North South divide – the disproportionate impact of government cuts

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2012 National Delegate Conference
27 February 2012

The North East economy was growing at the same rate as London until 2009. Until 2008 there was an increase of over 11.2% in the number of North East residents in work, against a national average of 9.2%. Compare this to where we are now with an unemployment figure of 12% the highest in the UK. Up to 2008 we had a 9.2% increase in private sector employment. We also had a 17.7% increase in the region among the self employed. Since the inception of the Coalition government we have witnessed the widening inequalities between regions, increasing the North South divide and disproportionately damaging the North East economy and people.

While we recognise that the North East is not alone in feeling the impact of the slash and burn policies of the government, there is a disproportionate impact on the North East.

One in three jobs in the North East is in the public sector. 46% of all working women in the region work in the public sector. With an unemployment level of 12% in the region this means that one in every eight people in the North East is unemployed. This is the highest level of unemployment in the country. In addition the region has seen a drop in full time and the increase in part time employment. In the North East 60,000 part-time workers are looking for full time employment.

All of our regions have suffered pay freezes, VAT increases, a collapse in consumer confidence and job insecurity and redundancies. In his Autumn Statement, George Osborne announced a further 1% cap on public sector pay. In the public sector in Northern region we are looking at losing 2,000 public sector jobs a month. While we are haemorrhaging jobs in the public sector the private sector is not filling the gap. Unemployment in the North East has increased by 19% in the last 12 months. There has been a 28% fall in the number of young people aged 16-17 in employment. In Hartlepool, for example, there are 23 jobseekers for every vacancy. 60,000 part-time workers in the region are looking for full time employment. The number of women in work across the North East has fallen by 19,000. Unemployment of women in the region has increased at twice the rate of men. With two in three jobs in the public sector done by women, it is women who are bearing the brunt of the government’s public sector job losses. The Coalition’s changes to tax and benefits show that 72% of these changes adversely affected women. The TUC has projected a 16.5% drop in the living standards of members in the public sector over the course of this Parliament.

One in five children in the North East live in poverty. The Child Poverty Action Group has highlighted how the job shortage in the region exasperated by further public sector job losses will lead to rising child poverty. Ten of the North East local authorities have child poverty levels above the UK average of 21%.

The Council of Mortgage Lenders has shown that one in four mortgage holders in the North East are in negative equity compared to one in seven across the UK. This is further evidence of the contraction of the regional economy compared to Southern regions where house prices have increased in Southern regions over the last year. Standard and Poor rating agency, has projected that the North South divide will worsen with further public sector job losses. Shelter has identified the North East as the UK hotspot for house repossessions.

Cambridge University ‘s Department of Land Economy predicts that in the rented sector the North East will see up to 12,000 evictions as a direct consequence of the government’s policy on housing benefit cap. Only 10% of housing benefit recipients are unemployed, and are facing a severe housing crisis. This will harm a significant number of working households and pensioners in Northern region.

There are instances of good practice in the public sector for example Newcastle City Council who are looking towards introducing a living wage policy across the city, despite the bleak economic situation and promoting a buy in from the private sector.

The Association of North East Councils has highlighted how changing the basic revenue support grant reduces compensation to those councils with the most homes in the lowest council tax band. This will lead to further job losses and poorer services in the North East that rely on public services the most.

Conference calls upon the National Executive Council to:

1) continue to promote and develop an alternative economic strategy which recognises the need for real investment in quality public services and public service jobs;

2) pursue a high profile campaign against the public sector pay freeze and for the maintenance of national pay structures and to analyse the potential impact of regional pay bargaining;

3) campaign for investment in apprenticeships, training and real jobs for young people;

4) campaign to defend employment rights, particularly the right to time off for trade union duties and activities;

5) seek ways to extend the living wage.