One has to admire the Bank of England for its determined optimism in the face of all the facts. The only organisation that is even more adamant that the UK economy is going to grow is the Office for Budget Irresponsibility, and we all know how rarely that body ever gets anything right.
Today, the soon-to-be ex-governor, Sir Mervyn King, said the economy had “cause for optimism” and there was an “encouraging underlying picture”.
What makes this tragic is the timing. Today, the story appeared on the BBC’s business news web page beneath a revelation that the fashion chain Republic has become the latest High Street name to go into receivership, and an announcement that Blockbuster, which bit the bullet earlier this year, would be closing a further 164 shops – threatening 800 jobs.
Cause for optimism, Sir Mervyn? Really?
Comet has gone, Jessops has gone, HMV is hanging on by its forepaws after closing 66 stores. Now Republic. We understand more than 100 other chains are facing financial ruin.
What, in this situation, is the “encouraging underlying picture”? A resurgence in manufacturing? What good will that do, if everybody is out of work and unable to buy anything? Who will benefit?
It won’t be the people on the street. Republic had 2,500 employees; Blockbuster is likely to lose 800 staff. Those job losses follow the many hundreds in the other chains mentioned. If manufacturing does improve, it will be selling abroad, and the only beneficiaries will be company bosses.
You and I won’t see a penny of it.
One aspect of this that did make me smile was the fact that the administrators from accountancy firm Ernst & Young (itself no stranger to controversy – see the previous Vox Political article about tax avoidance for details) sacked all 150 staff at the fashion firm’s head office. All the managers lost their jobs, and quite right, too!
It seems sales dropped off by 0.1 per cent (seasonally adjusted figure) last month, while the quantity of goods sold rose (rose? shurely shome mishtake, unless prices have magically dropped) by a worse-than-expected 0.3 per cent.
Isn’t December supposed to be the busiest shopping month of the year, with everyone rushing to buy Christmas presents and get the food in? I know the news wasn’t totally awful – sales were still up 0.7 per cent on the same time last year – but it does look like a darkening of the skies before the storm blows in.
Online sales increased, as one should reasonably expect – this is the current trend. But what I found worrying was the drop in sales of both clothing and food. They did “notably badly”, according to the BBC.
I would have thought these were two sales areas that would be relatively internet-proof. With clothing and food (and furniture), people like to see what they’re getting. They want to test it first, to make sure it fits their standards.
My concept of the High Street of the Future would have included clothes shops (or boutiques if you want to be all King’s Road about it), grocery stores (not necessarily supermarkets – how about farm-gate stores or farmers’ markets?), furniture stores, chemists and hairdressers/barbers. With possibly the odd gadget/technology shop for people who don’t trust the postman with fragile items. Also private doctor and dentist surgeries, for those who can afford to pay for them as the future gets worse for the NHS.
The rest will probably go. Blockbuster is closing 160 stores, according to the BBC business site today. That doesn’t surprise me in the least. Bosses should have seen the writing on the wall, when digital delivery became an option, and diversified into it. They didn’t; LoveFilm and the like took over and that was that. People who like holding physical copies of movies in their hands can get them from the glorified mail-order companies like Amazon, if they don’t mind giving their money to tax avoiders.
That’s why HMV lost the battle last week. Now I see that Game wants to buy some HMV stores. Wasn’t Game itself in danger of going out of business last April? I think it was, and I wouldn’t expect a business bought by such a firm to last very long, for that reason alone.
We have already discussed, in a previous article, the demise of Jessop’s.
To cap it all, panellists on the BBC’s Question Time last Thursday said a further 140 UK high street shopping chains were facing severe financial difficulty. One hundred and forty!
And that’s just at the moment.
What will happen after the government’s cuts to benefits kick in, ensuring that the poorest in the country, who use the highest proportion of their money as they receive it, have much, much less cash to spend?
