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Michael is fair haired and frail, with a face that tells a story. Until seven years ago his life was perhaps as he imagined it. He was married and working for a fancy food shop in his home town in north Yorkshire.

Then something happened. He is reluctant to share the full details but his marriage broke down, he lost the job, and was left with a choice: “It was to be homeless, or move to a bedsit in Middlesbrough,” he says.

Which is how we come to be speaking in the Employment Hub on Corporation Road, opposite Middlesbrough’s Jobcentre.

A council-backed centre, it offers help and guidance to anyone looking to get back into work.

Young adults making the leap from education to employment; older people who want or need to earn again; and clients like Michael, who fall somewhere in between, derailed by illness or personal circumstances.

‘I’ve lost my confidence’

He has not worked for six years and he’s here to try to change that. “With not being in work for a while I’ve lost my confidence,” he says.

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“I got stuck in a routine and I’m not the best at helping myself out at times. You feel like you’re stuck. It would be nice to get back into a work routine. You feel better in yourself through having a job.”

Michael has an appointment with Doug Hewitson, once long-term unemployed himself. He points clients towards an array of services they might need to help them work, from compiling a CV and getting basic qualifications, to training and work experience opportunities.

“We primarily work with retirees, the short-term sick and people with young families, that tends to be with children younger than two,” Doug says. “Generally, they will be on a type of universal credit that doesn’t have the requirement to seek work attached to it. And we have a lot of them.”

50 Futures business development officer Doug Hewitson
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50 Futures business development officer Doug Hewitson

The Employment Hub is trying to help fill a gap that exists across the country as the economy struggles with a labour market crisis that has nothing to do with the number of jobs.

Unlike the unemployment crisis of the 1980s, there are plenty of opportunities, close to a million vacancies at the most recent count. The problem is finding people to fill them.

Since the pandemic almost 800,000 people have fallen out of employment into “economic inactivity”, a catch-all definition that covers the nine million people of working age not currently able or looking to work.

That includes students, early retirees and stay-at-home parents and carers, but the largest and most pernicious reason is long-term sickness, which now accounts for more than 2.5 million people, an increase of more than 400,000 since COVID, driven largely by mental health conditions.

‘There is a stigma attached to going to work’

That has held back growth and pushed the welfare bill up, and the issue has gained political salience with Rishi Sunak characterising some mental health challenges as “the ups and downs of everyday life”.

Unemployment, inactivity and workless households are all above the national average in Middlesbrough and the Tees Valley but they are not unique.

“You can walk out on the High Street now and find several people who are economically inactive,” says Philip Bentham, who leads the employability team at housing association Thirteen in Stockton-on-Tees, which aims to help people into work.

“For some it’s health, mental health, low skills and qualifications, or generational unemployment. We’re working with families who are three and four generations unemployed within the household, mum and dad and grandparents that have never worked.

“Quite often there is a stigma attached to going to work. Their families are afraid of not having the safety net of the benefits system, and people sometimes sadly think work doesn’t pay. Our job is to convince them there is always something they can do.”

Middlesbrough Transporter Bridge
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Middlesbrough Transporter Bridge

The state response to worklessness is Universal Credit, a single payment that covers benefits for housing, children and childcare, as well as unemployment benefit, administered by the Jobcentre Plus network.

At Middlesbrough’s Corporation Road branch a steady stream of claimants arrive for their strict 10-minute appointments, watched by up to four security guards.

A mix of carrot and stick

In principle it’s a deal between the state and the claimant, a mix of carrot and stick. Claimants who can work are required to attend weekly meetings with a work coach and take steps to find a job. Fail to do this and you can be “sanctioned”, often by reducing cash payments.

If you are too sick to work however the requirement to look for a job falls away leading to the suspicion, apparently shared by the prime minister, that some claimants are citing mental health conditions to get signed off.

I ask work coach Michaela Fulleylove if some people do play the system.

“I’m saying yes, definitely. But we have to treat every individual with trust, fairness and compassion.

“But we have to be able to ask questions, because not only is it our job to support the public, we’ve also got to protect the public purse.”

For all the challenges in Middlesbrough and the Tees Valley there are opportunities.

The demise of ICI and British Steel, huge paternal employers that offered their own safety net, left a gap that has never been adequately filled.

The latest attempt is levelling up, largely channelled through the Tees Valley mayoralty of Ben Houchen.

Louise Croce, AV Dawson people and culture director
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Louise Croce, AV Dawson people and culture director

Europe’s largest brownfield development, the controversial Teesworks freeport, is taking shape and there are advanced manufacturing opportunities in the renewable energy industry serving a huge new offshore wind project at Dogger Bank.

