As recession returns to Britain, the Prime Minister and other wealthy MPs are concerning themselves with the glories of the Olympics and the Queen’s Jubilee whilst the Bank of England’s warnings over inflation and recession are quietly ignored, prices rise and ordinary people find themselves unable to pay essential bills.
The Governor of the Bank of England, Sir Mervyn King was demonstrably annoyed when facing questions from a Parliamentary select committee recently and when being asked about his strategy for dealing with the current financial difficulties. Dr. King, normally a very quiet and placid man on camera, understandably got very annoyed when some members of the committee effectively accused him of not knowing what he was doing.
The truth of the matter was not that Sir Mervyn was incompetent but rather that the MPs on the committee were not of a sufficiently high intellectual standard to understand what he was saying. This is not a new phenomenon as a quick glance around the House of Commons soon reveals that most MPs are either failed lawyers who couldn’t make it in the real world, individuals who have vested interests in pursuing a particular issue or people who have been in Parliament so long that they’ve forgotten what the real world is like.
Meanwhile, David Cameron and his MPs, no doubt looking forward to their annual pay rise, are telling us all what a ‘great’ country Britain is and how everything will be fine because the Olympics and the Queen’s Diamond Jubilee are coming to the rescue. It is a ‘great chance’ for Britain to prove what it is capable of, according to politicians.
The last royal wedding cost Britain a billion ponds in lost productivity; how much will these two forthcoming events cost the country? And who really cares about the Olympics or the Queen anyway when most people cannot even afford to heat their homes properly?
It has to be said that the level of Parliamentary ignorance relating to the plight of ordinary people is spectacular. Whilst one accepts that no individual can possibly be expected to be an expert on absolutely everything, one does expect our elected representatives to at least be able to understand what is being said to them by their constituents – and to remember it and learn from it.
Then, there is the dreaded disease of inflation…
The principal job of the Bank of England is to ensure that inflation is kept under control and in accordance with the government’s targets and to find methods by which government policy, notably that from the Treasury, can be put into practice. It has to do this whilst at the same time remaining independent of government and by ensuring that banks and financial institutions are sufficiently capitalised in order that the public does not have to bail them out in the way that has been necessary in the past.
With the Bank of England now readily printing new money and forcing it into the ailing financial system, inflation is bound to increase further. The original government target of between 2 to 2.5% was exceeded long ago and the rate of inflation as measured by the Consumer Price Index is running at just over 5% in real terms. The CPI measure does not take mortgages into account but the Retail Price Index does; this measure shows an inflation rate of as much a 7.5% depending on how one cares to calculate it.
For ordinary families and those who are on fixed incomes or benefits especially, the ongoing financial storm is proving to be very difficult indeed. With the cost of fuel and energy having risen so dramatically over the last few months, retail food outlets and supermarkets have had to reflect the increase in their own costs of moving stuff around, processing it in the first place and putting it on the shelves. Despite alleged competition in the marketplace, prices at Asda and Tesco are much higher now than they were even just a few months ago.
With Christmas now over, it is time for the reckoning that those who spent money that they didn’t have on “having a good Christmas” have been dreading.. Regrettably, TheOpinionSite.org knows from correspondence received from its many visitors that there are likely to be worst times to come. The truth is, whether we like it or not, the promised financial meltdown is only just beginning and is likely to go on for years to come.
With the highest unemployment for 17 years, fuel and energy prices that seemed to be unconstrained and wages and benefits at best remaining static, the added burden of inflation inevitably hits the poorest hardest. It is simply not reasonable for the Chancellor of the Exchequer, George Osborne to tell us that VAT is fair to the poor because wealthy people spend more generally. This is of little comfort to those who now cannot pay their grocery bills and who in some cases are trying to live on less than £10 a day.
Sitting in his office in the Bank of England, Dr. King believes that inflation will fall next year. The problem with this bold statement, as King must realise, is that the model that is used by the government and the Bank of England to forecast what is likely to happen over a given period seems to be fatally flawed.
When the government proudly proclaimed that growth would be a modest 2.5% this year, they genuinely believed that the modelling was correct. Now however, so many independent organisations – including the International Monetary Fund and the European bank – have made it clear that growth is unlikely to exceed 1% at best, all the promises made by the government of private-sector expansion and of disappearing public sector jobs being replaced by employment in the private sector are now absolutely meaningless.
Indeed, far from expanding as the government intended, the private sector is actually contracting and inevitably, this leads to fewer new job opportunities being made available. Iain Duncan Smith’s famous “Work Program” which was intended to get the unemployed masses back to work by using private companies instead of relying on the Job Centre, has also proved so far to be largely ineffective. If you have a criminal conviction, empoyment is an even more distant prospect.
It is true that some people have found jobs with the program. However, the employment that they have been lucky enough to secure is either part-time or temporary and almost nearly always very low paid and hardly ever above the minimum wage. This means that there are still plenty of people finding themselves in some kind of job whilst at the same time being worse off than they were when they were on benefits.
The government is seeking to address this anomaly by bringing in the Universal Credit to replace the many different benefits currently available but, mainly because of the complexity of doing so, this will not come into operation until 2013 at the earliest. It must also be said that the record of a similar work programme in Australia was not encouraging. Indeed, it didn’t take very long at all for the private companies concerned to run out of money and the whole program soon came to a grinding halt.
David Cameron said a few weeks ago that he believes that the UK economy is “basically sound”. Whilst this may be true from inside Downing Street or from within the grounds of Mr. Cameron’s privately owned country house, for most of us such is not the case. An ever increasing number of people cannot pay their bills, cannot feed their family and in the event of another cold February, may find it impossible to heat their homes.
Cameron and Osborne are currently content to gloat on the sidelines at the prospect of the Eurozone running into ever greater difficulties and they both take pleasure in being able to turn round and say “Aren’t you glad that were not in it?” The truth is however that in a few years time, when the Eurozone becomes strong again, it will be Britain that is sidelined, isolated and ever more vulnerable. Instead of having to deal with a worldwide monetary crisis, Britain will be dealing with another one, this time generated by itself.
The only good thing to come out of all this is that at last people may understand that it is simply not possible to endlessly borrow money in the belief that it will never really be necessary to pay it back. The older teenagers and students of today, along with their parents who also subscribed to the same failed philosophy, may now perhaps understand that every time a credit card is used or a debit card produces money from a cash machine, someone somewhere has to pay for it.
There is no such thing as free money and the current financial crisis, in the UK at least, will only be dealt a fatal blow once everyone understands that if you cannot afford something, you are better off not having it.
In his New Year’s message, if anybody bothered to listen to it, Cameron praised the Olympics and the Queen’s Jubilee. Millions spent on sport and pageantry in the hope that investment might somehow magically appear. I’m sure that a good result in the Beach Volley Ball will solve the country’s financial crisis and enable people to pay for their groceries once again!
Remember the Millennium and how the Dome was going to generate money for the country? It nearly fell down before it made a penny and whilst it is nice to have the new, shiny Olympic buildings, who is going to pay for their maintenance after the event? Will these ‘celebrations’ of Britain’s ‘greatness’ bring down our rail fares which are the most expensive in Europe or reduce our energy bills? I think not.
2012 is going to be financially hard for most people in the UK; for some, it will be a disaster but don’t worry, as long as we get a few gold medals, everything will be fine. Really?.