The coping classes - part 3: From cradle to grave: bills, bills, bills....- The Telegraph, Jan 2008

The Sandwich Generation is paying to bring up children, support its ageing parents - and carry the taxman on its back. How much longer can it continue, asks Judith Woods.

They have been dubbed the Sandwich Generation - those middle-class couples who struggle to meet the demands of growing children on the one hand, and ageing, frail parents on the other. For those overburdened by taxation and an inequitable care system that penalises pensioners who have savings, life is an endless round of often conflicting responsibilities.

Benjamin Franklin quipped in the 18th century that nothing is certain but death and taxes. But he would have found it less amusing were he labouring under the middle class's tax burden. Figures published this week showed that since Labour came to power in 1997, the number of people paying the top rate of income tax will have risen from two million to 3.7 million by the end of this year.

Anyone earning more than a modest £39,825 is paying 40p to the Exchequer for every additional pound earned - just like the super-rich. Because tax thresholds haven't risen in line with wages, the Coping Class is losing out on £700 annually.

This makes it hard to maintain a decent standard of living - let alone bring up children and support elderly parents.

The Treasury, which last year collected £143 billion in income tax, invariably responds by saying that the increased tax burden is the result of stronger economic growth, which has lifted government revenues. But Mike Warburton, head of tax at accountants Grant Thornton, believes that families are being hit hardest.

"The big question is, where has all this money gone? If it had all gone into hospitals, schools or roads and we could see they had improved, I don't think we would mind. But it hasn't," he says.

Total taxation as a proportion of national income leapt by a full percentage point to 37.4 per cent last year, according to the Organisation for Economic Co-operation and Development, which has ranked the tax take of the richest nations. For the first time in 21 years, Britain is among the 10 most taxed countries, above the US, Australia, Spain, Italy and Germany.

We also have the longest working hours in Europe, according to TUC figures. Full-time employees put in 43.5 hours a week, compared to the French who work 38.2 hours and the Germans with 39.9 hours - countries that have higher productivity than Britain, despite the fact that 16 per cent of us work 60 hours a week. Overall, we clock up £23 billion in unpaid overtime.

"The Germans pay less tax than we do, which is bad for our economy and bad for growth," says Tim Knox at the Centre for Policy Studies. "With the economic growth of the last 10 years, people have not felt the impact of the rising tax burden. But now, as the economy slows down, they will really start to feel the pinch." Being taxed at source is just the start of our woes. There has been a huge increase in council tax: £22.4 billion was collected in 2006 - a doubling since 1997, with the average household expected to pay £1,154 this year.

And then there's stamp duty - which adds three per cent (£7,500) to the cost of buying a modest £250,000 home - and inheritance tax, which, even after the recently announced reforms, will net an estimated £3.3 billion a year by 2009, up from £1.7 billion three years ago.

Given that we are being taxed on property we have paid for out of taxed salaries, this amounts to a double whammy - hard to justify, or stomach. It's not that we in the Coping Classes object to paying taxes per se, simply that we are being unduly penalised and are acutely - even angrily - aware that we aren't getting value for money.

To paraphrase the late American broadcaster Arthur Godfrey, we're proud to pay taxes, but we could be just as proud for half the money.

After deductions, what little we are left with we are increasingly spending on our parents, rather than our children. Currently, 450,000 people in England pay their own care bills, according to Help the Aged, and a further 450,000 rely on family and friends to get by.

Under the present system, which has been widely criticised, only those with assets of less than £12,000 have their care wholly paid for by the state. Above this threshold, means testing is applied and people with assets of more than £20,500 have to pay for personal care, which has often meant selling the family home to provide funds.

Although Alistair Darling has promised a radical reform in care for the elderly, it seems the middle classes could find themselves worse off than ever. A report produced by the Audit Commission last week suggested that councils could free up resources by increasing charges to "affluent" pensioners.

An estimated 70,000 homes are sold each year to cover the cost of care, their owners being effectively penalised for having worked hard to provide for themselves in old age. "Millions of people make up what has been termed the Sandwich Generation," says Mike Bingham of the website elderlyparents.org.uk. "Our website is inundated with people under immense stress trying to juggle the demands of a growing family and the needs of their elderly parents."

In Scotland, where the Chancellor and Prime Minister have their constituencies, long-term personal and nursing care is free to everyone, with means testing for meals and some minor elements of care.

Despite Darling's promise of a Green Paper this year to examine "real opportunities" to "share the cost between the individual and the state", he has ruled out the abolition of means testing.

Yet in 1999 the Royal Commission on Long-Term Care called for all personal social care to be made free to every patient. An independent health think tank, the King's Fund, says that current regulations have caused distress and misery to older people and their families.

A report this week from the Commission for Social Care Inspection says almost 300,000 pensioners have been left to fend for themselves by social services because they have savings and their own home.

Niall Dickson, chief executive of the King's Fund, says: "Our failure to prove adequate support for frail and vulnerable people is one of the scandals of our time, and it's often a real shock to many who felt they paid into a system they believed would provide help for them in their old age. It's shocking to have to undergo a means test only to find that you have to use your meagre savings to fund care. Some people are also upset to find there's no consistency from place to place or from month to month about who is entitled to what."

With the number of over-85s set to double by 2050, the system is in urgent need of reform, and the middle class is no less deserving than any other sector of society.

But whether this Government takes heed of the growing discontent remains to be seen. Meanwhile, hundreds of thousands of hard-pressed families have no choice but to keep on coping.