Welcome to Cabinetland: The worsening inequality between Britain's rich and poor is shameful

The economic divide in Britain, hastened and worsened by the north-south divide, is wider now than any time since the war, and it is getting worse. That income inequality became worse during the boom is deeply regrettable. But that this has continued into

At the last Prime Minister’s Questions of the session David Cameron was triumphant. “Britain is getting stronger,” he proclaimed. Labour MPs, with caseloads filled with vulnerable people seeing their standard of living collapsing, were incredulous.

As the Coalition moves into its fourth year, the gap between the government and the opposition has widened to more than politics. Increasingly, the two opposing benches reflect two entirely different countries.

In one of these countries, unemployment is 2.6 per cent. The number of people claiming Job Seeker’s Allowance is down over nine per cent on last year. Youth unemployment has plummeted by 19 per cent in the last 12 months, and even over-50s unemployment is down. Each constituency has just 300 people unemployed for longer than twelve months.

These are the average figures for the 21 MPs who are full Cabinet members.

In the other country, there are no Tory MPs. Unemployment is 13 per cent. Every constituency has over 6,000 people looking for work. A quarter of them are under 25. One in three of those people has been looking, fruitlessly, for over a year.

This is the typical situation in the ten constituencies worst affected by the economic incompetence of the Coalition. My own hometown of Middlesbrough, which I now have the honour of representing, is among them.

As David Cameron enlists the help of Barack Obama’s campaign manager Jim Messina, it is perhaps worth looking at the message that handed the US President his only electoral defeat, that of the 2010 midterm elections. The message, repeated ad infinitum by the Republicans, was simple. “Where are the jobs?”

The claim from the Coalition is that “There are more people in work than ever before”. This claim is emblematic of the torturing of figures this government has been pulled up on repeatedly by the UK Statistics Authority. There are more people in work than ever before because Britain has more people than ever before. But the number of people unemployed is higher than it was in 2010. The rate, 7.8 per cent nationally, is unchanged since the Coalition came to power.

Despite herding people onto unpaid workfare schemes and counting that as a job.

Despite freezing the minimum wage for young people at a time of high inflation, cheapening their labour.

Despite a million people on zero hours contracts, unsure of if they will be granted the right to work today.

Further, productivity has fallen. The output per hour of private-sector workers fell by almost four per cent in the year to October 2012, according to data from the Office for National Statistics. Figures for the economy as a whole were not much better, with a 2.4 per cent decline in productivity over the year.

There are more people, working longer, in worse conditions to produce less value. Yet George Osborne has the nerve to crow about an ephemeral 0.8 per cent increase in GDP, in what is now the longest depression in British history.

Nothing has changed. For over three years this government has been treading water. It has done so with impunity, because the people it represents are doing fine. Your income is down, but the FTSE is up.

The targeting of the government resources echoes this twisted view. In response to the chronic household shortage in the UK, the government could have announced a mass house building programme. This would simultaneously have generated jobs for skilled and unskilled labour, in a construction industry still languishing at 14 per cent below capacity.

Instead we got George Osborne’s “Funding for Lending Scheme” (FLS). As of the end of March this year the scheme gifted £16.5bn of low interest loans to the banks. The effect? Mortgage rates have got cheaper, but primarily only on loans where those remortgaging or buying have at least 20 per cent equity in their home, or an equivalent deposit. The people the Chancellor thinks are really in need are those trying to buy a home with only fifty grand in the bank.

Universal credit will be “digital by default”, because who doesn’t have a computer? Benefit payments will be delayed an extra week, because who doesn’t have an overdraft? Legal aid will be cut because who doesn’t have a lawyer on retainer?

The economic divide in Britain, hastened and worsened by the north-south divide, is wider now than any time since the war, and it is getting worse. That income inequality became worse during the boom is deeply regrettable. But that this has continued into the bust is shameful. The average wage rise for those in work who don’t receive bonus payments is just one per cent, while inflation is more than double that. Meanwhile there was a sharp jump in bonus payments in the financial services sector in March this year: end-of-financial-year bonuses were 64 per cent higher than in March 2012.

Whether the blindness of the Coalition to the sufferings of ordinary people is deliberate or merely accidental does not matter. The compact between the richer and the poorer of Britain, Disraeli’s two nations, benefits us all. The deeply corrosive affect it has upon our society might start in Middlesbrough, or Birmingham Ladywood, or West Belfast, but the long term effects of inequality make life worse for everyone.

Andy McDonald is the Labour MP for Middlesbrough

William Hague and David Cameron. Photo: Getty
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Will the collapse of the EU/Canada trade deal speed the demise of Jean-Claude Juncker?

