| | By Mick James
I didn’t have time to
comment on the
pre-Budget report,
mainly because I was on
holiday but also because
what time I had was
spent desperately trying
to work out what the
“great giveaway” meant
for ME.
What with the changes
to VAT (including
adjustments to the flat
rate scheme) increased
income tax allowance,
changes to national
insurance (personal and
employers’) plus the
deferred corporation tax
increases, I might just
break even – provided I
actually manage to make
any money to pay tax on
next year. So I won’t be
rushing down to Argos to
max out the MasterCard
just yet.
And neither will
anyone else, I fear. Mr
Darling has correctly
spotted that we are at
that irritating stage of
a recession where
everyone stops spending
money because they are
afraid they are going to
lose their jobs – at
which point we all lose
our jobs. But given that
the primary motivation
is fear, which is not in
my experience
particularly
price-sensitive, I can’t
really see this having
much of an effect. In
any case it has already
been dwarfed by the deep
discounting going on in
every high street.
Could the Government
have addressed this fear
more directly?
Unemployment is never | |
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| | pleasant, but it’s
become increasingly more
distressing to be
unemployed in this
country over the last 30
years or so. Back in the
pre-Thatcher era it was
possible to survive a
reasonable period of
unemployment with hardly
any change to your
lifestyle. Benefits were
earnings-related, and
mortgage support kicked
in almost immediately
and bore some relation
to people’s actual
levels of indebtedness.
Nowadays, unemployment
is a crushing financial
and social blow from
which some never
recover, involving the
elimination of savings,
debt, educational
disruption and even
homelessness. Apart from
some additional support
promised to homeowners,
little has been done to
dispel that fear.
The net result is
that recessions take a
lot longer to get over
than they used to, as
once people return to
the workforce they are
more concerned about
repaying debt and
rebuilding savings than
acquiring mountains of
consumer goods. Even
quite a short and
shallow recession will
leave a prolonged
aftertaste.
In any case, it’s
probably time we stopped
seeing recessions as
being like a cold or the
flu and started seeing
them for what they are:
transitional periods.
“Put it back the way it
was” had been a
reasonable request just | |
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| | valuable, as the
workplace experiences an
absolute loss of skills,
and individuals touched
by unemployment begin to
rethink their
priorities.
Taken together this
may lead to a
reappraisal of our goals
as a society: what
“prosperity”, should it
ever return, actually
means to us. One of the
paradoxes of recent
years has been the way
that formerly
aspirational consumer
goods such as cars and
televisions have become
commonplace, previously
available social goods
such as housing, health,
education and pensions
have become more and
more unattainable. I
don’t think this means
that people will
necessarily reinvent
socialism, or follow the
whimsy of its new age
surrogate “gross
domestic happiness”
school of thought. But I
think that they will
begin to question, in a
fairly straightforward
manner, what it is they
are slogging their guts
out for all their lives
and what they are
getting in return for
the money they fork
over, whether at the
tills or to the taxman.
This suggests to me a
radical overhaul of the
way we do business at
all levels of our
society, whether public
or private. Business
models that rely on the
idea that people will
continually update
products they already
own to the latest model, | |
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| | regardless of whether it
represents an
improvement or not, I
would suggest, are
doomed (writes an
embittered Vista user).
So, I would suggest, are
government models that
rely on the wholesale
confiscation of income
in return for
“protection” and the
possible return of some
of your investment in
the form of “alms”.
Our current system
has grown too reliant on
massive overconsumption,
whether of goods by
private individuals or
labour by the public
sector. That’s why we’re
so prone to recession –
even for the “worried
working”, cutting your
private expenditure by
10% or 20% or more is a
doddle if you’re largely
buying stuff you don’t
need or you’ve already
got. And I doubt if
anyone really knows what
level of redundancies is
possible in the public
sector if things really
get tough.
In the short term,
the future for
consultants will be
about delivering some
pretty instant, survival
based support to keep
clients afloat. In the
long-term, we’re going
to need a radical
re-imagining of the way
we deliver goods and
services to increasingly
sceptical and
value-conscious
consumers. Expect
something along the
lines of the BPR
movement in the 1990s –
only much, much bigger. | |
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