Thousands of jobs are promised, an incentive for the workforce and a challenge for employers.

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AV Dawson has operated the Port of Middlesbrough in the shadow of the town’s landmark Transporter Bridge for 80 years.

They employ around 200 staff and people and culture director Louise Croce tells me they have no problem filling roles or retaining staff.

‘We get people who want to be hairdressers applying to be forklift truck drivers’

She points out the perverse incentives of a benefits system that requires claimants to apply for jobs, irrespective of whether they can do them.

“We get people who want to be hairdressers applying to be forklift truck drivers. You do question whether some of it’s around their ability to claim benefits,” she says.

But those who do work for her receive a level of support, particularly around mental health, that would have been unimaginable in Middlesbrough’s macho industrial past.

“We provide a lot of support inside the company, we have health and well being ambassadors, because mental health is such an issue in the area. We try and look after people, help them with issues early, before they become a problem.”

Professor Mark Simpson, deputy vice chancellor at Teesside University
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Professor Mark Simpson, deputy vice chancellor at Teesside University

On the edge of a city centre abandoned by big retailers is Teesside University, a cluster of new buildings that is evidence of badly needed investment.

The vast majority of the 20,000 students come from within a five mile radius, and deputy vice chancellor Professor Mark Simpson tells me they aim to prepare them for the promised jobs, from digital and AI, health and life sciences, public sector jobs and the net zero industries.

“We work with businesses and we work with industry to look at demands, look at what skill sets they need from our graduates,” he says. “But we don’t just respond, through those clusters of courses we help create the industries.”

“But when you see the levels of deprivation across the Tees Valley a big part of what we need to do is raise aspiration.”

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Tata Steel workers to hold ‘all-out indefinite strike’ in July, Unite says

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Tata Steel workers to hold  'all-out indefinite strike' in July, Unite says

Around 1,500 workers at Tata Steel will hold an “all-out indefinite strike” next month, a union has announced.

The industrial action at the company’s sites in Port Talbot and Llanwern, Newport, will begin on 8 July, Unite said.

The union said the walkout would “severely impact” the company’s UK operations.

It comes in response to plans to close Tata Steel’s blast furnaces in South Wales, putting 2,800 jobs at risk.

The union said it would be the first time in more than 40 years that steel workers in the UK have gone on strike.

Members voted in favour of the move in April.

Industrial action short of a walkout, including staff working to rule and a ban on overtime, began earlier this week.

The union’s general secretary Sharon Graham said: “Tata’s workers are not just fighting for their jobs – they are fighting for the future of their communities and the future of steel in Wales.

“Our members will not stand by while this immensely wealthy conglomerate tries to throw Port Talbot and Llanwern on the scrap heap so it can boost its operations abroad.”

She added: “The strikes will go on until Tata halts its disastrous plans.

“Unite is backing Tata’s workers to the hilt in their historic battle to save the Welsh steel industry and give it the bright future it deserves.”

Read more: Port Talbot’s uncertain future as the cost of going green hits home

Tata Steel previously said it was losing £1m a day at Port Talbot and warned the situation was unsustainable.

The company said its plans, which include the building of an electric arc furnace, would mark the beginning of a new way of “competitive and greener” steelmaking.

The proposals were officially confirmed in January, with its boss TV Narendran telling MPs the decision was “pretty much” a done deal.

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Sky News first exclusively revealed details of the plans in September 2023.

Tata Steel initially offered an enhanced redundancy package to workers affected by the proposals, but this was reduced after the industrial action short of a strike began earlier this week.

Unions, including Unite, expect Labour to hold emergency talks with the company if the party wins the upcoming general election.

Alun Davies, national officer for steel at the Community union, which says it represents the “vast majority” of affected Tata workers, said it had decided with the GMB union not to take part in any industrial action for now.

He added: “If the Labour Party wins the general election it has said that it will hold emergency talks with Tata…

“We welcome this, and now feel it is important to wait for the completion of that process before initiating any significant course of action.”

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Former union boss George Thomson denies being ‘too close’ to Post Office as he gives evidence at inquiry

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Former union boss George Thomson denies being 'too close' to Post Office as he gives evidence at inquiry

The former head of a union for sub-postmasters has denied it became “too close” to the Post Office and was “flush with money”.

George Thomson, formerly of the National Federation of SubPostmasters (NFSP), also denied lacking sympathy for those who were wrongfully convicted during the Post Office scandal, which occurred following faults in the organisation’s Horizon IT system.

It comes after the TUC claimed earlier this year that the Communication Workers Union (CWU) had been blocked from effectively organising at the Post Office, and alleged the NFSP was given funds by the Post Office.

