Another hideous story about banks and recession reaches me. The boss of a small company had to call in the receivers – because he couldn’t call in his bankers.
For months the poor man has been trying to attract the attention of his friendly neighbourhood bankers.
Though we, the taxpayers, own this bank, its staff ignored him, never returned his calls, didn’t bother to look at his e-mails and were “not in” when he visited. As the company’s cash-flow got worse, the boss grew desperate.
Last year he cut his employees from 26 to 13. Things have looked a bit better in the past few months.
Unfortunately, he makes children’s toys so the best time for business is in the build-up to Christmas.
To get to the most profitable time of year, he needs to spend money before he can accumulate it again. This is where the bank is supposed to help with loans and overdrafts.
Our man needed £50,000 – not much in the great scheme of things. He never got it.
Now the banks are under scrutiny, they are reluctant to say no to someone like my toy-maker. They might get into trouble with the politicians – and then what would happen to their multi-million pound bonuses?
It’s much easier to pretend your customers never even bothered to ask for your help. Ignore them and hope they go away – or go bust – without the need to turn them down flat.
The truth is, banks have changed. A few years ago, they threw money around like confetti.
These days, they won’t lend you a penny unless you pay hefty charges, extortionate rates of interest and promise them your house, car, golf clubs, wife, kids and dog if it all goes wrong.
On Tuesday there was a little demonstration outside the Council House in Birmingham as Unison members held a sing-song in protest over the axing of 200 jobs.
A young woman handed me a leaflet calling on me to join a “stuff your cuts, we won’t pay” demo outside the International Convention Centre on October 3 when the Conservative Party conference kicks off there.
To add extra potential for unhappiness, it seems the police are trying to divert the protestors away from the ICC.
This is all in aid of protecting heavily unionised public-sector workers, who seem to think they are on the “front line” when it comes to the new austerity.
They are mistaken. The first blast of cold air is already rushing through the private sector. Look what’s happened to the public housing maintenance firm Connaught.
Quite why it went bust is a bit of a mystery. It had contracts with local authorities and, even if they were being run down, that doesn’t really justify calling in the receivers.
It’s clear, though, the threat of Government spending cuts had already hammered the company’s share price.
It’s happening to dozens of businesses, especially construction firms which have seen plans to build new schools shrivel and die.
Supposedly, we have clambered out of recession and the economy is improving. Most experts think it’s unlikely we’ll fall back into another one – the much-feared “double dip” – but it is a real possibility.
We won’t know the full impact of Government spending cuts until October 20, when Chancellor George Osborne delivers the bad news.
What’s worrying is how Ministers go on about what desperate financial times these are. I understand they want to place all the blame on Gordon Brown.
But they lay it on so thick it’s enough to make the average consumer stay at home and hoard tins of baked beans rather than stimulate the economy by going shopping.
David Cameron’s rhetoric is making things worse. The economy needs public spending cuts and they will have nasty consequences, in the short term anyway.
When the marchers reach the ICC next month, when public sector workers go on strike, when riots take place in Westminster and when tax hikes lead to a spending slump, do people like Cameron and Nick Clegg have the courage to stick to their plans?
Even if the dynamic duo stand firm, will their parties? The Lib-Dems are already pretty flaky.
Few of their MPs or members signed up for the toughest austerity package in history – an election tomorrow and they’d be out on their ears.
In opposition, their hero Vince Cable, now an unhappy Business Secretary, was full of talk about reining in the banks, tackling obscene bonuses and forcing them to lend to small businesses again.
Since getting power? Nothing.
For the Coalition to survive, the least it must do is make sure private businesses also survive. That means dealing with the banks.
There are options. Vince could, for instance, prevent banks demanding personal guarantees from company directors. He could make banks take on the debt many companies now have with the taxman.
He could insist that all bank bonuses are paid into a fund to support small businesses and the money could only be taken out after five years.
If he could make bank managers answer the phone once in a while it would be a start.
Tuesday, October 26, 2010
A Government in a hurry
David Cameron banged on about fairness at the Conservative conference in Birmingham. But there’s precious little fairness in what he’s planning to do.
Work and Pensions Secretary Iain Duncan Smith was garlanded with praise for his overhaul of the benefits system but actually he’s proposing to make the existing unfairnesses worse.
