Friday 27 January 2012

Kick Start

As the country slides back into a recession, now is probably the time to ask ourselves how to return the economy to growth because no one on either side of the political spectrum has the slightest idea. On the right, the only prescription is cutting public spending which will magically kick start the private sector. I've been on the receiving end of several lectures on free enterprise and the evils of big government by wealthy white men, privately-educated who bought their homes with  a sizeable deposit from their parents most of whom work as consultants or city financiers. Being mercifully free of self-doubt or their own lack of real world knowledge, they will happily pontificate on business and enterprise whilst having no direct experience of either. They honestly believe that moving money round in a bubble market was the same as being an entrepreneur, a notion that would be amusing if it wasn't so damaging.

Don't look for any more insight or wisdom on the left of politics, as they are drawn from same social strata, that is predominantly privately-educated white people from the same geographical area of North and West London, the only difference being they work exclusively for the state or as lawyers. Their remedy for Britain's ills is more deficit spending, more regulation of business and no job cuts in the public sector; then equally magically the economy grows again. This ideology is no less self-serving that the right winger who wants to cut public spending to retain more of his income in tax. Turkeys, to date, have not voted for Christmas. (Mind you, I'm not sure they have ever been asked or whether we would have any reliable means of interpreting their wishes if they did vote, but the point still stands, more or less). The thinking, if you can call it that on the left, is in essence jobs for the boys and girls, either directly through state spending on public sector job creation or regulation which acts as job-creation for lawyers.

If you look at the backgrounds and life experience of the current political class, left or right, what is notable is the complete absence of business experience at the sharp end. True, some have worked in the private sector, typically in large corporations and a long way removed from the messy business of managing cashflow or chasing payment; some have worked as a consultants, which whatever they might try to tell you has as much to do with real business as paintballing does to a tour of duty in Afghanistan. Not forgetting the former lawyers, the union officials and the public sector workers, all of which have their uses (except lawyers) but are not going to be engine of future growth, unless we decide that every single person in the country is going to work for the government or do the legal paperwork. Not even the North Koreans are mad enough to do that; and they are madder than a box of schizophrenic frogs on LCD.

Up until a few years ago, I had a similarly blinkered world view, never having a run a small business. Having run someone's else's firm, sold it and then started my own which is thriving, my opinions have shifted about the problems of the UK economy, particularly for the smaller enterprises. At this micro-level, the little stuff matters a great deal to your business prospects. Take for example the client who has moved their accounts department to India, which means they pay four months after invoicing. Consequently you don't get paid, your creditors don't get paid and you can't make that investment you were planning. But hey, remember those savings to shareholders. Or discover the great deals available for invoicing financing, where the bank will take 10% off 30K of invoices, even if your order book is 150K for the next three months. Let's not forget the local council, who mission as far as I can tell is not dissimilar to a LA porn actress going for the gang bang record, which is to screw as many people in the shortest time possible. Finally, if you are foolish enough to consider taking on employee, look forward to doing their tax for them, paying for sick leave, holidays and the whole carousel of benefits the government has gifted to the staff member, regardless of cost. After careful consideration, my conclusion is that only upside to the business is they are contractually obliged to turn up for work, unless of course they feel unwell. And you can only pray they don't have a child or there goes half your yearly profits in maternity leave.

Whilst George Osborne might be scratching his head wondering why the world doesn't work like Hayek claimed it did, no one running a small business is remotely surprised. Small enterprises create jobs faster and with less turnover than large concerns, yet there has been precious little debate from any party on how to help them in the current crisis. Lib Dems might talk about raising tax thresholds to £10,000 but that won't create a single job if the obstacles to growth remain unchallenged. Trying making the burden of taking on employees less onerous to employers,  make councils business friendly and force banks to lend to small enterprises on reasonable terms, then you might see some activity. Otherwise, expect nothing and be disappointed.

Tuesday 17 January 2012

Devo Max

It's only three weeks into 2012 and already we'e got a new phrase coined - 'Devo Max', which you think would be a cold remedy, drain cleaner or the stage name of a male stripper, but in fact relates to the referendum on Scottish independence. Finally the Tory party has realised that they are about as welcome in Scotland as rabies, so Osborne and Cameron see political gain in fast tracking a referendum, ideally on a full split from the UK. 'Devo Max' is short for maximum devolution, why they had to swap it round is beyond me, unless they were worried about confusion with Max Payne, a successful computer game franchise. In Max Devo,  instead of gunning down bad guys with hot lead, the lead character bores them to death with debates on local income tax and government grants.

You see that is the problem with Scottish politics; it is unbelievably  boring and dull, even to the people elected to the Scottish parliament. Check this assertion by reviewing coverage of their sessions. Recovering heroin addicts, correction heroin addicts who have just jacked up, would have more get up and go that the average parliamentarian and might give better speeches. Tedium has served Alex Salmond, leader of the SNP, well  as under the cover of boredom he has been able to advance a set of claims and proposals that ought to provoke outrage amongst every non-Scottish citizen, except that none of us care.