Mr Thomson, who served as its general secretary between 2007 and 2018, gave evidence at the Post Office inquiry on Friday.

When asked by inquiry counsel Julian Blake if he became “too close” to the Post Office, he replied: “No, I wasn’t.”

Mr Thomson later added: “We worked closely with the Post Office because we both needed to have a successful franchise – that’s the reality.”

The inquiry was shown an email sent on behalf of Mr Thomson in August 2013 which outlined plans for the Post Office and NFSP to sign a 15-year contract to represent all Post Office operators.

It included annual payments starting at £500,000 in 2013/14 and reaching £2.5m from 2017 to 2028.

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Mr Thomson said it had taken “a lot of badgering” of the then Post Office chief executive Paula Vennells to agree to the deal. He also claimed her team “would have preferred the NFSP withered on the vine”.

Put to him by Mr Blake that they were significant figures, Mr Thomson told the inquiry the NFSP “took on new functions” as part of the deal.

When asked if the NFSP was financially dependent on the Post Office at the time when issues with Horizon were ongoing, Mr Thomson said the federation had lost 8,500 sub-postmasters in the previous 12 or 13 years, and that the money was “replacing what used to be membership money”.

He added: “It was never ever tied to Horizon.”

The inquiry was also shown a Computer Weekly article from May 2009 which detailed the cases of several high-profile sub-postmasters, including Sir Alan Bates.

The sub-postmasters told the magazine their union had “refused to help them investigate their concerns”.

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‘Did the mask slip in this email, Ms Vennells?’

Asked by Mr Blake why the NFSP did not help them, Mr Thomson said the federation had to seek permission from the Post Office first.

He said: “We did fight their cases but we asked the Post Office, ‘What are we to do as an organisation?’

“Every case that was brought to us, we took it up with the Post Office.

“You’re trying to make out that somehow we were flush with money… That’s not correct.”

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Mr Thomson said he had investigated 20 or 30 cases at the “highest level” during his time as general secretary, and would have tried to employ a computer expert had he known more about the issues with Horizon.

He said: “I’ve been around a long time – suspensions have always taken place, prosecutions have always taken place, under the manual system as well.

“We had a franchise that was in crisis and we always tried to help people.”

Mr Thomson described Horizon as “a strong system”. He added: “It’s a well-used system, and I still support it systemically as being very robust.”

However, some former sub-postmasters reacted with anger to his testimony on Friday.

They included Christopher Head, who wrote on X: “[Mr Thomson] and his organisation failed it is main overarching duty to protect its members. They are a disgrace and have no place today to be trying to represent the interests of current Postmasters, they are a sham…

“The NFSP should be completely disbanded.”

More than 700 sub-postmasters were convicted between 1999 and 2015 after errors in the Post Office’s Horizon IT system meant money appeared to be missing from many branch accounts when, in fact, it was not.

It has been branded the biggest miscarriage of justice in British legal history.

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Government net borrowing lower than forecast – but next chancellor ‘facing Pandora’s box’

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Government net borrowing lower than forecast - but next chancellor 'facing Pandora's box'

Government borrowing was less than expected in May, new figures have revealed.

Net borrowing – the difference between public sector spending and income – was £15bn, an increase of £0.8bn on the same time last year, the Office for National Statistics (ONS) reported on Friday.

The amount is below the £15.7bn forecast by the Office for Budget Responsibility (OBR) and less than expected by economists.

However, it was still the highest amount for the month of May since the COVID-19 pandemic.

The ONS also said that public sector net debt, excluding public sector banks, was provisionally estimated at 99.8% of gross domestic product (GDP) in May – the highest level since March 1961.

The figure is also 3.7 percentage points higher than during the same period last year.

Economists said it showed that whoever wins the upcoming general election will face a string of potential financial challenges.

Alex Kerr, from research firm Capital Economics, said that while the better-than-expected net borrowing figure would give a little extra wriggle room for the next chancellor, it would do little to reduce the “scale of the fiscal challenge that awaits”.

He said this included upward pressure on the government’s debt interest bill from higher interest rates.

Mr Kerr estimated that the next chancellor will have financial “headroom” of around £8.5bn at their first post-election fiscal event, slightly less than the £8.9bn left over from the last budget in March.

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Economist Michal Stelmach, from KPMG UK, said the next chancellor was facing a “fiscal Pandora’s box”.

He added: “The fiscal reality is similar for whichever party wins the general election. Interest rates are set to remain higher, debt more difficult to bring down, and spending pressures continue to mount.

“With only nuanced differences in the stated plans for fiscal rules and taxation, borrowing will likely follow a similar path under either government.

“That said, a clear victory would give the winning party a stronger mandate to implement big reforms or increase public investment.”

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