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Whose Recovery Is It Anyway? The Appalling Inequality Behind Britain's Two-Tier Economy

30/12/2013 15:35 GMT | Updated 28/02/2014 10:59 GMT

The last year has been a particularly good one for Britain's richest people. Taxes are down, the luxury market is booming and executive salaries have increased by an average of 14%. On top of that the wealth of the 1000 richest people in the country has hit a record level of £450 billion, up by an eye watering £35.4 billion since 2012.

They're not the only ones who have been celebrating. It's also been a great year for Wonga, who have seen their profits increase by 35% on last year to a staggering £84.5 million. In fact the whole pay day loan industry has had a pretty good year of cashing in on the nation's debt, with some estimates suggesting that the sector now has two million customers with loans worth £2 billion.

The two worlds of executive boardrooms and pay day loan customers may seem distant and remote, but in the area I live I'm only a short walk from some of the most expensive properties in the western world, as well as some of the worst poverty in the country. We may be at the start of a recovery for CEOs, bankers and big business, but there is little sign of any recovery for the squeezed middles classes, the 350,000 people who are using food banks or the growing number of people living on our streets.

Although the recent fall in unemployment should be welcomed it should also be viewed in context. Unemployment may be down, but it's still nearly 1 million higher than it was in 2008, and long term unemployment - those out of work for a year or more - hasn't fallen at all.

Much of the government's response has focused on trying to paint the long term unemployed as a feckless work-shy bunch, while simultaneously trying to 'make work pay'. This isn't being done by improving the wages or working conditions of those in work, but rather by the traditional tabloid friendly tactic of bashing the poor and cutting welfare.

The picture it creates is one of a government intent on fighting the poor rather than poverty itself. The botched delivery of the universal credit policy has been complemented by a whole barrage of new and tough policy announcements, including Atos assessments, threats to cut benefits for people under 25 and the unfair bedroom tax, with some high-ranking Tories even pushing for a two-child cap for child-benefit recipients.

Many of the recent reforms have hit the worst-off people, but they're also hitting those in work. For example, the Institute for Fiscal Studies has found that changes to welfare have also affected 7 million working people, incuding a number on the lowest incomes. This is exacerbated by the rise in part-time employment, with many unable to find the full-time jobs they are looking for. ONS stats show that the number of people working part time has reached its highest level since records began, having doubled since 2008.

The Joseph Rowntree Foundation has found that despite all the talk of 'strivers and skivers', a majority of the 13 million people in poverty come from working families. On top of that The New Economics Foundation has concluded that Britain has seen the greatest fall in living standards since the Victorian era, with a level of wealth inequality to match. Even in the few parts of the country where average wages are increasing they are falling behind the cost of living, which is rising at over twice the rate.

Nowhere is the consequence of a two-track Britain more clearly reflected than in our health. Over the last 20 years the gap in life expectancy between those in the richest and poorest areas has increased by over 40% for men and 70% for women. For example, men living in East Dorset can expect to live for almost a decade longer than those in Blackpool. Even in London there is an 18 year difference in 'healthy life expectancy' between women living in Richmond (72 years) and Tower Hamlets (54 years).

Another example of the impact of the two tier recovery is in regard to housing. Current forecasts predict that house prices will increase by 8% in 2014, which is obviously great news for those with property, but not for those who are looking to buy or those who rent. Schemes, such as the government's 'Help to Buy' programme may inflate demand, but they do little to encourage building. It's not just property prices that are getting silly though, earlier this year we saw the absurd spectacle of a parking space near Hyde Park being put on the market for £300,000.

It would be too easy to lay the blame for all of this at the gates of David Cameron and everyone at 10 Downing Street, but none of the trends I've described are new. They're the result of years of a political culture that has all too often focused on deregulation and the interests of the super-rich, and not enough on the plight of those affected by poverty, or even on average Britons who have seen their spending power cut and their children graduating into a system that has normalised debt and job insecurity.

At the same time public trust in an increasingly pampered and alien political class has been steadily eroding. A recent ICM poll found that 64% don't trust politicians to keep their promises, while almost half (46%) believe they're only in it for themselves. Only 16% describe their attitude towards politicians as 'respectful' while 47% describe theirs as angry. Some of this anger has been manifested through protests and riots and some through increased sales of Russell Brand DVDs, but much of it has been through declining party memberships and electoral turnouts, particularly among the people who are feeling the brunt of cuts and austerity.

If we were to judge the wellbeing of the nation by the changing skyline of the City of London or the number of designer handbags then we would be on the verge entering a new golden age. However this only tells one side of the story, the other is told by widespread political apathy, increasing household debts and the ever-growing queues at food banks and pay day loan companies. What is clear is that many of those at the top are seeing the upside of the economic recovery, but for millions of people up and down the country there has been no tangible benefit from a two-track recovery that is not only the result of grotesque inequality but is also exacerbating it.