We should listen and pay attention, because for too long Caledonian politics has existed as a parasitical enterprise, with all the self-control of banker's wife with her husband's black Amex who has just discovered his mistress. Thanks to Barnett formula, each year Scottish citizens receive at least £1,000 per capita more than English citizens, an annual transfer of £4.5 billion. Scottish nationalists might cite North Sea oil revenues; there is the small matter of the bank bail outs for RBS and HBOS, with liabilities the size of the UK GDP or perhaps the £100 millions a year spent on Scotrail. North of Hadrian's wall, it would be cheaper to provide chauffer-driven limos to every passenger that it would be to continue with this subsidy devouring money pit. If you live in the South East, think of that as you cram yourself onto the tube or the commuter lines so crowded it would be illegal to transport animals in such fashion; think of the net outflow of billions in tax revenue and spending from London to....Scotland.

Whatever way you slice the respective revenues, the case for further devolution rests not fiscal fairness alone but on remedying the democratic deficit. Scottish MPs sit in the UK parliament and vote on laws that affect England; yet English MPs may not vote on Scottish legislation passed in the Scottish parliament even though the revenues come from the UK Treasury. Known as the West Lothian question, most people might think the answer is where is West Lothian and aren't they a football team (near Edinburgh and no in case you needed to know).

The answer to the West Lothian question surely has to be 'devo max' or independence, the Scots should raise and spend their own taxes as far as is practical. Spending money without the responsibility of raising it is a recipe for immaturity and irresponsibility; ask any parent foolish enough to give their teenage offspring a credit card what happens next.

Time for Scottish politics to grow up. If the Scots want to waive tuition fees, then they must pay for it and their politicians must find a new guiding philosophy rather than endlessly asking the English if they can spare any change.

Saturday 7 January 2012

Identity Theft

Welcome to 2012. If this was a movie franchise, 2011 was the first Matrix film with a cool 'everything you know is wrong' vibe.  Financial armageddon looms, the poor get poorer, the rich get richer, even the weather went weird but then a ray of hope shines out. The people rise up and overthrow the fascist tyrant that had held his people in slavery for decades...yes Rupert Murdoch's hold on British political life was broken. And ding dong the witch stands a chance of criminal prosecution, that's Rebecca Brooks incidentally, in case you were following this analogy which to be honest I'm not any more.

Suffice to say that 2012, the sequel to the original Matrix 2011, will be more of the same only rubbish and incomprehensible. If anyone meets the Wachowski Brothers, please tell them from me, I want the two hours and £10 I spent watching the Matrix sequel back, same goes for George Lucas and that shameless cash-in and rape of my childhood dreams film known as the 'first' Star Wars film.

So what better way to usher in this sorry excuse of a year than to tell you about a heartwarming personal story of crime and credit, for I have been a victim of identity theft. At first, I had a little surge of pride to think that of all the identities out there, mine was worth stealing; then you realise you're just one of many marks, a drop in the ocean of impersonation. Imagine if you had a stalker and he started following other people; you would feel cheap and used.

Identity theft gave me a brief insight into crime prevention techniques in this country, as on the same day I discovered a new mobile phone contract taken out in my name along with a store card, my actual, legal credit card was stopped for purchasing £150 of goods online. Never fear I thought, if the fraud detection software is so finely tuned it activates on a handful of legit purchases, there is no way that any business would be so incompetent or negligent as to dole out a £500 phone contract with no security checks or a store card with a £1000 credit limit without proof of identity.

Relax, your identity is secure, because whoever impersonated me had to pass a tough test, they had a letter with my address on the top and they knew my birthday. Yet a piece of this puzzle is missing and you don't have to be a super-detective hybrid of Columbo crossed with Sherlock and a dash of Miss Marple to solve this case. (Sorry I've just got a weird image in my head of Benedict Cumberbatch wearing a floral hat, rain mac and smoking a cigar). Where were we? Yes, solving the mystery is pretty straightforward and does not involve Professor Moriarty or gathering all in the suspects on one room for a bizarrely convoluted exposition at the end of the show. It was the postman stealing my mail, somewhere between the sorting office and my flat, using his thieving, pickpockety hands. Or it could have been a female postal delivery agent, whatever the gender, somebody's been dipping into my post, which trust me is dull beyond belief.

When you call Royal Mail  to say that the police and the credit card fraud prevention team believe your post has been intercepted, they don't have to tell you what happens as a result of their investigation or indeed tell you anything. Although the woman on the phone was perfectly polite, the postal service's customer care ethos can be summarised as: go away and leave us alone, we're busy listening to Five Live and drop kicking your special delivery package across the sorting room floor. Then, when the supervisor's not looking, pinching your post.

But I did get a phone call from the Metropolitan Police, explaining that even though someone had impersonated me to take out a store card and a mobile phone, I was not a victim of crime, it was the mobile company and the bank who were the victims. It is, incredibly, not an offence to steal someone's identity to take out contracts in their name. Quite how the Labour party failed to pass a law against this, given that egg tampering justified its own statute, is one of those strange unanswered questions of life like Ed Milliband.

In spite of all these shenanigans, part of me remains flattered that the thieving postie and his accomplices chose me, which I realise is tragic, but with 2012 already limbering up to be as much fun as root canal work without anaesthesia,  I'll take what I can get.


PS - I feel the word 'shenanigans', like 'tomfoolery' ought to be employed more often in every day speech.  Don't over do it though, as if you're not careful some branding consultant will set up a chain of themed Irish fun pubs, called Shenanigans, with a leprechaun logo and bits of old farm machinery painted neon-green decorating every outlet.