These labourers provide a cheap supply of ready manpower. Photograph: Getty Images
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Cheap, and far from free: The migrant army building Britain

Revealed: how job restrictions have left Romanian and Bulgarian construction workers underpaid and vulnerable to exploitation.

The men gather in the shadow of the Wickes hardware store, looking out for the odd jobs that keep them in the UK and for the police that periodically moves them along.
    
As day labourers on the margins of Britain’s sprawling construction sector, they provide a cheap supply of ready manpower, useful yet often unwelcome.

Their presence provokes frequent complaints from the residents of Seven Sisters, a north London neighbourhood where the cafés offer a greasy “builder’s breakfast” for less than five pounds.

With no offices or agencies supporting them, the day labourers crowd the pavement and advertise their trade through their attire – grubby tracksuits spattered with paint and plaster.

When potential clients pull up, they haggle over rates and hitch rides. When the police show up, they run.

Across the road on a sunny July morning, Jarek collects his groceries and stops for a chat with some friends.

“Illegal people,” is how he describes the 30 or so men waiting outside Wickes. Like them, Jarek is an immigrant. Unlike them, he comes from Poland and does not panic when he sees the police.

He too is a builder, but he does not do business on the pavement outside Wickes. Instead, he travels on a moped fitted with a toolbox, dispensing glossy flyers advertising “cheap and reliable contractor services” in ungrammatical English.

Jarek is one of around a million workers who moved to the UK as a result of the EU’s expansion into Eastern Europe in 2004. The scale of the migration, most of it from Poland, prompted a backlash against the British politicians who had failed to anticipate it.

The day labourers are mostly Romanians and Bulgarians, and relative newcomers to the UK. They arrived after 2007, when Romania and Bulgaria – the so-called A2 countries – joined the EU.

Despite Jarek’s suspicions, the men’s presence in Britain, or indeed outside Wickes, is not in itself illegal.    

All that separates him from the newcomers is a web of restrictions, designed to deny A2 migrants the many advantages that helped Jarek and his compatriots establish themselves in the UK.

Free to stay but not free to work, the Romanians and Bulgarians fulfil a narrow function – meeting Britain’s need for underpaid and unprotected labour.

Nervous and suspicious

The construction sector accounts for more than 10 per cent of Britain’s GDP. It is the centrepiece of the government’s plan to revive the struggling economy, and the recipient of regular subsidies and stimuli.

Critics say the government’s restrictions on A2 workers have benefitted the construction sector by boosting the ranks of poorly paid and loosely regulated labourers. They accuse Britain of trying to build its way out of a double-dip recession by undercutting pay and conditions for other, relatively well-established, workers.

A Balkan Investigative Reporting Network (BIRN) investigation shows that A2 workers are generally prepared to work for lower wages and in worse conditions than others in the construction industry. Many interviewees spoke on condition of anonymity because they did not wish to attract the attention of the authorities.

Unions and safety officials agree that the A2 workers’ immigration status has driven them into the highly casual end of the building trade, where procedures are more likely to be ignored and injuries and grievances are less likely to be reported.

The UK government justifies its restrictions, arguing that they have protected the British workforce by preventing another surge of immigration of the scale that brought Jarek to the country.

Statistics from the Department of Work and Pensions show that around 210,000 Romanians and Bulgarians have received a National Insurance (NI) number since their countries joined the EU five years ago. This figure offers a very rough indication of how many migrants from these countries may be working in Britain, without taking into account those working illegally and those who have since returned home.

By comparison, some 640,000 Poles have received NI numbers over the last five years, from the total of more than a million over the last decade.

Large construction guilds, meanwhile, insist that their members are bound by law to ensure working conditions are safe and fair. When the rules are broken, they say, the migrants are often complicit.

Some migrants interviewed by BIRN seemed to confirm this, saying they worked in the grey economy to avoid taxes. But as many are underpaid, the incentive for doing so is also greater.

If caught working illegally, the migrants face a fine of up to £1,000 pounds (about €1,300) and a possible prison term.

However, the day labourers in front of Wickes are in little danger of being busted, as they can always claim that they intend to declare any earnings.

Their nervousness around the police stems less from a genuine fear of prosecution than from a general suspicion of the state.

Facing severe restrictions in the job market, they have been funnelled towards a zone where there is no clear distinction between the lawful and unlawful, or between the exploitative and the cost-effective.

