TIME FOR ANOTHER SEA CHANGE,40 YEARS ON?

I will write about the local elections next week when all the results are in.

THE THATCHER REVOLUTION.

40 years ago, Britain was weary from an era of high inflation, unemployment and rampant union power. The Labour minority government was being defeated far more frequently than Mrs May’s outfit.

It was time for a major change in direction and Margaret Thatcher was the woman of the hour. Her remedy was unnecessarily harsh, especially for the coal mining communities of the North but overall, she made Britain face the modern world. The subsidising of lame duck industries was ended, inflation was brought under control and in the biggest social revolution, tenants could buy their council houses.

There was no suggestion that leaving the European Union would be a remedy for any of the country’s ills, indeed Margaret Thatcher was a keen supporter of the introduction of the Single Market. Only in her last years did she put on the cloak of Euro scepticism but by then she was making other mistakes like the poll tax which brought her down.

John Major lived in her shadow and Labour Prime Ministers Tony Blair and Gordon Brown did not challenge the fundamentals of the Thatcher reforms of the 1980’s.

IS IT TIME FOR McDONNELL?

Now let’s fast forward to the present. Britain has a government who’s lack of authority can be compared to the position of Jim Callaghan’s in 1978/9. The economy is superficially in much better shape, although many forecast a drastic post Brexit reckoning to come. Despite low inflation and high employment there are major problems. The young can’t get houses, local government is stripped of cash, job insecurity is high and the proliferation of food banks shames us all. The trade unions are generally weak, and people are vulnerable to bosses who offer uncertain hours and no pension rights.

The global capitalism that began to manifest itself in the Thatcher years is now under attack from right and left, so it is time for the socialist alternative proscribed by Shadow Chancellor John McDonnell?

Wages have hardly grown in a decade and productivity remains a major problem. Is it time to strengthen union power to give back to workers collective strength, with more say over conditions and incentives? Perhaps productivity would improve if McDonnell had his way.

The problem is that there is widespread suspicion that McDonnell has a wider vision than giving more power to the unions. The fear is that a Labour government under Corbyn/McDonnell (or the rapidly rising Rebecca Long Bailey) want to turn Britain into a place where a strong economy takes second place to a socialist state of high tax, low defence spending, a relaxed attitude to immigration and hostility to America.

Even in their darkest hour, never underestimate the Tories. They could emerge from the Brexit crisis as a right-wing party full of ex UKIP people calling the shots. But if you look at what the May government is doing in other policy areas, you will observe a much more pragmatic, centrist approach. The effects of the austerity policy will take years to correct but the government is turning the corner and starting to increase spending budgets. If they have any sense, the Conservatives will see this approach as the way to see off Labour.

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ANSWER MY QUESTION, MR FARAGE.

MAY DEAL STILL MOST LIKELY.

I want to comment briefly on the growing Brexit crisis before telling you about my encounter with Nigel Farage.

I still think Mrs May can get her deal through because as I have written many times before only a change in the law can stop Brexit, only the government can change the law and MPs won’t vote for no deal. The Commons can pass all the motions they like, but they ultimately have no effect. As March 29th approaches and the EU’s long extension offer loom, watch the dominoes collapse.

Now I want to my attention to my encounter with Nigel Farage in Chester. We Remainers are constantly chided for not accepting the result of the 2016 referendum by the de facto leader of the new Brexit Party. I have always believed there is no way Farage would have accepted the Referendum result if a majority of people had voted to Remain.

Ahead of his visit to the North West I looked up what Farage said in the hour after the close of poll in June 2016. Before results started to come in, he thought Leave had lost. He said the following “Whatever happens tonight, we are winning this war. The Eurosceptic gene is out of the bottle and will not be put back. My sense is that the government’s voter registration scheme has perhaps tipped the balance.”

Are these the words of a man preparing to accept the result, or getting his arguments in place ready to campaign for a second referendum?

I began my question by politely acknowledging that he had changed British history and then read the above quotes to him asking him to admit he would not have accepted a Remain result.

Instead of answering my question, he launched into a rant about the BBC (an organisation I have not been employed by for 13 years) betraying the people. The performance went down well with his audience which shows the power of this man. A few have told me since they were unimpressed and that includes me. Farage is a rabble rouser. He spends his time in the European Parliament insulting MEPs and tarnishing the image of our country. When he is here, he prefers a rant to responding to an uncomfortable question.

The truthful answer is that the ante brigade never gave up under John Major, Tony Blair and David Cameron and would have been undeterred by a Remain vote in 2016.

DEMOB HAPPY CHANCELLOR.

We may have seen the last financial statement of Philip Hammond. He would be unlikely to survive the fall of the Prime Minister. He is a top target for Brexiteers who increasingly run the Tory Party despite the fact that this week he was able to give an upbeat report on the economy. The budget deficit is at its lowest since 2001, wages are rising and unemployment low. His speech was laced with effective attacks on Labour’s high spending plans.

But he incurred the wrath of Brexiteers by warning that the economic recovery was being threatened by Brexit uncertainty and hinted at his support for indicative votes on Brexit options.

