AXA - Be Life Confident

Families need to earn an average of £62,000 a year, own their own home, have at least two cars and live in London, the South East or East of England to become a typical Middle Britain household in 2008, according to a new report* from the AXA Financial Task Force.

The AXA group says the term "Middle Britain" needs to be redefined as it does not represent 'middle income' Britain and only applies to a significant minority of households – although the group as a whole is growing.

Although one in three Brits now considers themselves to be part of Middle Britain**, the AXA Financial Task Force analysis shows that in fact around only five million households – 20 per cent of all homes – fall into the true definition of Middle Britain. Typically a Middle Britain household has an income in the 70th – 95th percentile of all earners, or incomes of between £40,000 and £100,000 per annum, earns an average of £62,000 a year before tax and has a disposable income of £40,000 a year – some £22,000 more than the average UK household.

And unless you have at least two cars, have a mortgage or own your home outright, and work in management or professional occupations, the chances are you'll struggle to become a member of this group of university educated families, the AXA Financial Task Force figures suggest.

Criteria	Middle Brit	Average Brit (UK average)
Average household earnings	£62,000 pa	£35,000 pa
% of workers in professional or management positions	70%	32%
% of workers in manual occupations	10%	21%
% of workers in office and service-based employment	5%	31%
% of households made up of families or couples with no children	75%	44%
Owner occupiers of household	85%	70%
Average disposable income (income after tax, benefits and housing costs)	£40,000 pa	£18,000 pa
Discretionary budget (income after housing, taxation and essentials such as food, clothing, transport)	£27,000 pa	£11,000 pa

Yet despite a relatively small proportion of households fitting into this privileged group, the AXA findings show that ten years ago Middle Britain was a third smaller and around 40 per cent poorer. In 1998 just 15 per cent of all households in the UK met the group’s Middle Britain criteria, earning gross household incomes of between £32,000 - £68,000 per annum or an average salary of around £45,000 – almost 30% less than in 2008.

Criteria	Middle Britain household 1998	Middle Britain household 2008	10 year change
Minimum gross annual household income	£32,000	£40,000	+ 25%
Maximum gross annual household income	£68,000	£100,000	+ 47%
Average gross annual household income	£45,000	£62,000	+ 38%
% of total UK households in Middle Britain	15%	20%	+ 5% points
% of Middle Britain workers in management or professional occupations	75%	70%	- 5%
Annual housing costs for Middle Britain (rent/mortgage, council tax, water rates, maintenance, insurance, etc.)	£7,200 per annum	£10,000 per annum	+ £2,800 per annum

Despite an increase in earnings the AXA Financial Task Force report also highlights the extent to which Middle Britain’s finances have been squeezed over the past two years, as economic conditions have deteriorated. The findings show that while disposable income levels have increased by five per cent over the last two years, Middle Britain’s spending power has stagnated, dropping two per cent thanks to the high levels of inflation in essential goods and services such as fuel, food and drink and heating.

In fact debt advice centres in so-called Middle Britain heartlands have seen as much as a 500 per cent increases in enquiries with even with people on salaries as high as £70,000 seeking advice well.***

Middle Britain spending patterns also differ markedly from the average UK household. Typically a Middle Britain household spends more on pensions and savings, education and home improvements than the rest of the country, while the average Brit spends a higher proportion of their income on tobacco, alcohol and vehicle repairs than the average Middle Britain household.
SEE NOTES TO EDITORS FOR DETAILS SPENDING PATTERNS TABLE

Steve Folkard of the AXA Financial Task Force said: “Ever since the days of New Labour and the rise of the so-called ‘classless society’, many people think that Middle Britain represents the majority – the middle section – of households in this country. And in fact thanks to an inflated housing market many people probably feel they belong in that category.

“However our research shows that Middle Britain is in fact a smaller group of families than most people might think, though many of the same stereotypes still apply.

“What is also clear is that Middle Britain households have felt the effects of the rising cost of living. Despite seeing an increase in their disposable income over the past two years, the typical Middle Britain household has not been able to increase their relative spending power.

“In spite of their higher earning power, Middle Britain households are as susceptible to economic pressures as everyone else. Over the coming months the AXA Financial Task will be trying to gain a level of understanding of precisely how housing issues; savings rates and pension contributions; debts and dependency on credit; and financial apathy are all impacting on this group.”

The AXA figures show that over 30 per cent of households in London and the South East could be classified as being in Middle Britain, while in other regions the proportion varies from just 14 to 18 per cent. Half of all of Middle Britain is to be found in the South East and East of England.

And typically Middle Britain workers are in management or professional qualifications, with a reasonable spread amongst doctors, science and IT professionals, teachers and professional services such as lawyers and accountants. Only one third of all UK employees are in similar occupations.

Some 10 per cent of Middle Britain workers are in manual trade such as manufacturing or construction and 8 per cent of Middle Britain managers work in the service industry or in agriculture.

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• Middle Britain report.
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