Britain’s unbalanced economy offers no real recovery for the forgotten millions

The recent return to growth is welcome. Particularly after the Government’s misguided economic plan starved the economy of it for two and a half years, and left ordinary people much worse off. Tax and benefit changes cost the average household £891 in this financial year (according to the Institute for Fiscal Studies) on top of the relentless fall in real wages. Of the thirteen million people now in poverty in Britain, over half are in working households. Two in every three children growing up in poverty are in households where at least one adult is working. No wonder three-quarters of people in our country are now worried about the price all of us will pay for this rising inequality.

For my constituents, and millions like them across the UK, there has been no comeback on living standards in an economy described even by the Business Secretary as “dangerously unbalanced”. Of the shockingly low 29,000 adults in my constituency in paid employment (where 65,000 are on the electoral register), some 16.5% took home less than a living wage. In real terms, the wages of working people in Glasgow North East were nearly 5% lower than the previous April. The latest ONS survey of hours and earnings showed in the year to April 2013, the median wage in my constituency fell in cash terms by 1.8% to just £342 a week, with mean wages down 2.3%, before the cost of living was factored in, with CPI inflation having averaged at 2.7% over that period. The costs of food and energy have risen far higher than this and place an even larger burden on the working poor.

Recently, Skills and Enterprise Minister Matthew Hancock attempted to persuade people with a partial set of statistics that the cost of living crisis was a figment of their imaginations, but even in his own constituency of West Suffolk nearly three in ten people going out to work take home less than a living wage. Ask people if they feel better off after paying their electricity and gas bills, travel costs, or after the weekly food shop? Total hours worked are higher than in 2008, but real median wages are considerably lower – under David Cameron and George Osborne ordinary people are working harder than ever but have a lot less to show for it.

A real recovery for the forgotten millions would mean an increase in the employment rate with a jobs guarantee to help young people and the long-term jobless into a life bettered by work, rather than an existence endured on out-of-work benefits. It would also mean reversing the real terms 5% drop in the value of the national minimum wage under the Coalition. It would mean sorting out the looming chaos of Universal Credit, which threatens work incentives for lone parents trying to work more than twenty hours a week. It would mean removing the barrier to jobs or working longer hours that lack of accessible childcare creates, acting as a brake on raising living standards for many households.

Last week in Parliament, I quizzed Vince Cable twice on the UK’s woeful record on productivity on his watch – down in seven of the last nine quarters at a time when the jobs market has remained slack and pressures on unit labour costs weak. Similarly, business investment has flatlined, and our trade deficit particularly in goods has remained high over the last twelve months – hardly the march of the makers which the Chancellor promised for the UK economy in his 2011 Budget.

Added to this, there is evidence of growing skills shortages in the economy which threatens the long-term sustainability of growth, and poorly accessible workplace training impedes the ability for progression in work or the prospect of workers moving to a higher paid job, a problem identified by the CIPD this week.

My constituents and millions like them need an economy which restores the link between their efforts in the workplace and wages, where every region or nation within the UK shares in rising living standards, and one which is less dependent on a surge in house prices, or consumers running down savings or taking on more credit, in order to fuel growth.

Only a Labour Government can get to grips with the root causes of this unbalanced recovery – lack of a sectorally and regionally balanced industrial policy, weak business investment, skills shortages, poor export performance, a worsening productivity crisis, the lowest number of new housing starts since the 1920s, and mass underemployment. We need to earn and make our way to a real recovery for Britain with a long-term shift in favour of rising living standards for ordinary people.

William Bain is Labour MP for Glasgow North East and a member of the Business, Innovation and Skills Select Committe