“The police have asked me for ID… Sometimes they say you can stay, sometimes they make you leave,’’ says a middle-aged day labourer from Bulgaria who gave his name as Neven. “I stay,’’ he adds. “What are the police going to do to me?’’

 

Numbers game

Upon arrival in the UK, all foreigners in search of work are expected to apply for an NI number.

The number is a prerequisite for anyone seeking legitimate long-term employment. It is effectively the code upon which the state builds each individual’s record of taxes, pensions and benefits.

When Jarek came to Britain in 2004, Poles like him had little difficulty acquiring an NI number. But by the time Neven migrated five years later, Romanians and Bulgarians were finding it harder to register.

A2 nationals are automatically allocated NI numbers only if they have travelled to Britain on a type of work permit that is issued with direct offers of employment.

However, these migrants are in a minority. Most Romanians and Bulgarians travel to the UK without work permits or any firm promise of employment.

Eager to start earning, they gravitate towards the construction and hospitality sectors, where they can eventually skirt the need for a work permit by registering as self-employed.

Migrants who fail to prove they are self-employed, and therefore fail to get an NI number, often end up on the margins of these sectors, getting paid cash-in-hand for casual jobs that require minimal paperwork.

Bulgarian and Romanian embassy officials in London told BIRN that their citizens were finding it harder to get an NI number, in some cases logging five unsuccessful attempts. Many of the day labourers outside the Wickes at Seven Sisters fit this category.

“No money, no job in Bulgaria,” said a 45-year-old migrant who did not give his name. He said he had twice applied for an NI number, and had been refused both times. He had not found work for two months and was living off his savings.

"Smaller sites, bigger risks"

Undocumented workers are more likely to be seriously injured on the job, according to trade unions and safety experts.

A young Romanian man, whose name has been withheld on the advice of his lawyer, told BIRN he had been electrocuted while operating a jackhammer at a site in London. “I don’t remember much,” he said. “There was smoke. My arm was burned.”

The man had been working in Britain without an NI number and had learned about the job from a friend. He says he was not asked to provide any documents or sign any contracts before starting work, and was paid cash-in-hand. Although he received some basic safety instructions, he says he had trouble following them because of his poor English.

Construction unions estimate that some 80 per cent of workplace accidents go unreported. The Health and Safety Executive (HSE), the UK watchdog that monitors safety in the workplace, does not keep any data recording the nationality of injured workers.

However, it acknowledges that migrant workers are more exposed to accidents and less likely to report them, even though they cannot be deported or penalised for doing so.

Richard Boland, the HSE’s head of operations for construction in southern England, says “the vulnerability that comes with having restrictions on when and where you can work” can drive builders to sites where the safety rules are not enforced.

HSE’s inspectors are now shifting their focus away from the large firms towards smaller sites because the latter, he says, are more likely to ignore standards and to employ relatively inexperienced migrant workers.

"Silent accidents"

Romanian and Bulgarian workers who manage to acquire an NI number still face curbs that did not trouble an earlier generation of immigrants from the EU.

Most jobs in construction are arranged through specialist employment agencies, which are typically small companies with a record for hiring from within a particular immigrant community.

These agencies act as subcontractors for bigger firms, delivering casual labour to large sites at short notice and handling much of the associated paperwork.

According to lawyers and labour experts, the A2 workers hired by such agencies are less likely to complain of dangerous conditions and low wages. Many fear being blacklisted in an economy where their options for employment are already circumscribed.

Remus Robu, a paralegal with UK law firm Levenes, often handles claims arising from accidents involving A2 workers. “Unfortunately, there are people who do lose their job when they file for compensation,” he said.

The Romanian owner of a small building company, speaking on condition of anonymity, confirmed the existence of an informal blacklist for workers who were regarded as troublesome. But, he said, this was no different to the system of references shared by employers in other industries.

“Would you hire back somebody who had filed a claim against you?’’ he said.

The owner also told BIRN that he had persuaded a worker against reporting an accident that had led to a broken leg. He said he had paid the injured man a full wage throughout his time in recovery, and guaranteed him further employment when he was fit again.

“He agreed not to pursue a claim against me because I have a good relationship with my workers,” the owner said.

According to the HSE, any accident that leads to a broken leg has to be reported under UK law. If an employer is found to be at fault, lawyers say a worker can expect to receive between £6,000 and £36,000, depending on the severity of the injury.

