Mary Ann Sieghart: The middle-class prize for Labour

Of all people, it was John Prescott who declared, in 1997: "We're all middle-class now." It was certainly true of him: his earnings put him well into the top decile, and the only work he did with his hands involved croquet mallets and diary secretaries. But will Labour, under a new leader, understand the importance of the middle classes? If so, in five years' time, the electoral prize could be huge.

At the next election, it could be Labour – not the Tories or Lib Dems – who succeed in selling themselves as the party of the squeezed middle. It would be as dramatic a political reversal as Margaret Thatcher's seduction of the C2s in 1979 or Tony Blair's appeal to the ABs in 1997. But it's not unthinkable. For, if anyone is going to bear the financial brunt of the new austerity under this government, it is likely to be middle-income voters.

I say "middle-income" rather than "middle-class" deliberately, for there is a notorious tendency among well-paid metropolitans to assume that the middle classes are simply people like them. Even David Cameron was at it the other day. Actually, most London journalists and MPs earn three or four times the median income. And their jobs contain much less drudgery than those of the travelling salesmen, customer service managers, local authority officials or warehouse supervisors who make up the real Middle Britain.

Median gross annual earnings in 2009 were £20,801. That is not a lot of money. These people are unlikely to say, airily: "I really don't deserve child benefit. I ought to donate it to Water Aid." Tax credits, introduced by Labour, have helped them enormously, and they dread losing that buffer against debt. They fear for their jobs and, if they are close to retirement, they know they will rely on the winter fuel allowance to be able to pay their heating bills.

American politicians understand this demographic. When they talk about the middle classes, these are the people they have in mind: people who work in not particularly rewarding white-collar jobs, whose budgets are tight and who value self-reliance. In Britain, our tendency to redefine "middle" as "professional" means that this vast chunk of the population is often ignored.

But, in the arguments over where the cuts should fall, these are the voters who are likely to suffer most. The Liberal Democrats are keen to make the cuts as progressive as possible, which means targeting middle-class benefits. Already, child tax credit is being taken away from higher-income families. In an ideal world, the Conservatives might prefer to protect these benefits, but the world is far from ideal. If Iain Duncan Smith is to find the money needed to help ease the transition from welfare to work, he can hardly raid benefits for the poor while keeping them for the middle classes. One way or another, then, it is middle-income voters who will lose out.

Given the dreadful state of the country's finances, this seems only fair. It would certainly be worse to hit the poorest hardest. But it does create a political opportunity for Labour, which lost a lot of its C1 and C2 voters, particularly women, at the last election.

So how will the Milibrothers respond? It is a caricature to suggest, as many commentators have, that only David wants to connect with the middle classes, while Ed is happy to concentrate on the core vote. Just last week, Ed said: "We must reach out to the squeezed middle, those who find themselves working harder for longer for less." And in yesterday's Observer, he claimed that to cut middle-class benefits would be "a dangerous erosion of the social solidarity that comes from a universal system".

But it is true that – in emphasis and degree – David has been more anxious to recreate the sense of political inclusion that Blair managed to induce in the early days of New Labour. He knows in his bones that parties only win elections by attracting support well beyond their core vote.

Blair wanted that inclusiveness to extend all the way up the income scale. He wasn't happy unless multi-millionaires were voting Labour too. Peter Mandelson was not only "intensely relaxed about people getting filthy rich" but was intensely keen on relaxing on the filthy rich's yachts. As long as they paid their taxes, the filthy rich could feel comfortable with Labour.

Neither Miliband feels as comfortable as Blair or Mandelson with the filthy rich. And, whichever brother wins the leadership, the tent won't stretch as far as the overclass. David has advocated a "mansion tax" of 1 per cent a year on homes worth over £2m. As he explains in this paper today, Ed wants to use a combination of a bonus tax, an increased bank levy and a new financial transactions tax to pay for middle-class benefits. He also proposes a high pay commission to look at top salaries in the private as well as public sector.

Blair would have been horrified by such ideas. He believed that middle-class voters didn't want to see any cap on aspiration. An attack on the rich – even the super-rich – would be seen as just that. But the Milibrothers may be right to calculate that the banking crisis has changed the political dynamic. These days, the real middle classes might relish an attack on the super-rich bankers who ruined Britain's economy and the living standards of ordinary people, while still paying themselves huge bonuses.

It is easy to see how this could be misrepresented. Newspaper editors on a salary of hundreds of thousands of pounds, with a house (or two) worth several million, might well feel miffed at having to pay a 50 per cent top tax rate and a levy on their "mansion". They might well contend that such policies were an attack on the middle class. They are not. They are a raid on the overclass to raise money for the middle.

There are plenty of reasonable arguments to be had over whether such a raid would work. If the best of our bankers left London for Switzerland, the tax take could even end up lower than it was before. And there may be thousands of little old ladies living frugally in £2m houses in Ealing who couldn't possibly find £20,000 a year out of their pensions and savings. But what this argument is proving is that the ridiculously elastic definition of "middle class" has reached its limits.

"Middle" means just that. Just because, in these post-aristocracy days, nobody wants to call themselves "upper-class" any more, doesn't mean that there is no class above the middle. An attack on the rich is not an attack on the middle class. And a withdrawal of child benefit from someone earning £75,000 a year hurts a lot less than it does from someone earning £25,000. The professional classes can more easily afford to be altruistic.

David Miliband's definition of middle class may extend further up the income scale than Ed's. But what both believe is that the interests of the middle class are no longer the same as those of the filthy rich. And, if they are going to define themselves against the Coalition Government, one way is to defend the benefits that middle-income voters get from the welfare state. Labour can only afford to keep those benefits by taxing the rich more heavily.

So the left-right divide at the next election is likely to be between one party arguing for a universal welfare state in which people who put money in can expect to get something out, and two parties arguing for a pared-down version that only helps those in need. In that case, Labour would be campaigning for the middle classes and the Coalition for both the poor and the rich. If you thought coalition government threw up unexpected political alignments, you ain't seen nothing yet.

m.sieghart@independent.co.uk www.twitter.com/MASieghart