Dec 21 2008
Is it my democratic duty to shop til I drop?
I read in the Labour press this morning we all need to go out and shop til we drop – but showing suitable responsibility at the same time.
I ventured out this morning to buy a couple of newspapers and some fresh bread. I added seasonal marzipan to my basket so I could ice the Christmas cake later. Was that enough, I wondered, to meet the new patriotic requirement to be a cheery shopper? The marzipan was certainly dear enough to make a difference to the Sunday bill. It didn’t mean, however, that I needed to up the mortgage.
Therein lies the dilemma. The authorities visited this crunch on us, because they judged we were collectively borrowing too much and spending too much. They hiked the interest rates and later told the banks to lend less for the level of capital they held. Now they don’t like the results that come from jamming on the monetary brakes so spectacularly. They want us to be both prudent and to spend more. Given many families personal circumstances they can’t do that.
The spectre at the feast this Christmas is not just cash strapped banks reluctant to lend. It is many people worrying about whether they will get any overtime in the New Year, whether they will be on short time working, or whether they might lose their job altogether. Unemployment is the spectre stalking the land. If you fear loss of job you are not going to go out and buy big ticket items. You are going look carefully at the price of any inessential you would like to buy. You might buy some decorations and some Christmas lights, but preferably on the day the shop has cut their price by 25% to promote them. You won’t buy the new plasma TV, even when it is £300 off, because it’s still a large commitment. As for a new car, well you can forget it.
Companies are in an even worse plight. If people don’t spend enough in the shops, they feel it first at the factories making the goods. The stores soon turn off the suppliers. Companies cut out buying new cars for their staff, cut back on corporate hospitality, and review the prices they are paying to all who work for them on contract. You soon get into a recessionary psychology. Why buy it today? It might be cheaper tomorrow. Why buy it today? We might not be able to afford it tomorrow. Why buy it today? We can make the one we’ve got last longer.
After years of fulminating against the throw away society, after years of moral condemnation of the have it now pay later society that fuelled the boom, the government has come to the conclusion there is one thing worse than such a society. That’s a society where people are so careful with their things and their money that they throw others out of work with their parsimony. Did I do enough with my marzipan? No I didn’t. Should I do more? No, I don’t think so. What’s the point of buying food you cannot eat, only to throw it away, or buying things you do not need. Besides, many are saving up for the tax bill in January, as the government does want to spend so much for us.
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
Yes, the irony is almost funny. After years of lectures about “consumerism” we are now being encouraged out to the shops.
JR, Way off topic if you will forgive me, but how about a referendum on the continued licence fee for the BBC? It’s a hard thing for anyone to oppose and it gets the tories off the hook with regard to BBC reform ~ let the people decide. I for one could stand a massive ramping up of pro-BBC propaganda on the BBC for a short while if it meant their demise.
Reply: I like it, but I don’t think any main party is likely to pick up the idea.
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Donitz Reply:
December 22nd, 2008 at 11:17 am
I could not stand anymore of those damned “We are the BBC. We are wonderful adds”.
Kate A stood in war zone with Chopper flying over, looking brave.
Lenny H or other “granny’s favourite” smiling at camera.
Voice Over with dreadful ding dong music “We are the BBC making the unwatchable, highly taxed”.
As a cost cutting exercise, could the left-wing, I mean impartial reporters, stand outside a cardboard cut out of number 10 instead of the real thing. I’m sure no one would notice.
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Stuart Fairney Reply:
December 22nd, 2008 at 12:11 pm
I wouod never advocate not paying one’s TV licence ~ Jonathan Miller on the other hand…
http://jonathanmiller.wordpress.com/2008/11/18/13-things-you-need-to-know-about-the-tv-licence/#comment-544
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[...] Wrong Shadow Chancellor?? John Redwood MP » Is it my democratic duty to shop til I drop? The authorities visited this crunch on us, because they judged we were collectively borrowing too [...]
[...] The Wrong Shadow Chancellor?? John Redwood MP » Is it my democratic duty to shop til I drop? [...]