Small construction firms are usually keen to avoid having claims brought against them, as these can hamper their ability to secure fresh contracts.

"Informal economy"

As well as discouraging complaints over conditions, employment agencies often pay A2 migrants a lower wage than other workers.

Many agencies deduct a form of commission from workers’ pay packets. In some cases, a payroll company – often linked to the agency – will charge an additional “admin” fee for processing salaries.

The A2 migrants have no safeguards against these cuts to their earnings. As self-employed workers, they are not eligible for the UK’s minimum wage, currently set at just over six pounds an hour.

Moreover, although technically expected to pay their own taxes, self-employed labourers are automatically taxed at source at a rate of 20 per cent, under a government scheme that applies to the construction sector alone.

The construction workers’ union, UCATT, has called for the scheme to be scrapped, saying it facilitates a form of bogus self-employment. Britain’s opposition Labour party also recently said it would review the scheme.

However, an official from the UK’s largest construction trade association said the workers in this category deserved no more sympathy than their employers for undermining their “legitimate competitors”.

“Both parties gain from effectively breaking the law and, as such, those A2s who collude in false self-employment cannot be portrayed as innocent victims,” says Peter O’ Connell, a policy manager with the Federation of Master Builders.

Stephen Ratcliffe, director of the UK Contractors Groups, a guild representing the country’s top construction firms, said criminal proceedings should be used against the “informal economy” where companies flout tax, employment and safety laws.

Both O’Connell and Ratcliffe stressed that the members of their organisations abide fully by the law.

The UK’s main trade body for employment agencies, the Recruitment and Employment Confederation, declined to comment despite several requests from BIRN.

Given the ways in which working through employment agencies can eat into their earnings, many A2 workers decide to opt out of the system.

The day labourers outside the Wickes superstore in Seven Sisters include some who have an NI number but choose not to use it.

A Romanian man, who refused to give his name, says he has been in the UK for six years and regularly pays his taxes and contributions to the state.

But he supplements his official income by working cash-in-hand. “People hire me to paint their house. If they ask for an invoice, I can issue one. Otherwise, I don’t.”

“I’m done working with the agencies,” he adds. “They take too much of your money.”

Most of the men outside Wickes said they expected to earn around £50 (€60) a day. By comparison, a self-employed Romanian recruited legally through an employment agency for marshalling traffic at a building site, can expect to earn £80 (€100) per day. In other words, he will be paid only £30 (€40) more than the day labourers, out of which he must fund further tax and NI contributions.

Recruitment agencies say they pay the same wage, regardless of nationality. However, unions say that British and Polish workers can expect to be paid £9-10 per hour for jobs that will be offered to A2 workers for £5-6 per hour.

As they do not face any working restrictions, Polish and British workers are in a better position to negotiate their rates or simply take better jobs in other sectors. Romanians and Bulgarians are more likely to go with what they are offered, as they have fewer options on the job market.

"Good for business"

According to its critics, the current policy on A2 workers has created a system that deprives the state of tax revenues, undercuts British labour and leaves foreigners open to exploitation.

Labour MP Jim Sheridan has argued for tighter regulation of the employment agencies in the construction sector, along the lines of the licensing of agricultural gangmasters.

Others call for reducing self-employment in the sector by making construction firms hire more workers directly. However, this would also shift the burden for NI contributions – nearly 14 per cent of the wage bill – on to the employers.

UCATT convenor Dave Allen admits this is unlikely to happen, as it would leave the big firms with smaller budgets. “The government knows that if everybody was directly employed, the economy might suffer,” he says.

Bridget Anderson, deputy director and senior research fellow at Oxford University’s migration think-tank COMPAS, says the government should, at the very least, enforce the minimum wage regulations on all workers, British and foreign, self-employed or not.

She says the rhetoric about protecting British jobs was misleading: the curbs had undermined the established workforce while benefitting businesses by giving them a more pliant workforce.

“The more you focus on immigration control, the more you introduce transitional arrangements – the more you create a labour force that is actually more desirable for employers,” she said.

EU members cannot prevent the citizens of other member states from travelling to their countries for work. They can only impose “transitional controls” of the kind currently in place in the UK against Romanians and Bulgarians.

The UK is just one of several EU states that have imposed restrictions on A2 workers. Similar restrictions exist in Austria, Germany, Belgium, France and the Netherlands.

