Economic Barometers

Talking to business colleague of mine recently he told me a family member of his works in an upmarket estate agents. Business seems to be pretty good in that stratosphere, but they have one real worry - there simply aren't enough houses in the £10m+ bracket coming on the market to satisfy the demand.

In a sentence that about sums up this recession and financial crisis. The brunt of the hardship in this tough time has been endured at the low end of our earners. Over a million people in the 2.5m unemployment figure are classified as young and already we are talking of a 'Lost Generation'. One firm, who have fared well in this recession, has spent £200,000 on a graduate entrant scheme where in all their history they have drawn from the local labour pool of 18 to 25 year olds to man their sales desk engine. Now they start graduates there instead - it's a great investment in the future but a sad indictment of the times we are in and no incentive for young people to get a good education as it does them little favours.

What it seems is that those people who are rich may have had their net worth dented but their income stream only paused minimally - they are still exceptionally rich and earning a very strong monthly and annual incomes. At the lower and middle ends of the scale is where all the negativity has bitten hard. The stark reality is that while kids may have a lost out, there will be a new tranche of 45+ year olds who were made redundant who may never find equivalent work and earnings again - to add to those woes, they will not have sufficient pension resources to survive either. The future for those 'baby boomer' offspring is bleak.

While Prince Andrew puts out a plaintive call to protect the 112,000 people who are non-domiciles, who pay no tax in Britain he may as well have added those corporations who hide part or a majority of their wealth offshore. When Lehmans bank collapsed it left thousands of subsidiaries many housed in offshore territories known as tax havens - there can be only one reason why banks love doing this.

Small businesses, who constitute 97% of the companies in Britain, who employ over 13m people and who pay a disproportionate amount of the tax revenue in this country will be where the Government goes to get more - where VAT decreases have had least benefit and where bank lending has decreased by £14.7bn during this crisis. It will be the base level tax that will be increased most, rumoured to be a further 7% shortly while those who have demands of 50% will find ways around the system by using tax avoiding accountants and lawyers.

It all stems from the first port of call in the financial failure - to save the necks of rich bankers with no strings attached. Now we are looking spiteful in attacking bonuses but that will not stop banks making vast profits on high risk activities associated with products that benefit no one but banks themselves.

Politics takes a different view. No one wants to home in on the problem and admit responsibility, so conveniently parties like the BNP blame all those people who do not have Celtic ancestry or have skin of a different colour. If only people like Griffin knew that the Gallic races are not of these islands either but that is the domain of unintelligent brutes, they shape history as they like to suit their needs - that's why in their eyes Jews either deserved what they got or it never happened. It is when the country and crisis hits us and we see our lot diminished we look to the daft answers.

The answer is that there is a shortage of homes to be sold in the £10m+ bracket. Go figure.

The Lost Generation

Evidence shows that in the record unemployment figures released just a week ago of approaching 2.5m and rising, that the young have been hardest hit by this recession as unemployment figures of those leaving school or University is rising faster than any other sector.

Many commentators believe this will lead to a 'Lost Generation'. As if we did not have enough problems with youth disaffection leading to what appears to be a sharp increase in crime, and violent crime at that, amongst the young, it now appear that prospects for their future are getting bleaker.

You might think that of the Government priorities that have to be juggled to be produce the kinds of savings required to decrease our budget deficits and massive borrowing requirement after the incredible sums spent on bank bailouts, it should not be the time to make life harder for young kids.

But in the world of number crunching and accounting, strategy goes out of the window. So this week we have seen two extraordinary announcements. First, Ed Balls, former Treasury Minister and now in charge of Education, has volunteered to slash £2.5bn off the budget for Education, then we get the Director General of the CBI, Richard Lambert, suggesting that students should pay increased tuition fees. In fact, it appears that the Lib Dems are going back on one of their most important Election pledges on tuition fees.

Perhaps it is because the Government now feel with record pass and top grade levels at GCSEs that the job is done - we no longer have to invest in the education of our children as they are born more intelligent in the UK, perhaps. What a banner that would read at the next Election for Labour, 'Brighter kids under Labour'.

