Sunday, 20 October 2013

Wrong thinking (again)

Earlier this week Ed Miliband made another of his announcements in which he single-handedly will save the people of Britain, particularly the impoverished ones.  This weeks announcement made it clear he is looking to tackle the payday loans companies that so many people are struggling with, particularly their interest rates. The gist of his announcement is that he will impose a tax on them to raise funds for the growth of credit unions.

This all sounds very noble and it would be except it's more a demonstration in one dimensional thinking from the party who purportedly wish to change the lives of the working classes, yet have left them in the same position for decades.

If we want to understand part of the problem with his idea we have to look at credit unions. If we simply go back to May this year, we see that even the Guardian reported that all is not rosy for the credit union market.  Whilst the article reports on an overall growth, it also reports the that, on average the market is also losing one credit union a month. Within that article the most telling observation is that by Paul Brindley from Midland Business Recovery in which he suggests:

..many are being deprived of much-needed cash because of a combination of factors. They can't lend enough money to enough people who are willing, and able, to repay because of their rules on responsible lending. Meanwhile, when debtors get into trouble, they will often repay the payday loans with high interest rates first, and leave the credit unions until last for payment. And the courts are "taking a lenient stance", often allowing people to pay off their debts at perhaps just £5 a week.

Its there that we see the true nature of the problem.  It's not the interest rates they are charging that is the core problem (although it is a disgrace).  The true problem is that a market exists in which payday loans companies can thrive on the terms that they do.  Taxing the loan firms will not solve that.  All that will happen there is that the tax burden will simply get passed to the consumer as it always does, compounding the problem further.

One of the big problems of these consumers is their credit risk profile.  Many of them take on payday loans because they can no longer source funds from the main high street lenders, who after years of free and easy credit availability have tightened up their rules.  Credit unions will often be no different.  As "ethical" businesses, they have responsible lending woven in to their business model, so many of their potential customers will still find payday loans companies are the only option.

As I say the problem is that a market for them exists and this is where Miliband has missed the point. He has come up with a simplistic plan that's as thin as the only place it looks good in - the newspapers.  He has to realise this.  If he doesn't you've got to question his ability.  If he does understand it, then he needs criticising for his cynical play for cheap headlines. 

What is really needed is a culture and policy in which there is no market for payday lenders.  If he truly aspired to help, he would think seriously about how to collapse the market by raising the education of its population who can raise funds in a way they can manage without spiralling into deep debt and lift themselves out of poverty.  Part of the way to that is to have government that gets out of the way, stops taxing everything that breathes and creates conditions in which British industry thrives, grows and has a reservoir of highly educated and talented people to fuel it.

Saturday, 19 October 2013

Are you still happy...... sit on your hands?

The reason for my question comes after this weeks PMQs.  Although I didn't hear all of it, I caught a summary in which Cameron & Miliband were going head to head over the utility prices row thats raging on at the moment.  Miliband has been posturing by calling the whole thing an outrage, something he will do something about when in power as though none of what is now happening was anything to do with him.  Cameron struck at this posing for the media by pointing out that Miliband very much had something to do with this as he was the Climate Change Secretary who proposed the law that loaded your utility bills with costs that are causing them to bite hard now.

Miliband struck back.  His argument broadly, was that Cameron was in no position to be so sanctimonious, as this was the same piece of legislation that when it was travelling through Parliament, Cameron acknowledged his support for.  Touche.  To finish it Miliband went with a little soundbite for the media - "he's gone from hug a husky to gas a badger".  Almost irrelevant, but very telling in itself.

Something like this tells you quite a lot and I don't really know where to start, especially with Miliband.  For both of them however this was not a good moment.  Despite the severity of the price rises and the price that will be paid in the homes of the elderly up and down the country, there was no agreement to look at this with anything tangible.  No one asked and no one said that they were going to go back to revisiting the law and look at the green taxes that are playing a big part in your utility bills.  It didn't enter their heads. No! They have to stay, so we're reduced to the circus, lobbing media friendly custard pies across the despatch box.  In other words these taxes will remain and therefore so will price increases.