Talking about tax bills in January why not tell all QUANGO’s that unless they cut their budgets by 20% overall within three years that they would lose all public funding ? The £20 billion saving could fund raising the basic personal allowance over & above prices/planned levels by £2,000 to cut the burden on basic rate tax payers . If people felt that their taxes where going down long-term they might be more likely to spend money if they knew they would be better off.
Personally I would cancel the VAT reduction that has not worked, raise it to say 19% and would extend it to exempt goods & services. This could fund phasing in a 10p tax band on the first £10,000 p/a along with the end of tax credits & poverty trap creating payments that stop the working poor from embracing self improvement and fewer tax breaks for the wealthy. This would be phased in over three years. This would free-up the jobs market by making it more worthwhile to get better paid jobs - so that when the recovery happens there is a pool of people on low paid jobs who have the incentive to get on thanks to changes to tax & benefits.
Higher road fuel duties could fund extra cash for OAP’s to stop the VAT hike hurting their finances while reducing oil dependency which is good for economic stability and the environment. Pensioners could get a Citizenship Pension to slash poverty & red tape while boosting saving and a big fuel duty hike would force car-makers and sellers to develop greener cars to people facing a major increase at the petrol pumps. Car manufacturers are unlikely to sell cars that are bad for the environment if they are too expensive to run- they could recover by selling fuel efficient cars to people paying less tax on the basis that they used little petrol to run. This would solve the pensions crisis and could also be partly funded by raising the age of retirement to 68 and making that the same for the state sector too. The pensions time- bomb would be diffused as state provision would be made more affordable thanks to a later retirement age and a handy revenue stream from fuel duty increases.
As deflation is getting drastic a one off £22 billion cash injection into the economy would help as basic rate payers getting a £1,000 cheque this April would be a big boost to people paying off debts and to retailers wanting more sales.
ID Cards, New Deal , IT Schemes and Regional Development Agencies could all be axed to stop Big Government & long term increases in the public debt being a drag on recovery . A short -term boost to stop a depression is all well & good but longer term high debt interest charges for future generations , anti-competitive taxes and investment smothering public spending increases sound pretty bad. To speed up the fall in unemployment once a recovery starts why not replace JSA & IB with a less generous payment to curb economic inactivity ?
Civil service recruitment can be frozen for five years and government procurement costs slashed via a greater use of market forces to fund dispensing with Labour’s potty hikes in top rate taxes & NI charges while raising Child Benefit to stop higher VAT & other changes plunging more children into deprivation. The Tories could hardly be the nasty party if they pledged to tackle child poverty while stopping the kind of 1970’s style high taxes that brought the UK to its knees.
This would mean that within three years a person on £18,000 odd a year would only pay income tax at 10p while Labour’s higher taxes & the need for them ( excess public borrowing and the failure to reduce wasteful public spending) would be prevented and poverty kept down. The policy ideas would get money to those most likely to spend it - i.e. the lower paid .
You would get an economic upswing on the back of these reforms - taxing consumption rather than income is pure logic and has worked before. Helping people to spend more money while ensuring longer term stability via less oil usage and lower budget deficits sounds quite wise to me. People who need more cash actually getting it could see outstanding credit card bills being paid off thus getting more cash to the banks meaning that they would have more money to lend and thus defrosting the credit market too.
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Robert Reply:
December 23rd, 2008 at 9:49 pm
You obviously live in a city so no surprise in your suggestion of lets hit the poor old motorist who already pays a massive amount of tax. Most people outside large conurbations and or have more than 2 children need a car. I suspect you neither live in the country nor have more than 2 children!
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Another very good analysis of the current dilemma we all find ourselves in. While I would like to help keep people in jobs through my purchasing power, I have no wish to run myself into (worse) financial trouble by doing so, particularly as I am a pensioner. Therefore my Christmas spending is parsimonious to say the least, as is the Christmas spending of most of my friends. We have decided to cut back on the amount we spend on presents anyway & donate some of the money saved to small, local charities. The remaining presents are going to be items of food & drink to enliven our Christmas festivities or something we each need rather than want. Personally, I’m not using my credit cards this year - it’s either debit cards or cash - or do without. I believe the old adage was something like ‘cutting your coat to suit your cloth’. A pity Chancellor Brown, with his budgets unbalanced since 2002 as I understand it, never learned this lesson.
