Youth Cohort Study on the activities and experiences of 16 year olds in England and Wales 2000 showed that a bright child, born into a poor family will do worse in school than a child with low intelligence but with rich parents.

And it's not just in the world of work and education that the drawbridge is being pulled up. A survey carried out by John Ermisch and Marco Francesconi found that marriage between young middle and working class adults is getting rarer.

So we face a situation in which it is becoming more difficult to move up the social and economic ladder.

But some might argue that it doesn't really matter. As wealth increases and our economy grows then surely all will benefit, that the working class can now enjoy the rewards that come from being the fourth largest economy in the world.

It is true to say that the majority are better off and this improvement continues. We must not ignore the positive steps the government has taken to increase levels of income and take people out of poverty.

By 2001-02 there were over 400,000 fewer children in low income households compared to 1998.

Child Tax Credit, introduced in April 2003, is expected to lift more children above the 60% of median income line in 2003-4. As a result of April 2003 tax and benefit changes, families with children in the poorest fifth of the population will be on average £2,400 a year better off in real terms. Since Spring 1997, the number of children living in workless households has fallen by 300,000.

The national minimum wage introduced in April 1999 has helped increase the income for more than 1½ million people and helped narrow the pay gap between men and women and between different regions.

Over a million more people are now in work compared to 1997.

But within this overall positive scene there are still far too many who are missing out and are not sharing in our national wealth.

Let us first take a few examples, which taken together, paint a bleak picture.

The last 18 months or so has seen a dramatic increase in house prices – not just in London and the south-east but throughout the whole country. While this might be seen as good news for those already on the housing ladder it is bad news for those who are not home owners who will find it increasingly difficult to get on even the first rung of the ladder.

In recent years the increase in home ownership has slowed down. In 1977 54% of households were in owner occupation; 61% in 1984 68% in 1993 and 70% in 2000.

This means that some 6 million households are in the rented sector. As a result the value of the family home – which nowadays is a significant asset – is not there to be passed on to their children.

If there is no asset held in terms of the family home what about savings. Here again the figures show that around a third are missing out.

According to the Family Resource Survey for 2001/2 34% or 10 million benefit units (that is, a single adult or couple married or living as married and any dependent children) have no savings or personal pension provision.

In our schools system where education should provide a path out of poverty too many are failing to take advantage of the opportunities available to them.

In a recent report from the Chief Inspector of Schools David Bell it was stated that 10,000 14 to 15 year olds were unaccounted for. This means that despite being legally required to attend school they simply didn't appear on any school register. As a result they are not getting the education, qualifications or skills they will need for adult life. This is nothing short of a national scandal. How can 10,000 teenagers simply go missing?

They are joined by a further 50,000 children who although registered at school truant everyday. In such circumstances it should come as little surprise that in 2001/2 5.4% or over 32,500 15 year olds at the end of statutory schooling failed to gain a single educational qualification.

The Youth Cohort Study in 2002 found that 7% of 16 year old school-leavers didn't go into education, training or a job.

We shall see later how the work of Leon Feinstein identifies social and family background factors as affecting the development of children long before they enter education.

The extent to which education failure blights an individuals life chances is starkly demonstrated by the Youth Justice Board's latest general education audit of those juveniles going into custody which reveals that at least 71% had left school without any significant literacy or numeracy qualifications.

Poverty and deprivation also effect the health of an individual. In Manchester the death rate for people under 65 years of age is over three times higher than in Kingston and Richmond.

Life expectancy for males in social class V is 71.1 years compared to 78.5 years for a male from the professional social class. For women the gap is over 5.5 years.

Between 1998 – 2000 the infant mortality rate for children in social class V was double that in social class 1.

The death rate from chronic heart disease is three times higher among unskilled manual men of working age than among professional men.

Babies born to poorer families are more likely to be born prematurely, are at greater risk of infant mortality and have a greater likelihood of poverty, impaired development and chronic disease later in life. This sets up an inter-generational cycle of health inequalities.