Think of the rise in unemployment, as one retail chain after another hits the dirt. The growth in demand for social security (the government calls it “welfare”) benefits; the need to borrow even more money, increase the national debt even further; the increasing number of derelict buildings as our cities’ shops go empty – along with more and more homes, as families fail to keep up rent payments (their benefits won’t cover it) and they get kicked out onto the street; the lights going off across the UK as the Tory-led Coalition, helped by the Liberal Democrats, turns our home towns into ghost towns.
Let’s pause for a moment to remember that the Coalition government inherited an economy that was growing. It wasn’t booming, obviously, but it was going in the right direction. The very first thing this government did was kill that growth, and much of its economic policy since 2010 has been intended to make sure it stays dead.
To shrink the state. To starve the beast.
To end the social security system.
To privatise the NHS.
To increase unemployment.
To keep wages low – and maybe even find opportunities to cut them.
We’ve got two more years with these chumps in charge. That’s plenty of time to ruin the UK beyond repair – or at least so badly that it will take decades to recover.
I think it’s time to put serious effort into making life as difficult as possible for them. we’ve had a few demonstrations in London over the last couple of years – perhaps it’s time to start putting something up every week, even if it has to start with only a couple of people standing outside the Houses of Parliament with banners saying “Coalition Out” and “Resign”.
If they want information from you, in order to put their changes into practice, find a way to slow the process as much as possible – obviously not in situations where there’s a threat to life and limb, but in other administrative ways, why not? Think of it this way: They want to complicate your life – why not return the favour?
In employment law, there is an offence called ‘Constructive Dismissal’. This is when an employer contrives to make a particular employee’s working life so difficult that he or she is effectively forced out the door. There is no such offence relating to the way a nation treats its government.
I’m not an advocate of violence; I’ll take passive resistance every time.
“If you’re a student, and you have to pay a fee to go to university… You end up with a debt of 12,500 quid, you marry another student – £12,500, well, 25,000 quid; you then try to get a house because you want to start a family – that’s 40,000 – you start life with a debt of £60,000! I tell you, it would be great, convenient, to a future employer because someone with a debt of 60,000 quid is not going to cause any trouble; otherwise they might lose their job and so on.” Tony Benn, speaking circa 2002.
One has to admire Tony Benn for his powers of prophecy!
Clearly, he was able to look nearly a decade into the future to foretell the coming of a government for whom the imposition of a £9,000-per-year tax on learning – by universities themselves, not the government itself – was a desirable outcome. Right?
Wrong. He was talking about the introduction of those fees by Labour in 1998. The Labour government increased the amount it was possible to charge in tuition top-up fees in 2004, a couple of years after Mr Benn uttered the words I quote above.
Labour was on the slippery slope, even then. The party of the people had lost sight of the effects such policies would have on them. Why? Because the lure of business-oriented advisors was so strong. “Here’s where the money is,” it seems they were saying. “Come with us.”
What a shame they were talking about money for them, rather than the UK as a whole. Mr Benn’s prediction about student debt was – if I may be so tasteless as to say so – bang on the money and now we’ve got a lot of people labouring (sorry!) under serious debt.
It was a mistake.
Look at the credit boom in the early 2000s, when banks and other organisations were throwing money at people willy-nilly (or so it seems today). We know from analyses made after the 2008 crash that little attempt was made to evaluate borrowers’ creditworthiness, and hindsight suggests we should not be surprised that so many of them proved to be completely unable to clear those debts, with many borrowing even more in order to meet the interest repayments they had incurred. Eventually, people started to default, and in huge numbers. What did the lenders expect?
That was a mistake – not just by our (and others’) government, but by the major lending institutions of the UK and the western world.
Look at Workfare. Labour wanted to bring it in, despite the results of repeated studies before the 2010 election that showed workfare programmes did not increase the likelihood of finding paid employment and could instead reduce that prospect by limiting the time available for job searches and by failing to provide the skills and experience valued by employers.