The other point goes back to that time when this law was still going back through Parliament. Both of them and by extension, both of the key parties, backed these laws. This stuff has consequences.  They may not be immediate but somewhere along the way, this bill once it became law set in motion a train of events that sees your utility bills going through the roof.  It set in motion a train of future events that will see old people who have served this nation well, left forced to make decisions about what to spend their meagre savings on. Some of these people we will know as our friends and neighbours.

The impact of that bill on utility prices was predictable even back then.  It wasn't an unknown.  In fact it was part of the plan (but that's for a different post on a different day) and this brings me to my main point. 

Stuff like this has consequences.  Consequences for us as individuals and our lives.  We're largely disinterested in those who create these consequences.  We think they're at Westminster playing a boring game.  In some ways they are.  The result is this whole thing disinterests us.  Many of us whine and moan, but nothing really happens.  We prefer to sit on our hands rather than kick up a fuss.  We don't hold our politicians to account. It's just not the British way you see. 

Well there are consequences for that.  We'll see the price of our indifference this winter and the next and in future winters.  In fact we'll see it in future summers too as we pay ever rising prices even when when the heating is off.  Until we get interested in sufficient numbers in reminding them they are public servants, their games and their rubber stamping of their self regarded bright ideas will continue.  They will do what they choose to do, knowing that we will either simply watch it happen and or grumble in fashion that is ulitmately benign.

This week we are proof positive of the adage that if you do not take an interest in politics, politics may well take an interest in you.

So now comes the time to ask if you're still content to sit on your hands, or would you like to play a part in turning this nation back on the path to a brighter, different future?

Thursday, 3 October 2013

Just a game?

Richard North over at EUReferendum wrote yesterday on the Federal Shutdown and whilst he wrote about it from a democracy in action perspective something else struck me when he wrote at the start:

The barricade in picture seems largely for show. When elderly veterans piled off the chartered buses in front of the World War II Memorial, some in wheelchairs, metal barricades and signs announcing a closure due to the shutdown of the federal government awaited them.

But, said Republican Congressman Steven M. Palazzo, "the barricades just seemed to part. A US Park Police officer, who declined to give his name, observed: "I'm not going to enforce the 'no stopping or standing' sign for a group of 90 World War II veterans", adding, "I'm a veteran myself".

What struck me were those barriers.  Granted its not the main news over here but its been on the TV quite a bit and the barriers have featured each time along with the notices pointing out that parks and places generally aren't open due to the Federal Government SHUTDOWN.

Now I might be wrong but there's just something about this whole thing that's a little odd.  Why the barriers?  Do those barriers go up every single night and time that those parks and buildings have to close?  Or are they something new?  Those notices as well, all nicely designed and printed.  

I mean, don't they just look a little - erm, well, slick?

I saw the barriers again on the TV news with a quick shot from New York at what looked like a view from some kind of pier which had another sign on it saying it wasn't possible to visit Ellis Island due to the SHUTDOWN and as I said earlier, more barriers.

What struck me as odd about the New York imagery was that immediately beyond the barriers was the small remaining bit of pier and then water.  In short, there's no need for the barriers there.

In fact from what I can gather, the memorial mentioned in Richard North's post is regularly accessible even when it's "closed" and no guards are present

In other words, this whole thing looks like political theatre and there's even more evidence to suggest that it is with stories beginning to circulate of people being paid to protest the Republican leader at one of the closed sites.

The barriers will have cost money to place there and to remain there.  The notices will have cost money to produce and place there.  The guards will have cost money to place there.  It seems for a government with no money, there's money left for politicking.

Propaganda doesn't have to be the overt in your face propaganda we've witnessed in despotic regimes in history.  It can be the in the little signs and signals that reach your mind and create an images.  Those buildings, memorials and parks could simply be closed like they do each day.  But nothing says "closed" quite like an imposing barrier does it.  Also nothing says closed for political reasons quite like notices that capitalise the word "SHUTDOWN".

My point is that this looks like a game which is a sad indictment for whomever organised this.  These are serious times, that need serious people to act like grown ups and have serious conversations about what is right for the future of the nation they're supposed to be running.

The whole thing leaves a bad taste in the mouth.