Over the past 20 years between 1979 and 1999 income inequalities have widened significantly with the real incomes of those in the bottom 10% of income distribution rising by 6% in real terms, whereas the real incomes of those in top 10% rose by 82% in real terms. Although it should be noted that changes in the tax and benefit system previously mentioned will significantly improve the position of those in the bottom 10%.

In terms of quality of life and taking advantage of opportunities, it is important to know how persistent low income is for a person and their family.

The British Household Panel Survey looked at this issue. It found that between 1996 and 1999 11% of individuals lived in households with below 60% of the median income for at least three years. Of these just over half lived in families with children and just over a third were pensioners.

Lone parents were more at risk of persistent low income than other family types. Those in workless families were at the highest risk followed by those without qualifications and those living in rented housing.

The latest unemployment figures show that 15% of those out of work are long term unemployed having claimed benefit for more than a year.

So a clear picture begins to emerge. One in which around a third of the population has no wealth in that they don't own their own home; don't have their own pension and have no savings.

Within this group there is a further sub-set of between 5-10% of the population who have no qualifications; face long periods of unemployment; will exist on persistently low incomes; and will suffer from poor health.

It is likely that they will live in neighbourhoods that are crime ridden and suffer from anti-social behaviour. They lack access to good value shops, have under-performing schools and poor transport links.

An environment in which disadvantage reinforces itself across generations. Where underachievement leads to a spiral of decline.

So what, if anything, should the government do?

There will be some who will say that there is no role for the government. That people should be able to look after themselves and their families and that if they cannot then they should expect the consequences that follow.

Some would say that this is not a political priority. There are precious few votes to be gained. The most disadvantaged 5-10% are unlikely to even register to vote never mind being engaged enough to make the effort to get along to the polling station to cast their vote.

This is a group that feels itself to be outside the world as most of us know it. They are detached from political activity, feel that society has done little or nothing for them and therefore they don't owe anything in return.

This Labour government should bother. We need to support people on the basis of their worth not due to an accident of birth. All should have the chance to bridge the gap between what they are and what they have it in themselves to become.

It is also a way in which we can demonstrate how by securing social justice we can deliver a more efficient economy.

But there's also a selfish reason why action is needed which would benefit the majority. The group that we are talking about, in particular the 5-10% who are most disadvantaged are a burden on the health service, make demands on the benefit system, make no positive contribution to the economy, and from their ranks come those who are most likely to be involved in criminal activity and general anti-social behaviour.

If we accept that something needs to be done then we need to identify the extent of government intervention and the form it should take.

Providing opportunities on their own will not be enough. We will need to go further.

Tawney was right when he said that a fair society requires “not only an open road but an equal start.”

If we are to address seriously the question of social mobility then we need to do more than just provide opportunities – we need to ensure that people are in a position to take advantage of those opportunities.

This means looking in detail at the two key issues which lie at the heart of social mobility – education and exclusion.

Education

A glance at the stories covered in our national newspapers concerning education over the past few months would lead you to believe that the university sector was the only one that really matters.

Yet it is still the case that the majority of children don't go on to university. The key issue has to be how we can ensure that children can make the most of their time in school.

It is clear that intervention needs to take place at a very early stage.

Research by Leon Feinstein at University College, London shows that by the age of 22 months a child's educational path may already be set in stone.

Feinstein gave children four simple tasks to see how they were developing their skills: the ability to point to different facial features when asked; putting on and taking off a pair of shoes; stacking a pile of coloured bricks and drawing lines and circles on a piece of paper.

Feinstein discovered that at the early age of 22 months the children of middle class professional parents were far better at completing the tasks than the children of working class parents.

But perhaps the finding of most concern is that a bright, able child from a poor home will in most cases be overtaken by a less able child from a middle class family by their second year in primary education.

It would appear that educational intervention after children have entered school comes too late. Family background has already played a role in generating intergenerational inequality.

So we must concentrate attention and resources in the pre-school period catching children before family background destroys the life chances of a child.

We can learn from what has been used successfully in other parts of the world.

In the United States two years intensive pre-school education for children from impoverished backgrounds provided under Lyndon Johnson's Great Society programme shows real gains thirty years on with a high proportion of those attending having a college education, better jobs, owned their own homes and had never drawn social security or committed an offence compared with a control group from a similar background.