By law, the curbs must be lifted by January 2014. However, a statement issued by the UK Border Agency last year confirmed it would apply similar “transitional restrictions” on all new EU member states to ensure that “migration benefits the UK and does not adversely impact our labour market’’.

The UK’s Border Agency, the immigration minister, and the Department for Work and Pensions all declined to be interviewed for this article.

Sorana Stanescu is a Bucharest-based journalist. This article was edited by Neil Arun. It was produced as part of the Balkan Fellowship for Journalistic Excellence, an initiative of the Robert Bosch Stiftung and ERSTE Foundation, in cooperation with the Balkan Investigative Reporting Network. All photographs from Getty Images.

Sorana Stanescu is a Bucharest-based journalist.

Photo: Getty
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The Conservatives have failed to build an economy that works. Here's what Labour should do next

The failures of George Osborne are only the tip of the iceberg. But there is hope.

In just seven days, Phillip Hammond will rise in the House of Commons and present his first budget as Chancellor of the Exchequer.  How should the opposition respond? There are three important messages that we must communicate.  Firstly, that the Tories have presided over seven years of economic failure. Second, that Brexit presents new threats. Lastly, that there are - Brexit or no Brexit – fundamental weaknesses in the British economy that only a Labour government will ever resolve.

Perhaps given the context of our fundamentally changing position on trade and economic co-operation with our nearest neighbours, the price of a pint of beer, or a litre of fuel, won’t be the big news, for a change. Perhaps the attention of the press will be - as it was at the time of the global financial crisis nearly a decade ago - on the big numbers: sterling, debt, the deficit.

Or, more likely, the pro-Brexit press will give Hammond a pass, as he plays the hand they have dealt him.

All the more important, then, for Labour to shun the seminar room, roll our sleeves up, and make a big noise about the Tory economic failures. To be clear. We are currently nearly 30 points behind the Tories in polling questions about trust to run the economy.  We have a job to do.

Our first task is to demonstrate that even before the EU referendum, George Osborne had dragged down our prospects significantly. When he became Chancellor in 2010 George Osborne set himself one principal economic challenge- to eliminate the UK’s budget deficit by 2015. His failure to meet this target, alongside losing our credit rating, and building up debt, should define him.

Brexit of course then added to these woes. Our country looks set to be plunged further into debt now totalling £2 trillion. By 2020/1 the UK is set to be £210bn deeper in debt than George Osborne forecast at the time of the March Budget, pre-Brexit vote. That means increase in borrowing of £122bn over the next 5 years.

Now, of course the Tories will argue that it is only a matter of time before this is dealt with as long as the economy keeps growing.  Though, note that this is the argument that they criticised Gordon Brown for making in 2006. 

What’s more, Hammond has already let himself completely off the hook.  As the IFS tells us, “Fiscal policy is not currently subject to any fiscal targets that can be met or missed in the remainder of this Parliament.”  In other words, all of those debates we had pre-2015 about the importance of dealing with the deficit were just hot air.  In practice, the new post-Brexit Chancellor has, unseen, reversed Osborne’s stance. 

It is a mystery to me why the Tory press have not criticised his profligacy.  It is amazing that Tory MPs are not queuing up to explain that borrowing today will be heaped onto the backs of our children.  Or perhaps their protestations were just further acknowledgement that it is not actually their children who will suffer if the public finances preclude public investment. It is the many that will suffer. Not the few.

In addition to the failure to get to grips with the public finances, there is a new set of risks to our economic prosperity.

Firstly, the number of people who are self-employed have grown as a proportion of the workforce since the Tories came to power in 2010.  What’s the problem with that you might wonder? The government say we have more people in work than ever before.

The problem is the difference in taxation.  According to the IFS, the tax advantage in lower National Insurance contributions for a self-employed person over an employed person amounts to £1240 per year. And the OBR say the cost of the trend towards self-employment (particularly the growth of owner-manager companies) will mean tax revenues will be £3.5bn lower by 2021-22, than if this form of self-employment had grown at the same rate as conventional employment. 

This is a big problem.  Will this trend continue? Has the Treasury researched that? What if it speeds up? How can we get more employees paying tax? All questions Hammond must answer.

