Hi. Whenever you edit the length of something, you also need to edit weights and a uv_1 map
If you were to select b__Spine1__ in Weight paint mode, you'd see that it affects the mesh unevenly in that area.
- make sure the mesh has Armature modifier added and rig assigned ( it is right now );
- in Edit mode press NUM5 NUM1 to switch to orthographic front view, disable Limit selection to visible, press B and select the same area as in the pic;
- Select - Select boundary loop, Shading/UVs - Mark as seam;
- select the same area again, Tools - Remove doubles with Merge distance set to 0,0001;
- click on the tiny + button and type b__Spine1__, select it, click on Remove;
- unfold Weight tools, click on Normalize all;
- select one edge marked as seam, Select - select similar - seam, Mesh - Edges - Edge split;
- select the green area, switch to the uv_1 map, enable sync, in UV Editor press W and choose Align Y.