Broke: Who Killed the Middle Classes?. David Boyle

where the next meal was coming from.’

      By then, Lloyd’s was threatening 39,000 Names with legal action for failing to pay up. They could have approached the Lloyd’s hardship fund they had set up under the fearsome chairmanship of Mary Archer, novelist Jeffrey Archer’s fragrant spouse. But like Stockwell, many desperately resisted that fate too, because they would have had to accept all their losses, abandon any appeal over their fairness, and hand over all their other assets to Lloyd’s.

      Behind that 39,000 figure, the suffering was also now widespread. Elderly couples who had been persuaded to invest their money as Names found themselves evicted from their homes and living in caravans. There were very public suicides and very quiet divorces and evictions. People who had saved for their retirement their whole lives were finding themselves effectively on the street. Yes, they were a privileged class with family to fall back on. Yes, they had been chasing unlimited profits in return for those unlimited liabilities, but they had not been told the risks and were often no wealthier than the theoretical rise in value of their homes.

      Within eighteen months there were more than twenty-five action groups, and Stockwell was involved in many of them. At one meeting of the activists, there was a stand-up row between two prominent Names. Stockwell, towering over both of them, told them to sit down and shut up. He attributes to this the decision to ask him to chair the meeting, which led him to chairing the Lloyd’s Names Association and made him the obvious choice to chair Lloyd’s Open Years Working Party, Lloyd’s own attempt to hammer out a compromise.

      Either way, it put him at the heart of a whirlwind. The phone rang at home all the time, and his young children had to learn how to deal with the outpourings of fear and betrayal that came down the line.

      ‘I spent hours and hours listening to tales of human misery,’ he says. ‘From people who had just done what they had been told. Who never intended to take any real risks and who were losing everything. They just couldn’t understand how this could happen.’

      In that same year, 1992, the Sunday Times concluded that ‘the professionals at Lloyd’s are not fit to regulate a flea circus, never mind a multi-billion market’.²⁷

      But it was worse than that. It was quite clear by then that some Lloyd’s professionals regularly kept the most profitable business for their own mini-syndicates, for their families and relatives, and shifted the loss-making ones onto the absent Names. It was also clear that the leading underwriters were themselves avoiding the worst-hit syndicates and warning friends and family away from them. They knew, but said nothing in public. The nod-and-wink culture that the English middle classes specialize in was being turned against them. ‘Many members of the Lloyd’s community in senior positions’, concluded the 1986 Neill Report to Parliament, ‘were not even vaguely aware of the legal obligations on agents to act at all times in the best interests of their principals, not to make secret profits at their principals’ expense and to disclose fully all matters affecting their relationship with their principals.’²⁸

      The journalist Adam Raphael, himself a Name, described the plight of a secretary who had worked at one insurance brokers for twenty-five years. As a reward, the company chairman had asked her and a colleague if they would like to be Lloyd’s Names, promising to provide the guarantee and an insurance ‘stop-loss’ policy. As her losses began to mount, she contacted the retired chairman, who had completely forgotten her existence. The new chairman replied in 1988: ‘I am afraid there is nothing to suggest any sort of commitment to indemnify you against losses incurred by that membership. Indeed it would be highly unusual if any such arrangement did exist.’ Her insurance policy would not pay out because the wording was wrong. When, in desperation, she contacted the chairman of Lloyd’s, he warned her to do nothing that might ‘prejudice the reputation of Lloyd’s’.²⁹

      Julian Tennant attacked the underwriter of his syndicate at a meeting of Names in the Albert Hall in May 1993. ‘Our faith in Lloyd’s has been totally destroyed,’ he said. ‘It’s bad enough to be forced to move out of your house into a small cottage, but it’s even worse to learn that Mr Brockbank’s salary [underwriter of his syndicate] was £430,000 last year. That is obscene.’³⁰ In 1988, the Lloyd’s market made a loss of £500 million, but the managing agents and members’ agents earned £124 million in commission. As late as 2009, another group of thirty-five Names were bankrupted at the end of their legal process.

      Two decades on from the eye of the storm, Stockwell accepts that there were aspects of the experience that provided some compensation for the lost years and lost money. It was fascinating to work at the cutting edge of the law, dealing with some of the cleverest lawyers in the country. But in the end, the establishment shut the door on the Names and bolted it, and, despite the new evidence that he had amassed, the Court of Appeal refused to reopen the case against Lloyd’s. Now, viewed with hindsight, the Lloyd’s Scandal looks like a curtain-raiser for the banking scandal – the same refusal to provide proper regulation, the same scramble to cover things up, and to provide immunity for the financial community rather than to protect vulnerable people.

      ‘The legal system let us down badly,’ says Stockwell now. ‘I understand why. I understand their need for the legal system to give some kind of finality. I understand the need to protect the Lloyd’s market so that it could get back on its feet. But nevertheless, allowing the establishment to cover up was what made the banking crisis possible.’

      Here is the conundrum of the story, and the paradox for the middle classes today. They believe the great financial institutions are on their side, believe they understand the way the world works, pride themselves even on their ability to navigate through it – they had welcomed the deregulation of financial services and all the other changes since the 1980s. But they have been horribly deluded.

      The truth is that the world has changed, and the middle classes failed to see it. Their sturdy English conservatism has not served them well in this respect, because the financial sector is not on their side at all, and has not been for some time, and for reasons that go way beyond the shenanigans at Lloyd’s. Through no one’s fault and no one’s conspiracy, their collective failure to see the world clearly has made them vulnerable – so vulnerable that their survival as a recognizable class is now in doubt.

      There are two big objections to the thesis I have set out here, and we need to look at them now. Doing so will also force us, and not before time, to look at the other big question: who are the middle classes these days anyway?

      There have always been middle classes, right back to ancient times. They were the professionals, the shopkeepers, the tax-collectors and all the rest of the population between the peasants and the aristocracy. There they were in Britain too, through the centuries, running the pubs, owning property, riding to hounds. But the great influx into the middle classes coincided with the development of the railways, so that – for the first time – they could move away from their place of work. They no longer needed to live over the shop. These were not so much gentry as commuters, setting up home in the suburbs, and their emergence coincided with a new kind of middle-class society, dedicated to independence from the tyranny of bosses and landlords. From Mr Pooter to Captain Mainwaring, they thrived well into the twentieth century, but not smoothly or universally. There was always the chance, as they were well aware, of a politician determined to squeeze them until the pips squeaked.

      Perhaps the biggest shift came after the war when, thanks to the 1944 Education Act, the upper middle classes began to shift from the grammar schools to fee-paying independent schools, until the prices shot up out of reach at secondary level – while the new middle classes filled their places.

      The first objection to the idea that the middle classes are disappearing is that, for as long as they have existed – and even Aristotle warned that it was important that they survived for the good of the state – there have been warnings or bleatings from inside them that their days were numbered. This is a collective peril for anyone who writes about the death of the middle classes. In fact, there have been so many predictions of their demise, all of them premature, that it is hard to imagine them expiring at all – despite everything I have set out so far.

      The Marxist critic and