Secondly, Britain’s future age-profile will not be easy on the tax base either. A population that has more older people and relatively fewer people of working age will have greater liabilities to be met by a smaller number of people to pay the tax required.   For example, the IFS tell us that, “simply to keep pension promises and keep pace with rising demands for health and social care beyond 2021-22…we will need to increase annual spending by about £20billion over the next parliament.”

These demographic problems are faced by all western developed countries.  However, in making immigration cuts the driving force behind every policy of the state, the government have placed an unprecedented and unnatural limit around our ability to change our demographic fortunes.

In the end, this immigration policy is like swimming against a strong tide.  As nations develop and educate their citizens, women and men end up having fewer children. And people live longer.  So, rich countries need immigration to even things up between the age groups.  Theresa May can rail against it, but the fundamentals will stay the same.

But as this analysis on the impact of lower immigration on GDP shows, the populist dream-world story that all our problems are down to immigration has real-world consequences. There is an assumption in the minds of those who support Government cutting immigration that it is cost-free, practical, and achievable.  It is none of these things.  It will be costly to our public finances, and bureaucratic for British business.

Meanwhile there are even worse problems that Osborne and Hammond have failed on.

Growth in wages for most people now appears to be unconnected to the growth in the wider economy.  That means that people can no longer expect to do better if the country does better.  That must be fixed if we are to unite our country, post the Brexit vote, as I have previously argued.

And then, to this picture of woe, add the old Tory story: running down public services. 

More cuts in public spending are planned for the rest of this parliament, and worse than that, the parts of government that have already delivered the lion’s share of cuts – local government especially – are on the hook for more.  Given the impact of these cuts on social care, and therefore, the NHS, the modest increase available for health will come nowhere near the change required by the demographic shift in our country. 

This is a profound challenge for the UK, and the Chancellor in particular. Do the Tories wish to preside over more sick older people dying in corridors? Do they wish to exacerbate the flow of our doctors and nurses elsewhere as the stress of NHS cuts becomes too much to bear? Are they happy with people waiting longer and longer in pain, or suffer lonely and alone because they can’t afford simple social care?

We know too from the National Audit Office that while schools are being asked to save £3billion by 2019-20, “against a background of growing pupil numbers and a real-terms reduction in funding per pupil”.  This cannot amount to anything but a cut in resources. And, a generation of young people growing up with ever fewer choices at school, stressed-out teachers, and pressures on parents to pick up the cost of learning, will react in exactly the way I did.  They will learn to hate what Tories do to schools.  They will feel robbed of chances and choices.  And they will never forget.

And in case this appears to be party politicking, it’s not just Labour that say public services are being damaged.  Sir Amyas Morse, the NAO’s Comptroller and Auditor General has described the process of austerity by which he says, ‘significant damage has been done’.   It is all too depressing.

So in addition to the seven years of failure and the new demographic pressures, we have the economic turbulence of Brexit.  At the time of the Autumn Statement, the Office for Budget Responsibility calculated that the cost of the Brexit vote to the public finances was an extra £58bn worth of debt

But of course, that is not the end.  The Tory pursuit of lower immigration, at any cost, will have a substantial cost.  Unless they are prepared to turn away from hard-right policies, we will all have to pay.  The Office for Budget Responsibility have a range of forecasts looking at the future population structure and the consequences for the national finances, if we assume it is desirable to return borrowing to 40 percent of GDP.  The reality is stark.  The difference between their central projection, and their low inward migration projection is an extra £10billion in permanent fiscal tightening.  That’s spending cuts or tax rises.

And worse, Theresa May has made it clear that she is happy to leave the single market, with its common standards and tariff-free access to European consumers for goods that are often made across European borders, rather than within the borders of one European country or another.

Now let me be very cautious here.  We ought not to exacerbate fears for staff in existing sectors that look to be very challenged by Brexit.  There is no benefit to those whose livelihood is at stake in providing a counsel of doom.  But there is clear cause to point out the error of Tory ways, and campaign for a better approach that will create a new deal between Britain and Europe that can satisfy our national interest, and the interests of the other 27 countries in the Union.

When it comes to current economic arrangements with the European Union, there are two crucial agreements that the Tories are trying to unpick.  The first is free movement of European people in order to access labour markets across the EU.  The second is the free movement of goods around the European Union, maintained by the customs union which places an external administrative barrier (regarding rules of origin, and other regulations) around the European Union and Turkey, and removes almost all the barriers within the Union.  According to the Government, they wish to get out of this union in order to have the freedom to negotiate new Free Trade Agreements with other countries.  This is a highly disruptive approach.  Many British workers are employed by multinationals: global companies that rely on multinational supply chains to make their products.  You can’t just place administrative barriers in their way and expect zero impact, in the hope of Free Trade Agreements that may never come.