Chancellor George Osborne unveiled his big idea, which is axing child benefit for top earners. Yet within minutes, his plans were unravelling because they were so unfair.
Justice Secretary Kenneth Clarke insisted it was right to make prisoners work and promised to pay them £12,000 a year. But how can it be fair to offer jobs to criminals when honest men and women are out of work?
The Prime Minister told us “fairness is giving people what they deserve”.
OK then, let’s look at who gets what in our Big Society.
Child benefit won’t go to anyone earning the top rate of tax. That means a married man with a non-working wife will lose child benefit when his earnings hit £44,000 a year. But if he and his wife each earn £43,900 – totalling £87,800 – they will get child benefit.
It took only moments for even Mr Cameron and Mr Osborne to realise that, as leaders of the self-proclaimed “party of the family”, gunning for middle-class mums is a monumental miscalculation.
So they cobbled together a promise to introduce a tax allowance for married men which will doubtless wipe out the £1 billion saved by the benefit cut.
Fairness was not their guiding light. They just wanted to screw more money from the better-off.
Then Mr Duncan Smith announced that in future nobody would be entitled to State benefits of more than £500 a week.
Has he considered how that compares with the income of ordinary working people?
He might be interested to know that half the workers in the West Midlands earn £456.40 a week or less – and they have to pay tax on it.
His benefit cap is £26,000 a year. To earn that much, somebody in work needs to have a salary before tax of £35,000 because tax and National Insurance will cut his take-home pay to £26,000.
You need to be in the top 15 per cent of all earners in the country to have a salary of £35,000.
Ironically, the average taxable income is £25,800, more or less equal to the maximum Mr Duncan Smith would give you for not working.
Out of that, someone in a job must pay tax and National Insurance so his real income falls to £19,725.65 – £6,000 less than you might get for sitting at home and doing nothing.
One reason for the cap is to stop the State paying massive rent bills for families on benefits living in Mayfair and Belgravia. They will have to move out of their London mansions into more modest accommodation.
This will lead to an exodus from the capital as people are forced to find cheaper places to rent. In other words, London will simply export its problem families and dump them on the rest of us. That’s not fair either.
Then Ken Clarke declares it’s time to put prisoners to work. It’s a nice idea, especially when he says a quarter of their earnings will go to their victims.
Out of the £232 a week he wants to pay them, prisoners will get £20, presumably to buy drugs. Some of the rest will pay for their bed and board and a little may even find its way to their families.
This “porridge pays” policy would see crooks and thieves inputting computer data, repairing shoes and recycling rubbish.
These jobs could all be done by people on the outside. Is our economy so desperate for workers that nobody else is available?
Of course not. If paid jobs are on offer they should go to people who, even if they would prefer a life of leisure, at least have the merit of not being in prison.
Where is the fairness in giving jobs to criminals at the expense of people on the outside who might be grateful for the work?
If fairness is “giving people what they deserve” then mothers who stay at home to look after their children do not deserve to be denied benefits which still go to families with two working parents.
This is a Government in a hurry. It may be because the Tories have been out of power for so long or because they’re afraid they won’t stay there very long.
Either way, in their rush for “change”, they are making terrible mistakes and storing up more trouble for later.
Worse still, they were clearly so frightened of the backlash over child benefit cuts they dashed out a promise to help married couples overnight.
That tends to suggest they don’t have the courage of their convictions. When the going gets tough, they hoist the white flag of surrender.
Work and Pensions Secretary Iain Duncan Smith was garlanded with praise for his overhaul of the benefits system but actually he’s proposing to make the existing unfairnesses worse.
Chancellor George Osborne unveiled his big idea, which is axing child benefit for top earners. Yet within minutes, his plans were unravelling because they were so unfair.
Justice Secretary Kenneth Clarke insisted it was right to make prisoners work and promised to pay them £12,000 a year. But how can it be fair to offer jobs to criminals when honest men and women are out of work?
The Prime Minister told us “fairness is giving people what they deserve”.
OK then, let’s look at who gets what in our Big Society.
Child benefit won’t go to anyone earning the top rate of tax. That means a married man with a non-working wife will lose child benefit when his earnings hit £44,000 a year. But if he and his wife each earn £43,900 – totalling £87,800 – they will get child benefit.