Then the 2010 election happened and Labour got the boot. So instead, the Conservative-led Coalition government brought it in. Interesting, that.It’s almost as if the same people had been advising both parties on employment policy, don’t you think?
We all know the effect of Workfare. By going into organisations – including profit-making companies that are perfectly capable of employing staff in their own right – and providing free labour for them, the government not only stops those firms from actually taking on new staff – it depresses wages by ensuring current staff cannot ask for a pay rise; bosses can now simply give them their marching orders and ask for more support from Workfare.
In a nation that desperately needs to increase its tax income, to pay off a rocketing national debt, that has to be a mistake, right?
We can see that it is planned because the effect of the Coalition’s Benefits Uprating Bill will be the same – by ensuring the unemployed must chase every job available – no matter how low-paid – because benefit no longer covers their costs and they run the risk of losing everything they own, the government is also ensuring that people who are already in low-paid jobs live in fear that their contracts will be dropped in favour of employing people who will take less.
So: not a mistake, after all.
Or is it?
The UK economy has taken three major hits over the last week or so. First Honda cut 800 jobs at its factory in Swindon on January 11, blaming a sales slump across Europe. That’s an effect of austerity – people have less money to spend on cars which, apart from houses, are the most expensive investments ordinary working citizens can make.
Then camera retailer Jessops closed its 187 stores with the loss of 1,370 jobs on the same day – apparently blaming the rise in camera phones. That’s another effect of austerity – people won’t buy specialist photographic equipment they don’t think they can afford when they’ve got cameras as part of their mobile phones; lack of disposable income means they must try to make their purchases wisely.
Now HMV has run into trouble, seeking insolvency protection and putting 4,500 jobs at risk. The 91-year-old record store chain couldn’t compete with online firms such as Amazon, it seems. And no wonder – Amazon is cheaper, people can do their shopping at home and, of course, Amazon don’t pay their taxes.
I reckon that’s around 6,670 people whose jobs are either lost or in serious jeopardy, because of austerity policies fuelled by managers’ greed. It is heads of industry who advise the government, and their advice (as I’ve previously stated) has always been to ensure that workers’ pay is low, so their own salary increases can be high – 800 per cent more over the past 30 years. I keep harping on about that because, as figures go, it’s such a whopper that it needs special attention.
But the policy has backfired because these people have failed to account for the fact that it is the working and unemployed poor who spend most of their money on the products their companies sell. With no money to spare, the companies lose revenue and have to make cutbacks. Now even fewer people are economically active and there is even less money to spare.
More companies hit the wall. Without sincere and concentrated effort to halt the process, a cascade effect could kick in, leading to – as I mentioned only a few days ago – economic ruin.
I take no pleasure at all from seeing my own prediction coming to fruition so quickly.
So, returning to Mr Benn’s comments at the top of this piece, what will Labour – Her Majesty’s Loyal Opposition – do about it?
And the answer is: More of the same.
What are they playing at?
Labour’s ‘Job Guarantee’ will, according to Boycott Workfare, “give billions of taxpayers’ money to subsidise big private businesses – probably the likes of failing and government contract-reliant A4E, and workfare-users ASDA – helping them to drive up their profit margins. It guarantees to further undermine real job vacancies as companies replace job roles with subsidised compulsory short-term placements.
“Labour, like the Coalition government, also now guarantee to undermine the idea of a living wage, which just two months ago Ed Milliband appeared to champion. After all if a company can get staff forced to work for it, both provided by and subsidised by the state at minimum wage, why pay the living wage?”
In spite of all the evidence, it seems Labour wants to make matters worse.
This is no good at all! When it comes to 2015, at this rate, voters won’t see any difference at all between Labour and the Tories.
It’s time for a complete change of plan. Labour needs to jettison all the nonsense it picked up during the New Labour years – along with any Shadow ministers who are still spouting it – and go back to its roots.
Work out a policy that actually supports industry, employment and prosperity, rather than the fatcats who are clearly corrupting all our politicians.
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