These though, are the medium-term risks.  We can already see the immediate cost of Brexit.  The fall of sterling against the dollar and the euro provides a clear judgement on the relative strength in the British economy compared to the USA and the Eurozone.  The Bank of England says that there is evidence that the falls in the value of sterling are related to perceptions of the UK’s future trading arrangements, and that the volatility we have seen since the Brexit vote looks set to continue.

The fall in sterling is an important factor in the inflation rise that the Bank predicts.  Recall the lack of growth in real wages since the crash.  If inflation picks up, and employers are unable to match price growth with wage growth, the price of Brexit will become ever more clear. Not just in our national accounts, but also in our personal accounts.  

Price rises will inevitably hurt those on fixed incomes.  But the impact of rising prices will also be felt by those who the government has targeted for cuts: low-earning, working families. The freeze on tax credits, and other parts of the social security system that support people of working age, will become more painful as inflation kicks in. Further, it will make life harder for those struggling to keep small businesses going in low-pay areas, and exacerbate the pre-existing crisis in town centres that are fail due to having too few customers.  Sadly, it is many towns that voted overwhelmingly in favour of Brexit that, without help, will be at the sharp end of any downturn.

In many ways, whilst Brexit has caused this drop in the value of sterling, the inflation versus wages and tax credits squeeze will be demonstrated in a worsening of economy for those locked out of growth, in a fashion that was ever-present since the global financial crisis. It is a ‘same as it ever was’ weakness in the British economy. The lack of shared growth is not new, but Brexit makes it worse.

And it is a problem that hurts families as parents wrestle with the financial stress, and guts confidence in towns all across Britain.  Sadly, that’s not the only weakness we’ve lived with for far too long. 

Yes, I remain deeply concerned about the impact of Brexit on my constituents and my country.  Yet the greatest failure of the past seven years is not the Brexit vote itself. 

That vote may be the cause of economic risk and insecurity.  But it was also the consequence of economic insecurity.  Too many people in our country did not have a stake in the status quo, so quite logically voted for change. They expressed their disquiet with the Tories who had done far too little to change the fortunes of the many.

And there is no clearer indication of the unhealthy state of UK economic policy than the state of our infrastructure and housing.  The OECD has told us that “protracted underinvestment has taken its toll on UK infrastructure.”  This is true.  But what’s more, our infrastructure investment is exacerbating, not dealing with, profound imbalances in the British economy. 

But first consider the length of time it has taken the UK to decide about airport investment.  Crucial infrastructure beset by politics on all sides.  The same could be said for HS2.  It has taken so long to decide to do it that the debate has crowded out all discussion about other railways infrastructure needs. Similarly on energy. Political parties might disagree about the energy mix, but the increased capacity as a whole that our economy requires rarely receives the attention it deserves from policy makers.  The Tories rightly adopted Ed Ball’s idea of a National Infrastructure Commission.  But it isn’t clear that the process for taking decisions is developed enough yet to move investment on more quickly.  The NIC is still dealing with a plethora of local authorities, and the absence of devolution to English regions makes this process unnecessarily cumbersome.  George Osborne’s city deals does little to resolve this problem given that they cover a very limited section of the population.

Yet it’s not just as simple as a lack of capital investment in our infrastructure, or investment being dragged out too slowly. Analysis by Sheffield Political Economy Research Institute last year highlights a staggering regional inequality in infrastructure spending in our country. Based on figures from the government’s own national infrastructure pipeline, they found that planned infrastructure spend per capita in London (£5305) was over two and a half times that in the North West (£1946), over six times that in Yorkshire and Humber (£851) and thirteen times that in the North East (£414).

Poor infrastructure is a key driver of low productivity, according to the ONS GVA per hour in London is around 30 per cent above the national average, while every other region bar the South East lags well behind. But it also influences housing.