It took only moments for even Mr Cameron and Mr Osborne to realise that, as leaders of the self-proclaimed “party of the family”, gunning for middle-class mums is a monumental miscalculation.
So they cobbled together a promise to introduce a tax allowance for married men which will doubtless wipe out the £1 billion saved by the benefit cut.
Fairness was not their guiding light. They just wanted to screw more money from the better-off.
Then Mr Duncan Smith announced that in future nobody would be entitled to State benefits of more than £500 a week.
Has he considered how that compares with the income of ordinary working people?
He might be interested to know that half the workers in the West Midlands earn £456.40 a week or less – and they have to pay tax on it.
His benefit cap is £26,000 a year. To earn that much, somebody in work needs to have a salary before tax of £35,000 because tax and National Insurance will cut his take-home pay to £26,000.
You need to be in the top 15 per cent of all earners in the country to have a salary of £35,000.
Ironically, the average taxable income is £25,800, more or less equal to the maximum Mr Duncan Smith would give you for not working.
Out of that, someone in a job must pay tax and National Insurance so his real income falls to £19,725.65 – £6,000 less than you might get for sitting at home and doing nothing.
One reason for the cap is to stop the State paying massive rent bills for families on benefits living in Mayfair and Belgravia. They will have to move out of their London mansions into more modest accommodation.
This will lead to an exodus from the capital as people are forced to find cheaper places to rent. In other words, London will simply export its problem families and dump them on the rest of us. That’s not fair either.
Then Ken Clarke declares it’s time to put prisoners to work. It’s a nice idea, especially when he says a quarter of their earnings will go to their victims.
Out of the £232 a week he wants to pay them, prisoners will get £20, presumably to buy drugs. Some of the rest will pay for their bed and board and a little may even find its way to their families.
This “porridge pays” policy would see crooks and thieves inputting computer data, repairing shoes and recycling rubbish.
These jobs could all be done by people on the outside. Is our economy so desperate for workers that nobody else is available?
Of course not. If paid jobs are on offer they should go to people who, even if they would prefer a life of leisure, at least have the merit of not being in prison.
Where is the fairness in giving jobs to criminals at the expense of people on the outside who might be grateful for the work?
If fairness is “giving people what they deserve” then mothers who stay at home to look after their children do not deserve to be denied benefits which still go to families with two working parents.
This is a Government in a hurry. It may be because the Tories have been out of power for so long or because they’re afraid they won’t stay there very long.
Either way, in their rush for “change”, they are making terrible mistakes and storing up more trouble for later.
Worse still, they were clearly so frightened of the backlash over child benefit cuts they dashed out a promise to help married couples overnight.
That tends to suggest they don’t have the courage of their convictions. When the going gets tough, they hoist the white flag of surrender.
Wednesday, October 06, 2010
Emptiness of Dave's Big Society
Pity Dave has abandoned giving speeches without notes. His party conference address in Birmingham was drearily filled with rhetorical piffle and meaningless politico-speak.
You could tell it was written for him, not by him, and it was made worse because he didn't actually read his speech terribly well and stumbled over the words.
You could also tell that some marketing guru thought it a brilliant wheeze to fill it with silly phrases like “beating, radical heart” and “we are the radicals now”.
The big phrase was, of course, Big Society. This is still a most bizarre concept. Dave clearly wants it to be his legacy. But it’s like a label which gets put on even the shoddiest products to make them look shiny and new – Big Society is the new eco.
Just as every spiv and charlatan has taken to labelling his wizard wheezes eco- to make it look cool and trendy and on-message, now everyone will pretend their products and services are part of the Big Society.
Labour gave us the meaningless twaddle of “stakeholders”; Dave gives us “Big Society”. They are equally empty.
Listening to our Prime Minister, I was left wondering whether, rather than trying to convince the rest of the country of the merits of his case, he was actually trying to convince himself.
You could tell it was written for him, not by him, and it was made worse because he didn't actually read his speech terribly well and stumbled over the words.
You could also tell that some marketing guru thought it a brilliant wheeze to fill it with silly phrases like “beating, radical heart” and “we are the radicals now”.