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The debate about increasing debt when we are already massively indebted is well chronicled, the futility of buying more imported goods seems less examined. What has amazed me for years is the blind eye turned to our monumental and worsening balance of payments deficit. Having followed the Wilson/Callaghan torment over the sixties inbalance and the three year battle not to devalue, it has seemed very odd that the New Labour deficit has been largely ignored. The Sterling devaluation over the past year is no surprise but at some point the beneficial arguments for currency devaluation wear very thin. We are being encouraged to make our massive trading deficit, already further affected by the loss of financial service income, worse by binge buying more inconsequential imports. This likelihood has been increased by the VAT reduction, money that could have eliminated stamp duty for years and helped resuscitate the construction industry. Tax pounds should be spent on improving our cities, infrastructure and supporting new energy not encouraging the import of throw away clothes from China.
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No icing on the cake then?
reply: Good question! There will be, but you need to do the marzipan at least 24 hours before. Fortunately I have icing sugar in stock!
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My Mum has always put the marzipan on & then the icing straight afterwards ! Mind you she uses roll out store brought icing from M&S ( my staff discount card makes buying the marzipan & icing far less profligate !).
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Don’t forget the sieved apricot jam betwixt cake and marzipan.
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Back in the 1950s, there was a point to working here. You needed vast numbers of people to bring in the harvest and work the farms. The means of travel was the (manpower hungry) railway network. There always seemed to be a lot of what my Grannie called “little men” around to cut hair, patrol the Park, deliver things, work in shops. Now Superstores do all that much more efficiently. Also, of course, iron, steel, coal and manufacture (especially clothes) brought a lot of global money from our Empire into London. then there were the enormous numbers of Armed Services spread throughout the world.
Nowadays just one man works our farm, people drive cars, local little men seem to have been replaced by either nobody or else middle aged ladies and most manufacture has gone abroad.
What work are we supposed to do? The North was stripped of jobs under Mrs Thatcher (quite rightly too) and now the South, including London, is being stripped of jobs by Mr Blair/Brown.
I am afraid that spending a few bob isn’t going to affect the underlying lack of jobs or, more important, bring in some money from outside.
Maybe this recession is trying to tell us something?
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Having bankrupted their own party, Bankrupted the Country, they now want us Personally Bankrupt too, this spend spend spend idea is a trap people, don’t fall for it, if you have any money, pay off your debts.
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I quite agree with this article, I have no debts other than a perfectly manageable mortgage. I need a new kitchen but am hesitant because I don’t know if any company I buy from will still be in business to deliver, or if it will be cheaper waiting. My savings interest has halved but at the moment that is offset by mortgage reductions. My income is secure and if I am reluctant to spend how will people in a less secure position even consider it, especially since this government seems intent on punishing those of us who were sensible about house purchase and money. I really am scared about what is going to happen to the country.
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John, you should have stayed at home and used internet shopping to both help the economy and save you money.
For example, the other day my wife placed an internet order on M&S for flowers.
Now, it appears that M&S are coping with the recent VAT reduction by adjusting the bottom line with what they call a “Take VAT” amount rather than changing headline prices. In the case of my wife’s order of £35 worth of flowers it enjoys a Take VAT amount of -£1.05 to give a total value of £33.95. Yet by my calculation it should enjoy a Take VAT amount of -75p with a total value of £34.25, i.e. 35/1.175*1.15 =34.25. I may have got the calculation wrong, but if not you should enjoy this bonus whilst you can. How M&S are going to explain it to HMRC is another matter.
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Very frugal of you John to buy marzipan. I though you would have been more of an almond paste man?
reply: It was still £3.05 for 454 gms as we now are told to say.
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If you threw a packet of last year’s icing sugar and the same amount of caster sugar into your mixer + egg yolk, lemon juice, and a few ground apricot almonds instead of the recommended huge amounts of tasteless and expensive sweet almonds, you would save time spent shopping for bought marzipan as well as money, and have something much nicer to put on your cake. (The bitter almonds can be ground by you, and have huge amounts of vitamin B 17 in which might inhibit cancer too.)
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