The embattled European Comission President has already survived the migrant crisis and Brexit.

Jean-Claude Juncker, the embattled President of the European Commission, is likely to come under renewed pressure to resign later this week now that the Belgian region of Wallonia has likely scuppered the EU’s flagship trade deal with Canada.

The rebellious Walloons on Friday blocked the Comprehensive Economic and Trade Agreement (CETA). The deal for 500 million Europeans was at the final hurdle when it fell, struck down by an administration representing 3.2 million people.

As Canada’s trade minister, Chrystia Freeland, walked out of talks in tears and declared the deal dead, fingers were pointed at Juncker. Under pressure from EU governments, he had agreed that CETA would be a “mixed agreement”. He overruled the executive’s legal advice that finalising the deal was in the Commission’s power.

CETA now had to be ratified by each member state. In the case of Belgium, it means it had to be approved by each of its seven parliaments, giving the Walloons an effective veto.

Wallonia’s charismatic socialist Minister-President Paul Magnette needed a cause celebre to head off gains made by the rival Marxist PTB party. He found it in opposition to an investor protection clause that will allow multinationals to sue governments, just a month after the news that plant closures by the world’s leading heavy machinery maker Caterpillar would cost Wallonia 2,200 jobs.

Juncker was furious. Nobody spoke up when the EU signed a deal with Vietnam, “known the world over for applying all democratic principles”, he sarcastically told reporters.

“But when it comes to signing an agreement with Canada, an accomplished dictatorship as we all know, the whole world wants to say we don’t respect human right or social and economic rights,” he added.  

The Canadian Prime Minister Justin Trudeau was due to arrive in Brussels on Thursday to sign CETA, which is backed by all EU leaders.

European Council President, Donald Tusk, has today spoken to Trudeau and his visit is currently scheduled to go ahead. This morning, the Walloons said they would not be held to ransom by the “EU ultimatum”.

If signed, CETA will remove customs duties, open up markets, and encourage investment, the Commission has said. Losing it will cost jobs and billions in lost trade to Europe’s stagnant economy.

“The credibility of Europe is at stake”, Tusk has warned.

Failure to deliver CETA will be a serious blow to the European Union and call into question the European Commission’s exclusive mandate to strike trade deals on behalf of EU nations.

It will jeopardise a similar trade agreement with the USA, the Transatlantic Trade and Investment Partnership (TTIP). The Commission claims that an “ambitious” TTIP could increase the size of the EU economy by €120 billion (or 0.5% of GDP).

The Commission has already missed its end of year deadline to conclude trade talks with the US. It will now have to continue negotiations with whoever succeeds Obama as US President.

And if the EU cannot, after seven years of painstaking negotiations, get a deal with Canada done, how will it manage if the time comes to strike a similar pact with a "hard Brexit" Britain?

Juncker has faced criticism before.  After the Brexit referendum, the Czechs and the Poles wanted him gone. Hungary’s Prime Minister Viktor Orban muttered darkly about “personnel issues” at the Commission.

In July, it was reported that Angela Merkel, the most powerful politician in Europe, was plotting to oust Juncker. Merkel stayed her hand, and with German elections looming next year is unlikely to pull the trigger now.

When he took office in November 2014, Juncker promised that his administration would be a “political Commission”. But there has never been any sign he would be willing to bear the political consequences of his failures.

Asked if Juncker would quit after Brexit, the Commission’s chief spokesman said, “the answer has two letters and the first one is ‘N’”.

Just days into his administration, Juncker was embroiled in the LuxLeaks scandal. When he was Luxembourg’s prime minister and finance minister, the country had struck sweetheart tax deals with multinational companies.  

Despite official denials, rumours about his drinking and health continue to swirl around Brussels. They are exacerbated by bizarre behaviour such as kissing Belgium’s Charles Michel on his bald head and greeting Orban with a cheery “Hello dictator”!

On Juncker’s watch, border controls have been reintroduced in the once-sacrosanct Schengen passport-free zone, as the EU struggles to handle the migration crisis.

Member states promised to relocate 160,000 refugees in Italy and Greece across the bloc by September 2017. One year on, just 6,651 asylum seekers have been re-homed.

All this would be enough to claim the scalp of a normal politician but Juncker remains bulletproof.

The European Commission President can, in theory, only be forced out by the European Parliament, as happened to Jacques Santer in 1999.

The European Parliament President is Martin Schulz, a German socialist. His term is up for renewal next year and Juncker, a centre-right politician, has already endorsed its renewal in a joint interview.

There is little chance that Juncker will be replaced with a leader more sympathetic to the British before the Brexit negotiations begin next year.

James Crisp is the news editor at EurActiv, an online EU news service.