The big phrase was, of course, Big Society. This is still a most bizarre concept. Dave clearly wants it to be his legacy. But it’s like a label which gets put on even the shoddiest products to make them look shiny and new – Big Society is the new eco.
Just as every spiv and charlatan has taken to labelling his wizard wheezes eco- to make it look cool and trendy and on-message, now everyone will pretend their products and services are part of the Big Society.
Labour gave us the meaningless twaddle of “stakeholders”; Dave gives us “Big Society”. They are equally empty.
Listening to our Prime Minister, I was left wondering whether, rather than trying to convince the rest of the country of the merits of his case, he was actually trying to convince himself.
Monday, October 04, 2010
This is luxury you can't afford
How much longer must we endure being dictated to by the European Union? Its latest edict means we must find up to £2.5 billion a year to entertain “benefit tourists”.
Refusing them handouts breaches their human rights. So we must give them jobseeker's allowance, employment support allowance, pension credit and income support.
People from across the Continent will make a beeline for Britain if, as the EU demands, we are forced to dole out money to all Europe’s benefit scroungers.
This is just the latest in a long line of offensive decisions imposed on us by our lords and masters in Brussels.
Ministers are at each other’s throats over spending cuts – with Defence Secretary Liam Fox issuing a stark warning about the damage they will do to the armed forces.
It would be madness for us to take on the burden of funding Europe’s down-and-outs just because the Brussels bureaucracy thinks its human rights laws are more important than our struggle for economic survival.
In 2007, when he was still making his way as Leader of the Opposition, David Cameron offered crowd-pleasing opposition to EU human rights laws imposed on Britain a decade ago by Tony Blair.
He was protesting over the fact that the law prevented the deportation of Italian-born Learco Chindamo, who killed headmaster Philip Lawrence, even though the Home Office considered him a threat to the public.
Mr Cameron said: "It has to go. Abolish the Human Rights Act and replace it with a British Bill of Rights, which sets out rights and responsibilities. The fact that the murderer of Philip Lawrence cannot be deported flies in the face of common sense.
"It is a glaring example of what is going wrong in our country. What about the rights of Mrs Lawrence? The problem for this Government is that the Human Rights Act is their legislation and they appear to be blind to its failings."
You would think from comments like these that one of Mr Cameron’s first acts as Prime Minister would be to abolish the legislation.
Yet even before he failed to win the General Election, he was watering this down. It turned out his Bill of Rights would still leave this country ruled by the European Court of Human Rights.
Then, to cobble together his coalition with the Liberal Democrats, Mr Cameron has abandoned these plans altogether. There will be no cancellation of the human rights laws and the Bill of Rights has been shelved.
The boost to benefit tourism will cost us between £1.3 billion and £2.5 billion a year – yet the Government is desperately trying to cut welfare spending and crack down on benefit cheats.
How could it possibly justify hammering its own citizens when it offers an open door and a blank cheque to people from Lithuania, Latvia and Romania?
The European Union is not only trying to impose its bizarre view of human rights on us, it is also seeking to rob us blind.
The EU’s Budget Commissioner, Polish economist Janusz Lewandowski, is campaigning to end the “rebate” Mrs Thatcher negotiated with the EU back in 1984 when she declared: "We are simply asking to have our own money back."
Tony Blair did a deal which will has seen the rebate halved from £5 billion to £2.5 billion. Mr Lewandowski wants to see it axed altogether.
Even with the rebate, we are giving the EU £8.3 billion this year and, under Mr Blair’s deal, that increases to £10.3 billion by 2014.
Where is all this money coming from? How can we afford it?
It’s bad enough Ministers protecting the foreign aid budget which sees millions of pounds leak into the hands of monsters and terrorists. How can they justify increasing our payments to Brussels?
The EU boasts about how much money Britain received in grants from Brussels. It’s so desperate to win the propaganda war that any development completed with EU support must fly the blue European flag with its gold stars.
It even fines people who forget this little detail. It cost development agency Advantage West Midlands £200,000 and the Birmingham Chamber of Commerce £77,609.
Yet for every £1 the EU gives us, we give it £2. That is not, and never has been, a good deal for Britain.
The blight of benefit tourism won’t simply be the amount of money it costs. What will all these people do with themselves all day long if they have no work and no intention of looking for any? We can be pretty sure their activities will not all remain on the right side of the law.
