Margareta Pagano: Who's more tuned in, Vince Cable or George Osborne?
In the City: If the Chancellor is to keep the Business Secretary out of the charts, he has to change his tune
Margareta Pagano is a former business editor of the Independent on Sunday who now writes columns and business interviews for a range of publications, including the Independent, Independent on Sunday and London Evening Standard.
Sunday 15 September 2013
Vince Cable, the Business Secretary, has always had a taste for the limelight as his dancing skills have shown, right. Now he's heading for the music charts. His new band, Vince and the Supermarkets, more heavy metal than his usual swing, has a new single: "We're Not Out of Rehab." As lead singer, Cable hit the first notes of the tune on the Warwick University stage last Wednesday. His anthem was that while the economy is recovering, there is no room for complacency. More tartly, he also took a swipe at George Osborne for trying to take credit for the recovery rather than the hard-work of the British people.
Vince's singing was backed by a strong downbeat bass line from Dalton Philips, the boss of WM Morrison, after his supermarkets group, the UK's fourth biggest, reported falling sales as customers fled to discount stores. Worse still, Philips says the economic outlook remains tough for customers as inflation outstrips wages and warned that a third of them are "one pay cheque away from bankruptcy". Morrisons has 10 million customers each week so that's a scary number of people on the bread-line.
Lifting the pace was Terry Duddy on lead guitar. The chief executive of Home Retail, owners of Homebase and Argos, stunned the audience with a great set of results – particularly good at Homebase because of soaring barbecue and garden furniture sales. But Duddy upset the tempo by admitting higher sales were only due to the heat-wave and nothing to do with economic policy: "Cameron didn't do it. Those big macro-economic factors haven't fed through to consumers yet – if anything, disposable income is less than it was last month."
Picking up Duddy's sombre beat was Asda's boss, Andy Clarke on drums. His beat was loud and clear; he says the nation remains gripped in austerity. Clarke warns worse is to come; a report commissioned for Asda by the Centre for Economics and Business Research predicts spending will rise by £4,000 a year on essentials like food, petrol, rent and utility bills in five years time. With inflation rising faster than wages, and wages already being squeezed, disposable income will fall for most people for years to come; worst-off will be the under-thirties.
The Chancellor knows the melody; indeed, he admits that rising living costs are a problem and that something must be done. Yet there is no evidence to show that either he or the coalition – or Labour for that matter – understand how they should be getting to grips with roaring energy prices, unlocking an uncompetitive banking sector, rocketing train fares, stamp duty, fuel prices, controlling a housing bubble, and of course rising food prices. In many cases, the coalition's policies have made living costs higher with hikes in house-buying taxes, green subsidies to the energy companies which have pushed up utility prices and subsidising parents for child-care, to name a few.
If Osborne wants to keep Vince's song out of the charts, he must change his tune and come up with a better rhythm; take the poorest out of National Insurance, push through banking portability, more personal tax cuts, reconsider tightening the second part of the Help to Buy scheme, build more homes and encourage business to invest more in infrastructure and stop QE. He must get a new song to go with the new haircut; "It's Never Too Late" could yet be a hit.
If you landed back on earth today after a five-year space trip and were told you'd missed the collapse of Lehman Brothers, the world's biggest corporate bankruptcy which triggered the world's greatest financial crash, you would be forgiven for asking what's changed. Banks are bigger than ever, the shadow banking system is ballooning, the politicians and regulators are still in thrall to bankers and the banks can still take deposits alongside their investment activities.
Our space-travellers would be right in asking one question. Why is it that supposedly bright people turn dangerous when running big banking institutions? Are they narcissists? Is it the financial rewards?
Who knows, but it's worth watching The Banking Brain, a film by Suzanne Smith, a former World Bank economist, to find out more about bankers' extraordinary behaviour. If there is another banking collapse, it will be the taxpayer who stumps up, again. Plus ça change, plus c'est la même chose.
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