In the UK Sure Start is an excellent programme but only reaches around one third of the poorest children. We need to go further.

We need to identify those children who because of their family background are at risk of a lifetime of underachievement, of poverty and dependency on others. And we need to do this while the mother is pregnant so that a programme can be put in place from the day the child is born. We simply cannot afford to wait until the child is 18 months or 2 years old.

There needs to be an individual support programme for parent and child. At a local level we need children's centres in every community providing parenting groups, support for language development, health provision, as well as job training for parents. This would lead on to good quality nursery education.

For too long nursery provision, day care and parental support have been the Cinderella of the political world, they must now come in from the cold if we are to provide real opportunities to all the nation's children.

There is of course a crucial role for schools to help overcome inequality. Building on pre school support they will be in a far stronger position to develop the talents of their pupils. Of course, inequality makes the task of a school more difficult. It requires “schools to help children climb up the down escalator” as the Schools Minister, David Miliband, recently said. I agree with him that it can be done if the system is geared to high average achievement and then extra assistance is given to those in greatest need.

Exclusion

We have already seen the extent to which poverty is linked with underachievement.

This government through the tax and benefits system, the national minimum wage and as a result of there being over a million more people in work has done much to ensure that on a daily basis people have enough to live on.

While we have seen improvements in income levels for the poorest we have not seen an improvement in the number holding an asset. As we have already noted 30% do not own their own home 34% have no savings.

Being asset poor means that people find it difficult to lift up their sights and plan for the long term. An asset provides the means by which a person can take control of their own life.

Asset building policies should play an important part in reforming the welfare state. It is a way in which the cycle of disadvantage within families can be broken.

There are two specific issues that need to be pursued. The first is the further development of the Child Trust Fund, the second is to provide equity shares in rented accommodation.

In this year's Budget Gordon Brown announced details of the Child Trust Fund. All babies born after September 2002 will have £250 paid into an account by the government, the money to be available from the 18th birthday. This is an important initiative.

Research in the United States has shown that a young person with access to relatively modest sums of money is more likely to be self employed and less likely to make a claim on the welfare system.

£250 is a start but I would like to think we could go a good deal further in order to make a real difference. With a welfare budget in excess of £100 billion we should be able to identify funds to increase the amount to go into the Trust Fund of those 600,000 babies born each year.

A sum of £2,000 being paid into each newly born child's Trust Fund would significantly improve an individual's life chances in terms of the opportunities available to them at 18 and their ability to take advantage of them.

If necessary, this could be funded not by increasing the tax burden on those already paying tax but instead by bringing into the tax regime the foreign income and gains of those people who are resident in the UK but are domiciled elsewhere.

It must be right to expect those foreign nationals who benefit from living in the United Kingdom to make an appropriate contribution through the tax regime and in my proposal the money received would be used to provide every child with £2,000 so that they have an asset they can call their own.

This would be a bold step but one which I believe would have broad and popular support.

The second path to creating an asset rich society is through equity shares in rented housing.

With 30% of householders in the rented sector we do need to investigate ways in which they might gain an asset to pass on to their children.

The idea behind equity shares is that a tenant would get something in return for the rent they pay to their landlord. There are a number of ways in which this might be done. One mooted option would be to give tenants a notional share in the value of their rented property. This could then be cashed in after, say, ten years of keeping a clean rent book and used as a deposit to buy and move into the owner-occupied sector.

The Office of the Deputy Prime Minister has recently said that it has decided to keep a watching brief on how equity shares develop across the world.

It is important that this watching brief doesn't become an excuse for inaction.

Conclusion

If we are to be a government for all the people of our country then our starting point has to be a fundamental belief in the worth of every person and that all deserve to be given an equal chance in life to fulfil the potential with which they are born.

For children to have an equal chance that does not mean that they all need to be treated in the same way. On the contrary, intervention will be needed to ensure that those from poor backgrounds get the support and assistance they need to be given a genuine equal chance.

Government cannot remove all the challenges and risks which are part of our modern world but it does have an important role to play if we are to improve and extend social mobility and allow people to benefit from their own talent and ability.