Rather like being a member of a golf club or subscribing to Sky TV, EU membership may have been one of life’s little luxuries. It allowed our leaders to jet around Europe at our expense being important.
Surely the time has come when we have to say to our friends across the English Channel that their Union is a jolly nice idea and we wish it well but money’s a bit tight and we simply can’t afford the cost of membership any longer.
Refusing them handouts breaches their human rights. So we must give them jobseeker's allowance, employment support allowance, pension credit and income support.
People from across the Continent will make a beeline for Britain if, as the EU demands, we are forced to dole out money to all Europe’s benefit scroungers.
This is just the latest in a long line of offensive decisions imposed on us by our lords and masters in Brussels.
Ministers are at each other’s throats over spending cuts – with Defence Secretary Liam Fox issuing a stark warning about the damage they will do to the armed forces.
It would be madness for us to take on the burden of funding Europe’s down-and-outs just because the Brussels bureaucracy thinks its human rights laws are more important than our struggle for economic survival.
In 2007, when he was still making his way as Leader of the Opposition, David Cameron offered crowd-pleasing opposition to EU human rights laws imposed on Britain a decade ago by Tony Blair.
He was protesting over the fact that the law prevented the deportation of Italian-born Learco Chindamo, who killed headmaster Philip Lawrence, even though the Home Office considered him a threat to the public.
Mr Cameron said: "It has to go. Abolish the Human Rights Act and replace it with a British Bill of Rights, which sets out rights and responsibilities. The fact that the murderer of Philip Lawrence cannot be deported flies in the face of common sense.
"It is a glaring example of what is going wrong in our country. What about the rights of Mrs Lawrence? The problem for this Government is that the Human Rights Act is their legislation and they appear to be blind to its failings."
You would think from comments like these that one of Mr Cameron’s first acts as Prime Minister would be to abolish the legislation.
Yet even before he failed to win the General Election, he was watering this down. It turned out his Bill of Rights would still leave this country ruled by the European Court of Human Rights.
Then, to cobble together his coalition with the Liberal Democrats, Mr Cameron has abandoned these plans altogether. There will be no cancellation of the human rights laws and the Bill of Rights has been shelved.
The boost to benefit tourism will cost us between £1.3 billion and £2.5 billion a year – yet the Government is desperately trying to cut welfare spending and crack down on benefit cheats.
How could it possibly justify hammering its own citizens when it offers an open door and a blank cheque to people from Lithuania, Latvia and Romania?
The European Union is not only trying to impose its bizarre view of human rights on us, it is also seeking to rob us blind.
The EU’s Budget Commissioner, Polish economist Janusz Lewandowski, is campaigning to end the “rebate” Mrs Thatcher negotiated with the EU back in 1984 when she declared: "We are simply asking to have our own money back."
Tony Blair did a deal which will has seen the rebate halved from £5 billion to £2.5 billion. Mr Lewandowski wants to see it axed altogether.
Even with the rebate, we are giving the EU £8.3 billion this year and, under Mr Blair’s deal, that increases to £10.3 billion by 2014.
Where is all this money coming from? How can we afford it?
It’s bad enough Ministers protecting the foreign aid budget which sees millions of pounds leak into the hands of monsters and terrorists. How can they justify increasing our payments to Brussels?
The EU boasts about how much money Britain received in grants from Brussels. It’s so desperate to win the propaganda war that any development completed with EU support must fly the blue European flag with its gold stars.
It even fines people who forget this little detail. It cost development agency Advantage West Midlands £200,000 and the Birmingham Chamber of Commerce £77,609.
Yet for every £1 the EU gives us, we give it £2. That is not, and never has been, a good deal for Britain.
The blight of benefit tourism won’t simply be the amount of money it costs. What will all these people do with themselves all day long if they have no work and no intention of looking for any? We can be pretty sure their activities will not all remain on the right side of the law.
Rather like being a member of a golf club or subscribing to Sky TV, EU membership may have been one of life’s little luxuries. It allowed our leaders to jet around Europe at our expense being important.
Surely the time has come when we have to say to our friends across the English Channel that their Union is a jolly nice idea and we wish it well but money’s a bit tight and we simply can’t afford the cost of membership any longer.
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