George Osborne holds freshly minted coins during a visit to the Royal Mint in Llantrisant, Wales on March 25, 2014. Photograph: Getty Images.
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Inequality is on the up again - Osborne's boast is over

After the Chancellor boasted that inequality had fallen, welfare cuts mean it is rising again. 

To cries of disbelief from the Labour benches, George Osborne boasted in his last Budget that "under this government income inequality is at its lowest level for 28 years". Osborne's statement wasn't wrong. The Gini coefficient for disposable income in 2011-12 (the most recent figure then available) was 32.3 per cent, the lowest level since 1986. As I noted at the time, it's normal in periods of economic stagnation for inequality to fall as middle class earnings decline and the automatic stabilisers protect the incomes of the poorest.

But as I also noted, the Chancellor's boast was unlikely to last for long. Owing to the coalition's welfare cuts, many of which only took effect last year, inequality is forecast to significantly increase between now and 2015-16. In particular, Osborne's decision to cap benefit increases at 1 per cent for at least three years (an unprecedented real-terms cut) means the poorest will see a sharp fall in their incomes. The IFS expects inequality "to rise again from 2011–12, almost (but not quite) reaching its pre-recession level by 2015–16." 

Today, the Office for National Statistics has provided us with an update and, exactly as predicted, inequality is on the up again. The Gini coefficient increased to 33.2 in 2012-13, the same level as in 2009-10 and is only likely to get worse (these figures are from the year before the top rate of tax was cut from 50p to 45p). 

While the Tories could take little credit for the earlier fall in inequality (which was largely due the decline in middle class earnings), they will deserve the blame for the rise. And with Ed Miliband making the need to reduce the gap his defining mission, Osborne may live to regret fighting on this turf. 

George Eaton is political editor of the New Statesman.

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Inside the Momentum rally: meet the Jeremy Corbyn supporters challenging Labour’s rebel MPs

The Labour leader's followers had been waiting a long time for him to come along. 

Ed Miliband’s leadership of the Labour Party is at stake. As the news filters through the party’s branches, hundreds of thousands sign petitions in his support. But this is no online craze. By evening, thousands of diehard fans have gathered in Parliament Square, where they shout “Ed, Ed, Ed,” to the beat of a drum. Many swear Ed was the only thing keeping them in the Labour Party. They can’t imagine supporting it without him.

Am I stretching your credibility? Even a Milifan would be hard pressed to imagine such a scene. But this is precisely Labour’s problem. Only Jeremy Corbyn can command this kind of passion.

As the Shadow Cabinet MPs began to resign on Sunday, Momentum activists sprang into action. The rally outside Parliament on Monday evening  was organised with only 24 hours notice. The organisers said 4,000 were there. It certainly felt to me like a thousand or more were crammed into the square, and it took a long time to push through to the front of the crowd. 

In contrast to the whispered corridor conversations happening across the road, the Corbyn fans were noisy. Not only did they chant Jeremy’s name, they booed any mention of the Parliamentary Labour Party and waved signs denouncing rebel MPs as “scabs”. Other posters had a whiff of the cult about them. One declared: “We love Jeremy Corbyn”. Many had the t-shirt. 

“Jeremy Corbyn brought me back into the Labour Party,” Mike Jackson, one of the t-shirt wearers, told me. He had voted Remain, but he didn’t care that the majority of the Shadow Cabinet had resigned. “He’s got a new Shadow Cabinet. It’s more diverse, there are working class voices at last, there are women, the BME community. It is exactly how it should be.” Another man simply told me: “I am here for Corbyn.”

The crowd was diverse, but in the way a university campus is diverse, not a London street or school playground. They shouted angry slogans, then moved aside obligingly for me to pass through. Jack, a young actor who did not want to give his full name, told me: “I used to vote Green. I am joining Labour because of Jeremy Corbyn. I like the guy. He listens. I have seen friends frustrated with him, but I really think he can do it.”

Syada Fatima Dastagir, a student, has supported Labour for years - “Old Labour”. She thought Corbyn would survive the coup: “I voted Green and Plaid Cymru, because I didn’t think Labour supported its roots. This has brought Labour back to its roots.”

This belief that Jezza will overcome was present everywhere in the crowd. When I asked Momentum organiser Sophie Nazemi if she thought Corbyn would go, she replied: “He won’t.”

She continued: “It is important that we demonstrate that if there is a leadership election, Jeremy will win again. It will be three months of distraction we don’t need when there is likely to be an election this year.”

Instead of turning on Corbyn, Labour should be focused on campaigning for better local housing stock and investment in post-industrial towns, she said. 

Whatever happens, she said Momentum would continue to build its grassroots organisation: “This is more than just about Jeremy, whilst Jeremy is our leader.”

As I moved off through the chanting crowds, I remembered bumping into Corbyn at an anti-austerity march just a year ago. Although he had thrown his hat into the ring for Labour leadership, he was on his own, anonymous to most of the passers by. In the year that has passed, he has become the figurehead of an unlikely cult.

Nevertheless, it was also clear from the people I spoke to that they have been waiting ages for him to come along. In other words, they chose their messiah. The PLP may try to bury him. But if these activists have their way, he’ll rise again.