The myth of the economic “recovery” where we’re all worse off

CROYDON COMMENTARY: For ANDREW FISHER, the notion of a national economic recovery based on debt or a borough-wide regeneration based on retailing are equally flawed

“We inherited an economy reliant on banking, immigration and debt,” Croydon Conservatives told us at the Croydon North by-election in 2012. What the Conservative candidates standing in Croydon constituencies – Fairfield councillor Mohan Vidhi in North, Gavin Barwell in Central and Chris Philp in South -won’t be telling you during next year’s General Election campaign is that under their Tory Chancellor the economy is just as reliant on banking, immigration and debt.

Croydon Tory candidates at the 2015 General Election - Philp, Barwell and Mohan - will be fighting the general election on

Croydon Tory candidates at the 2015 General Election – Philp, Barwell and Mohan – will be fighting the General Election on an economy reliant on banking, immigration and debt

Earlier this month I looked at the rise in net migration, despite the Tory pledge to reduce it – and how migrant workers are actually helping to balance the books, but even their efforts can’t counteract Chancellor Osborne’s damaging economic policies.

We have an economic recovery which is unique. This is the only economic “recovery” in history in which living standards are falling for most people, and tax revenues aren’t rising.

Without tax revenues increasing, the deficit won’t close and Osborne is borrowing more – resulting in government debt rising by more and for longer than he pledged. An economy based on debt.

Tony Blair once boasted that Britain has “the most flexible labour market in Europe”, meaning that we have the weakest employment and trade union rights in Europe. Since the recession, only 1 in 40 of the net new jobs has been a full-time employee, while many are part-time or self-employed.  And average wages have collapsed, down 10 per cent since this government was elected.

This is why tax revenues are stagnant, despite the alleged “recovery” and rising employment. For households, this means more people are having to look elsewhere to make ends meet.

How the right-leaning magazine The Spectator has charted Gideon Osborne's performance as Chancellor, based on official figures

How the right-leaning magazine The Spectator has charted Gideon Osborne’s performance as Chancellor, based on official figures

So while the government is not getting as much income from tax as it needs, the cost of tax credits and housing benefit is rising because people’s wages no longer pay the bills and the rent. So low pay is costing us all, as the taxpayer subsidises falling wages. Despite Osborne’s aim to slash around 10 per cent from the welfare bill, he’s only saved 2.5 per cent – largely because he hasn’t tackled low pay or high rents.

But more damagingly, many families are also having to rely on food banks. Low wages were given as the primary reason by 22 per cent of people using food banks. With bills and rents rising faster than wages, in 2014 – during an economic “recovery” – hundreds of thousands of workers are having to be given free food.

And even more damaging than that is rising personal debt. Unsecured debts are currently rising by £1 billion a month and Osborne’s “recovery” is based upon ever more consumer spending funded by debt. This is projected to rise above the level of personal debt that was a major component of the global financial crash of 2007-2008 that got us here in the first place.

If this seems a bit abstract, it affects Croydon’s future intensely.

The shared vision between both Tories and Labour for Croydon to become the retail capital of south London and its Surrey hinterland. The plans for a £1 billion redeveloped shopping centre are accompanied by grand proclamations about job creation and regeneration.

It is an outdated vision in which people shop in physical shops, whereas retail is increasingly moving online. It is a vision of a future in which shops employ lots of people, whereas increasingly they install self-service tills, in placed of paid staff, to drive down costs and compete with online retail.

The Croydon retail revolution is also dependent upon people having money to spend. With workers’ wages increasingly driven downwards, and unsustainable debt levels making another crash ever more likely, where will this extra spending come from?

Despite Croydon Tories’ election spin, George Osborne is determined to return us to the pre-crash economy. Yes, the one “reliant on banking, immigration and debt” as Croydon Conservatives put it.

Coming to Croydon


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7 Responses to The myth of the economic “recovery” where we’re all worse off

  1. Is the Chancellor losing money?

    When Labour was in power the IR35 rule was introduced so that employees who use Ltd companies as intermediaries rather than being on the payroll of the company to avoid paying tax, would actually pay tax as employed.

    Almost every single person who uses a Ltd company to avoid paying tax (They take a small salary and the rest as dividends and also claim travel and other expenses) go through accountants who claim it is legal to avoid IR35.

    As the Conservatives were against IR35 at that time, so far nothing has been done to implement the rule.

    I am the only person with a Ltd company who declares 95% of my invoice as income (as per IR35 rule 5% for admin and other expenses) and pay employer’s NI, Employee’s NI and tax.

    There are thousands of contractors who also come from other countries and don’t pay any tax.

    It would cost the HMRC and therefore the Chancellor is not interested.

    The claim that we (The Conservatives) have increased the number of registered businesses is a big Con. The actual fact is that yes we have increased the number of Ltd companies and reduced the number of employees who pay tax and NI.

    There is no doubt that there is a recovery. All jobs both low level and highly skilled jobs are taken by Europeans and Indians not just in the IT industry but in all industries.

    I met a chap who has come to Britain on a highly skilled migrant visa. Would you like to know what his job is? Tamil goldsmith. Apparently there is shortage of Tamil goldsmiths.

  2. arnorab says:

    Andrew Fisher is 100% right. The proposed developments in Croydon will be a disaster. Hammersfield will be a gigantic white elephant with many relatives all over the USA that no one ever seems to mention. We, the ratepayers, are having to fund the traffic schemes because, as Gavin says, the developments will do us good. No they won’t: we are going to have roads leading from one potential bottleneck to another and to a gigantic, empty shopping mall. Oh, happy days, roll on!

  3. “It is an outdated vision in which people shop in physical shops, whereas retail is increasingly moving online.”

    Yes, both the Westfields in East and West London have been a disaster haven’t they.

  4. arnorab says:

    Just look for a second at the transport links to those Westfields…..both have Tube and Mainline and multi-bus connections are are really close to their stations and stops. If they work it is for this reason and there is no guarantee that they will continue to prosper once their novelty value has worn off.

  5. The Westfield in Shepherd’s Bush is doing so well they’re spending another £1bn expanding it.

    Westfield operate very different model to the failing out of town malls built in the US in the 1960s.

  6. Wait and see…..
    Some comments from The Guardian which should serve as a warning.

    “From what I have gathered it appears that the Westfield shopping complex is designed to be more of a social hub for the youth than somewhere to spend money. It is a warm, pristine building littered with comfy chairs, sheltered from parents and rain. In many ways it seems that Westfield is becoming a surrogate youth centre (compensating for the lack of such facilities in the area).”

    One thing surprised me, however. I quizzed a number of friends on whether they’d actually shop at Westfield. The majority said no. Despite its near proximity and great variety, people are still put off by the fact that it is constantly clogged with people and frightfully large.

    “The problem, I fear, is that Westfield is far too pretentious to be embraced by the locals. Stratford is a wonderfully diverse area with a real sense of community, and it is a shame that these qualities are not identifiable in the shopping complex… I can’t help but worry that the birth of Westfield will be a community’s demise.”

  7. I couldn’t agree more Arno – I think they’re pretty bland places. Not really a place I’d want to shop in. That said a proper John Lewis in Croydon wouldn’t go amiss. But they are generally warm, safe, high quality with a decent range of shops which do attract alot of people.

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