When investment and jobs growth is concentrated in the South East, it causes overheating of the economy there. Figures from the DCLG show that 44 percent of the projected growth in the number of households in England by 2039 will be in London and the South East. This in turn has an effect on house price growth, with London house prices racing away from the rest of the country. The practical effect is that the regional imbalance in the economy is becoming bad for London too as even high average London wages struggle to keep pace with the rising cost of housing. Instead of increasing supply to keep try to take the heat out of the housing market, the government has driven demand through policies like Help to Buy that have only fuelled more growth in house prices in the overheated capital.

The National Infrastructure Commission does not have housing infrastructure under its remit.  Surely this is a mistake that must be corrected?  New towns built in the post-war years are popular places to live, take the heat from cities, and could continue to be developed.  And possibly, the NIC could consider the scope for new New Towns in the north where there is existing infrastructure that could be developed alongside them to build up the case for businesses to relocate away from the south.

And as well as financial capital for new infrastructure, we also need to consider how long the UK has struggled with developing human capital also.  Unemployment may be low.  But there are a sizable number of people who could join or do better in the labour market if they were able to gain further skills.  And what’s more, low productivity in Britain requires an effective plan to raise the skill level of those in work.  We cannot sustainably grow any other way.

This, sadly is not a new analysis. The same could (and was) said of Britain a decade ago.  Reviews of skills training in 2006 and 2011 said that we needed a concerted effort to raise not just the number of apprenticeships, but crucially, the quality of training available to apprentices. Since Leitch, a decade may have passed, but we still witness the same problem of low skills concentrated amongst groups of people in specific areas of the country.

Unfortunately, the government’s central policy on apprenticeships will not resolve this problem either.  As the IFS have explained, the apprenticeship levy will raise in tax, “far more money than the additional resource planned to go into apprenticeship training.” Nearly £3billion of new taxation, much of which will not be spent on the skills training it is designed to promote, and worse, a tax that - because it is a payroll tax - is likely to reduce wages even further.

The problem doesn’t end there, however.  Government training schemes – such as Train to Gain or previous apprenticeship models - in the past has often driven firms to simply re-label existing schemes, in order to meet Government targets.  This mistake is repeated yet again with the apprenticeship levy.  It is time we took a whole new approach.

Add to this cuts to colleges of further education.  Now, whilst it is right that young people have a structured route to good on the job learning through apprenticeships, we also have a large number of people in work already who need to improve their skills.  For those whom school was not a success the first time around, colleges can be a second chance.  Yet funding for adult education has been cut by 14 percent in real terms since 2010.  Of course, standards, must be high, spending for the sake of it won’t work.  But we need to rebuild these important institutions that can offer adults a chance to change course, or correct the mistakes of the past.

In much of the discussion about new technology, the assumption is that there will be less work for people to do.  What economic history tells us, however, is that it is actually likely to be different work.  And that while status, culture and identity may be significantly changed, the idea that people will be happy to exist on state hand-outs rather than with the dignity of work for a living is wrong.

The profound mistake of the Thatcher period was that during rapid economic change, little attempt was made to smooth the path between one kind of work and another.  We ended up with large numbers of people existing on benefits, while we had a skills shortage elsewhere. In some ways the change was too rapid, too abrupt for any policy to combat the negative impacts.  Inequality rose so rapidly as the City ballooned and manufacturing fell sharply.  Imagining a way through that combination of the Big Bang of new technology in the City of London, and the long-term shift away from manufacturing, that didn’t leave some people feeling left out is hard.

But that is a lesson to us about what the consequence could be of very disruptive new technology today.  The institutions of the state are very important in smoothing the path when the economy is changing rapidly, and surely the lesson of the 1980s is that if the state does not play its part, poverty and inequality will blight British towns for a generation.

Those institutions we need at a time of turbulent chance do not end with adult education.  The Beveridge plan for a welfare state was written at a time when it was just assumed that women would not work if they were looking after children.  It is a world that no longer exists, and is not coming back.  That is why one of the newer functions of the state: as a commissioner and funder of childcare is such a vital area of policy in responding to the current economic turbulence.  Yet, for an issue that was at the heart of the general election in 2005, 2010, and 2015, the issue of childcare is now relatively overlooked.   

This is ludicrous.

Tooley Street Research found that those working in low pay sectors, such as retail, were held back from seeking promotion because of lack of effective childcare.  If dealing with low skills is one part of tackling Britain’s productivity crisis, then challenging ourselves to reach towards free universal childcare must be another.  We need to free those with childcare responsibilities to put all their skills to work if they choose to.