Grave offences in the eyes of those who’s priority isn’t to support a Chancellor delivering economic improvement but to risk all with a reckless Brexit.

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MANCHESTER: A YOUNG CITY

 

 

ECONOMIC SURVEY PART 1

 

First, congratulations to all my colleagues, past and present, who have contributed to 15 years of success for Downtown in Business.

In the run up to the International Festival of Business in Liverpool I’m going to be taking an in depth look at the business prospects of our three great cities, Liverpool, Preston and Manchester.

My interest in doing this was stimulated by a report this week claiming that Liverpool’s economy was growing faster than Manchester’s. I read it as I was about to meet with the leading movers and shakers of the Manchester economy. We can reach some conclusions at the end of the series of blogs, but just to say for now, Manchester is buzzing and perhaps the truth is that both of the large cities have a bright future despite Brexit. In Preston’s case we’ll be looking at the “keep it local” model which is attracting national attention.

But first to Manchester where Eddie Smith, the city’s Strategic Director, exudes vision and optimism. He has been in post a long time and remembers the challenges around the turn of the century to deal were to deal with jobs and office e accommodation. Since 2010 the drive has been to make Manchester a place where people want to live because the city is getting younger and there is an imperative to keep the graduates spilling out of the city’s excellent universities.

Future planning for the city, and conurbation more widely, will become clearer this summer with the opening of the review of Manchester’s local plan for the next fifteen years. Transport for Greater Manchester will publish their plans towards 2040. Finally, the Mayor of Greater Manchester will publish his revised spatial plan. The latter sounds dry and dull but is highly controversial as it involves housing and the green belt. When he came into office, Andy Burnham didn’t like the plan he inherited, and we will see what reaction he gets to the revised options.

The major infrastructure issue for the centre of Manchester now is Piccadilly station. It is due to be the hub for HS2 and the Northern Powerhouse rail link to Leeds. In the neglected area around the station, there is the prospect of 60,000 if the whole redevelopment benefits from the sort of central government vision and funding that has been invested in King’s Cross in London. There Eurostar, the London tube, national and local rail services converge in a spectacular station. The area around King’s Cross that was once a haven for sex workers and drug dealers has been transformed. Manchester wants a similar response from government for Piccadilly station, but ministers remain to be convinced.

Around the conurbation there are significant growth points in Salford (more on that next week), and airport city. Smith draws our attention to developments in Wythenshawe. It is already benefitting from the prospect of an HS2 station at the airport with Vodaphone and Virgin Media increasing their investment in an area long associated with unemployment.

In a week when Manchester City paraded their Premiership trophy through the streets, regeneration continues around the Etihad Stadium. The world’s first sports business park is being developed and 15,000 houses are planned out towards Collyhurst.

Next week I’ll be looking at developer interest in Manchester, the Salford story, and young entrepreneurs innovative approach to housing and office development.

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10 YEARS AND STILL COUNTING THE COST

 

On the tenth anniversary of the start of the economic crash, I thought it would be good to get an assessment of past and current consequences from people able to make unbiased assessments of the damage inflicted by the bankers’ and regulators’ irresponsibility in the early years of this century for which we mere mortals continue to pay.

The greatest financial crisis since 1929 not only caused major economic disruption, it has also considerably weakened political parties of the centre in Europe and America. People lost faith in politicians who had no idea about the casino practices of young city traders working for bank bosses asleep on the job.

The Institute for Fiscal Studies and the Institute for Government came together recently to assess the current climate in which people are trying to do business whilst still faced with the overhang from the 2007/8 crash. Gross Domestic Product is little better than in 2008. We are 15% poorer than if a 2% growth rate had been maintained since 2008.  The tax burden is now at its highest since 1986.

The bankers’ folly has been paid for substantially through massive cuts in local government grant with the promise of 100% business rate retention now withdrawn. One interesting suggestion made at the seminar I attended was that local government was easy prey for ministers because a lower tier of politicians took the blame. Will elected city region mayors make a difference here? Then there are the benefit reductions. They will have led to eleven billion pounds of savings by 2022.

What about the headwinds? The growing and ageing population will absorb 1% of GDP by 2026 and Brexit could cost over three billion pounds a year according to the Institute for Fiscal Studies Deputy Director Carl Emmerson.

We have had sluggish growth rates since 2008 due to poor productivity. Would easing the 1% public sector pay limit help? It might, the 1% pay rise policy is now causing huge retention problems in prisons, hospitals and teaching. 

The election taught us that the need for continued austerity is under challenge. The low hanging fruit of efficiency savings has long been plucked. The government appears to have no strategy for sorting out the public finances in the long term. A full review is needed with some courageous thinking.

So here we are 10 years after the financial merry-go-round came to a crashing halt. We are still paying for it and some of the old practices are creeping back in.

The crash of 2007/8 was substantially triggered by companies giving mortgages to people who couldn’t afford them. The 2017 equivalent is car loans using the very popular personal contract purchase method. Experts fear many people are using this method to lease cars they can’t afford. Overall £200bn is now owed on credit cards, overdrafts and personal loans. What happens when interest rates rise, which they will have to, someday?

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