The fact is that as we propose to de-invest in schools having invested instead in stock markets shares of companies like RBS, Lloyds, Northern Rock and Bradford & Bingley instead, the prospects for our young are diminishing. And even if they want to weather the storm and go to University to apparently increase their prospects for the future, they will leave University with a millstone of debt around their necks, the likes of which non generation has seen since the introduction of the Welfare State. Oh, and their job prospects will be the worst for generations with that level of qualification as the top companies decrease or even stop their graduate intake schemes - BT has led the way on this.

Only last night, there was a program on TV which showed that some 9 million people will reach retirement age with the prospect of a pittance of a pension as we are never encouraged at the right age to set aside enough money for our future. In fact, only 4% of the population will leave their jobs with the nirvana of two thirds of their final salary income and - you guessed it - the vast majority of those will be Public Sector workers on superannuated fantastic pension schemes. My argument here is that as a nation we should be setting out from the earliest age the conditioning and discipline of saving for retirement as the young enter the job market, instead we have our brightest talent weighed down by debt. And there is to be more of it.

There will be a point when going to University will be the domain of foreign students and rich kids - how un-Labour will that be? Already back in the 80's when I was at University and Polytechnic, there was as many as 25% of my colleges' students from overseas and one class shared students from Iran and Iraq whose countries were at each others' throats. The campus was regularly picketed by students of both sides raising funds for weapons back home and at the Poly of Wales I entered the Junior Common Room where they were lobbying for a quorum on a vote to send aid to the South Moluccan terrorists.

Recession leads to all sorts of daft things but what is most stupid is that the priorities of yesterday become far less important when people start studying the bottom line. Yet, if you looked in the Appointments Section of this week's Sunday Times, you will not see a single Private Sector job advertised - just about everyone was advertising fat salaried positions at the head of some Quango, NHS Trust, Government Think Tank or other Government Department.

I can't say that the Tories are right about their cuts but starting at the top is a great idea in my book. Less layers of bureaucracy will bring into sharp focus who we want to keep in high Government positions and who we don't - plus what flunkies and mandarins are also due for the scrap heap. Personally, long before I got the knife out on education, I would sit down and look at the money being wasted in these administrative departments that have grown up in the last 12 years like The Department of the Deputy Prime Minister or the Department of The Business Secretary - things that did not exist until this Government arrived. As much as a few countrymen of mine might think a devolved Wales is a good thing, frankly we cannot afford the salaries, expense accounts and opulent new buildings of the Welsh Assembly when so few people were actually interested enough to vote for it. It is a layer of Government that is entirely superfluous.

It may not be the time to start thinking about what is important to Britain so far ahead of an election but if we do not do it, the idiot politicians who led us to financial ruin will get their knives out instead. At a time when prospects for young people have been at their worst for years, the last thing we need to do is to take money out of the system and make them pay more for their higher education. It's a double whammy that lays the seeds for another dirth of talent in Britain at a time when we need the best to come through an innovate to make us competitive again.

But, as with so much of the policy of the top echelon of people, the focus of this future is the same as the last 12 years - Britain's only real growth industry was finance and once again we see the emphasis has been to save the careers of people who nearly ruined us. For them, we could not have bunged more money down a drain without any questions as to how much was needed and why and what modifications to behaviour we would mandate. Everyone is afraid of these rich goons who think that raising £9bn of someone else's money with only a tiny amount of their own risked to buy a drugs store chain is great business acumen. It does nothing for the wealth of this nation. Having knights who take £1bn in single dividends and not pay a bean in tax and revering them as business gurus is just sick while kids cannot get a job or a decent education.

The strange fact is that I am not a Socialist and am all for free enterprise but I am not for thin wedges of society using our tax money as their bank and I am not for Governments allowing super rich people and companies to avoid paying their way in tax.

There are a ton of ways that £2.5bn could be saved or raised long before we get anywhere near the Education budget or adding on extra debt for graduating students. The lack of thought put into is pathetic - then again, Ed Balls was a finance man and he has had his education all done and paid for. So no surprises what he really thinks about the kids of today.

In the coming months, we are going to get a lot of stupid decisions made which will wipe years off our progress. In the meantime, the bankers we saved will be taking us enthusiastically forward to the next crisis thanks to our money and lack of constraints. Now is the time to enter the debate on what is important to us all - after all, it's our money they are using.