Often though, pre-school childcare has been seen purely through the lens of child development. So, whilst free childcare for low income families with two-year-olds is having a positive impact on the development gap pre-school, the problem with a system that targets resources just at those with least (as the extended hours for disadvantaged two-year-olds does) is that you inevitably don’t reach everyone who could benefit. And resentment is likely to occur between those getting more help and those who aren’t.

Moreover, the current restrictions the government is placing on the new extension to 30 hours of free childcare for three and four-year-olds for working parents, fails to enable those in training or those looking for work to do so – this is where the biggest gains in productivity lie. Take the means test away and everyone can focus on that which really matters in childcare: quality and availability. We know that good quality childcare during the early years can be the difference between confident parents and children, ready to get the most out of school, and those who are falling behind already at too tender an age.

And universal childcare need not be as expensive as other parts of our social security system. We currently on spend about £6bn a year on childcare, compared to around £100bn on the state pension. A moderate increase in commitment to our nation’s children would enable more parents to work, which would be good for the government’s income, the prospects for those families, and would help to tackle the productivity gap that has held our country back. In fact, investment in childcare would pay for itself in the medium term through higher tax receipts and lower welfare bills. The IPPR has calculated that for every woman that returns to work after one year of maternity leave, thanks to universal childcare, the government would gain £20,050 a year in the medium term.

But, while institutions like colleges and childcare help everywhere, as we plan for our future, I cannot help but see the greatest challenge we face is the unequal nature of our economy.

As discussed above, the huge difference in infrastructure spending in the difference regions of our country is representative of an economy that is fundamentally divided.  And, this economic inequality has led to deep dissatisfaction in many parts of our country.

That change that happened in the 1980s – with the city of London charging ahead, and areas of mining, manufacturing and heavy industry falling way behind – scarred the economy in many parts of the north and midlands of England.  It was hard for younger people to see a way ahead, so many of them left. This has left towns dominated by older people, those existing on disability benefits, and lower skilled jobs for example in care or retail. 

Yet – despite this maddeningly unequal picture - the OECD acknowledge that Britain had in reality had no regional development policy at all since 2010. None at all. And, they have demonstrated that productivity gains were in reality only made in Greater London and Scotland between 2000 and 2013.

The truth is, despite the pause in inequality growth as Gordon Brown fought off poverty through Labour’s time in office, in some important ways, we are still living with the long hangover of the Thatcher years. Cities like Liverpool, Newcastle, Sunderland and Birmingham, now up off their knees, have been placed at risk again by the Tories. And what Thatcher began, Brexit could finish for good.

Labour must have a power-sharing plan that cannot be undone as George Osborne undid the regional institutions that were addressing inequality.  We now need a permanent settlement.

Seven years of Tories wedded to austerity for local government, ignoring the knock-on consequences for hospitals and schools, and prioritising tax cuts for corporations, has taken its toll.

The UK’s budget is still – nearly a decade after the global financial crisis – in deficit.  Our debt is rising, and the combination of long-term shifts in our liabilities, the Bank of England’s market operations, and the movement of sterling makes this a more risky situation than ever.

Meanwhile, even the head of the National Audit Office is spelling out the damage done to public services by austerity handed out by the Treasury to town halls.  Notably but not uniquely, social care is underfunded.  Pensioners who were once allowed to be generationally poor by the Thatcher and Major Governments are now left in their 80s and 90s without sufficient care to end their life with dignity.  The Conservatives could not be more blameworthy.

And Brexit is both consequence and cause of their failure.  The vote was a vote of no confidence by the public in Cameron and Osborne’s plans for Britain.  Now Theresa May has a mapped out a Britain that takes a lead from the hard right and the far right, rather than the rhetoric she herself has employed.  It is party and politics first, economics and the national interest a poor second.

Labour’s job is to consider again the long term strategic weaknesses in our economy.  Whether that is rebalancing through infrastructure, housing, and major sites of employment, or making sure there is a ladder from entry level work, through training, to a career, we must have a new vision for Britain.

In the end, our economy matters not for its own sake.  It is the means not the ends.  But the ends are important. The economy is the means by which British people are able to be and do all the things they might wish. 

Their dreams and hopes  - British dreams and British hopes - count for something, and people cannot just be left with the terrible hand the Tories have dealt them. Labour has a job to do to rebuild our economy, and it’s a job that cannot wait. 

Alison McGovern is Labour MP for Wirral South.