| As some of you know, I was away from home during the working week while my latest job lasted. I stayed in a very pleasant B&B and most of their business was people who are doing what I was doing: working away from home 5 days a week. These people did a variety of jobs: there were engineers and construction workers and people who repair leaks for the water board, as well as a number of social workers. All of them are what I would characterise as the skilled working class. Talking to them was instructive for me: frustrating but instructive.
One thing that is usually true is that people in such circumstances do not discuss anything that might be controversial, over breakfast or in casual encounters in the evening. That is because it is necessary to get along with these total strangers. People working away from home put their lives on hold, very largely. They do not have the normal circle of friends who agree with them on the things they believe to be important: so perforce they must live what little social life they have with folk they might not naturally associate with otherwise. There is a sort of adage which arose in a different context and that is the prohibition on discussing politics and religion at the dinner table: it is the same idea and it encapsulates and aspect of "manners" which we all recognise. Topics like football are specially designed to meet that kind of need and there is a lot of talk about that kind of thing. So it was a surprise to me that attitudes I found totally offensive were regularly raised and discussed. It appeared that such views were accepted as mainstream. Or perhaps the prohibition does not apply when the forced interaction is longer term. For whatever reason I listened to their views regularly: and since I am not always mannerly I did join in eventually: thus causing a lot of friction and discomfort. I regret that because it is not productive; and latterly I did keep silent even in face of a conversation which seriously proposed that "criminals" should replace the fox, and hunting with dogs be reinstated. By then I had realised that there is no point in talking seriously about such things: I am slow, but I am teachable.
That is an extreme view and not shared by most of these people: I do not wish to suggest that the person puttiing that forward was typical. But there were other things which were shared and those are what is relevant to this thread
As I said, these people were skilled working class, or lower middle class (engineers and social workers would probably see themselves as professionals, and to some extent that is correct). Many acknowledged origins in the "real" working class and were proud of those roots. They saw themselves as hard working (which is a hurrah term) and as having "bettered themselves" through their own efforts and values. They also saw themselves as unfairly put upon: the phrase "squeezed middle" seems to have appealed to them and I heard it used quite explicitly more than once.
From their perspective they were keeping the parasite rich and the parasite poor. Some of them were resigned to that fact, and some of them were angry: but whatever their response they did not question the truth of that slogan. It was almost a source of pride.
One of the things they agreed about was that there had been a change in the poor: they believed that in the past the poor were "respectable" and had values of community and hard work and pride and aspiration: and they thought that their own position had been achieved because of those values. They think that the poor now have no such values: that they are "welfare dependent" and unwilling to work. In short they think of them as an "underclass". Some believe that change is irreversible: some think that it can be altered by withdrawal of the "unaffordable" social support which they provide at great personal cost. All of them agree that the change has occurred and that it is regrettable. There was much talk of families where "3 generations" have never worked. This is the stuff of tabloid headlines (and of other news outlets, by now) and it betrays the power of the press like nothing else. There is no thought behind these views so far as I can tell. There is no recognition that they are controversial, either: and on the few occasions I sought to challenge them it was clear that the challenge was what was impolite: for they were not saying anything they thought of as divisive: I was.
The reason this is in this thread is this: not one of these people, who complain about the fact they are supporting both rich and poor, were paying due tax. Every single one of them was constituted as a "limited company", though in reality they were working for a wage just like most folk. I know this because they did not attempt to hide it: they had no compunction about it at all. Some were quite proud of it: seeing themselves as smart to avoid the bulk of taxation. Others saw it as mere pragmatism given that everyone works for money and any way of increasing your income is therefore legitimate.
It is possible that you do not understand the significance of that fact. Let me explain.
Most people in this country pay tax under a system called Pay As You Earn. You receive your wages net of tax and national insurance, because the employer deducts that at source. The rate of tax is determined by your "tax code" and is affected by things like your level of pay, and family circumstances. The tax rate is applied to your earnings over the "personal allowance" and that is more or less that.
The important thing to note is that very, very few of your costs are deductible. What the tax law says is that if you are an employee (which means that you are a PAYE taxpayer) any claim for an expense to be set off against tax can only succeed if that cost is "wholly, exclusively and necessarily" incurred because of your work.
For a person who is not PAYE the rule is different: in that case the expense is deductable if it is "wholly and exclusively" incurred because of your work. An apparently subtle difference: but one with enormous consequences.
As an example: home to work travel costs cannot be claimed if you are PAYE: it is deemed that you choose where to work and so the cost does not "necessarily" arise from your employment. But if you are a company that test does not arise: so you can set off those costs against your tax liability. Similarly with the costs of accommodation: and food which you have to eat out, being away from home.
Let us say that you earn £10 per hour for one working week of 40 hours. Let us say that your accommodation costs £20 a night and you pay it for 4 nights that week. Food out costs, let us say £5 per day. And you travel 200 miles to get from your home to your work place and back in that week.
Excluding the personal allowance etc for simplicity, the PAYE person pays tax on £400 that week: at 20% that is £80: and she pays, let us say 5% in national insurance: while the employer pays twice that as their NI contribution. So the worker gets £300 and the exchequer gets £140
The limited company pays tax on £400 - £80 for accommodation: -£25 for food: -£100 for travel (using a notional 50p per mile allowance which is not far from what the revenue estimates, depending on the type of car etc). This person pays tax on £195 and at 20% that is £39. NI for the self employed is a flat rate of £2.65 per week and of course the employer pays nothing. So this person gets £358.35 and the exchequer gets £41.65
That is not all. Social workers who do agency work, as I do, can choose this method if they wish. In fact it is very strongly promoted by the agencies and I have to fight hard to continue on PAYE. Because they promote it I happen to know that if I accept the offer of company status I will earn significantly more per hour. That is because the employer does not have to pay NI contributions for me, as I understand it. The difference is around £5 per hour in my case. So the calculation above does not reflect all of the benefits of company status. The higher hourly rate actually increases the tax liabilty back to something near what a PAYE person pays, on this example: but the loss of national insurance contributions from the employer is still in play and it represents a loss to the public purse: as does the fact that they are paying the same amount of tax on a much higher wage
Note that the substantial increase in take home pay is directly derived from a reduction in tax: it is pure loss to the public purse. It is scam against all of us: but for these people "us" is "me". It is particularly rich in irony when social workers do this: for we are paid out of taxation and our whole department is funded that way. We are enormously underfunded and the social workers who are doing this complain bitterly about lack of resources etc. But they don't make the connection and they get angry when I do.
This sort of thing caused a great commotion in the press recently when it was reported that some high up government officials were using this same mechanisms to avoid tax: but it is very widespread indeed. Far more so than I had realised.
I agree that there has been a change in the attitudes of a group: but it is not the attitudes of the poor: it is the attitudes of the "squeezed middle" which have changed. In the past the skilled working class saw themselves as having something in common with their unemployed counterparts: not now. It is necessary to the sense of self wrongteousness that they distance themselves from the poor: and they do.
Edited by FionaK - 17/5/2012, 11:05
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