Open Wide – This may hurt a bit… – Market Matters

The Cameron / Clegg Coalition: Can it deliver financial stability?

By the time you read this the Chancellor, George Osborne will have served up the bad news of his emergency budget.

Unfortunately I don’t have a crystal ball so at the time of writing only he knows just how painful it will be, but I suspect he’ll be like a well-intentioned dentist, pulling out your teeth then charging you for the service. It might be painful and expensive but you know it makes sense. 

At my local pub our landlord has opened the betting on ‘Good News v. Bad News’ with the winner being able to claim a top-of-the-menu bar meal complete with a free pint. Quite how he decides who wins I don’t know but in the collective opinion of the bar room regulars the bad news will include:

• VAT – up from 17.5% to 20% (but George won’t have the nerve to put it on food).

• Booze and fags – 20p on fags and 5p on a pint. • Capital Gains tax – doubled to 36% (but he won’t dare remove

the allowance on homes).

• Child tax credits – forget them if you earn over £30,000 a year.

• A freeze on public sector pensions, recruitment and a 12-month pay freeze.

• National insurance contributions up 1% (that was already planned).

• Lots of cancelled bypasses, airport extensions, high speed rail links, a few schools and the odd hospital or two.

…and the good news?

• Income tax and OAP pensions left alone.

• Corporation tax reduced from 28% – to 20%?

• And the best bit of all – a tax levy on the bankers who got us into this mess.

It looks like the honeymoon for our coalition government has ended, particularly after someone in the Treasury announced, “We’re kitchen- sinking it – throwing in as much bad news as we can”. From now on public sector capital projects will be shelved and public servants laid-off wherever possible whilst their feather-bedded public sector pensions are capped. Private sector employers like you, me and the rest of the markets industry are being encouraged to grow the economy out of trouble although this might not be too easy in the poorer regions where over 50% of local employment is created by the public sector. And you can expect the Council to put the squeeze on market rents and improvement schemes for the time being. I’ll announce who won the sweepstake next month.

Meanwhile one of the UK’s leading private sector, businesses is coming to terms with two startling bits of news. First, Tesco’s long-serving Chief Executive, Sir Terry Leahy who has been credited with engineering it’s phenomenal growth over the last decade, announced his surprise retirement. I don’t think he’ll be worrying too much about capped pensions or hikes in Capital Gains Tax but you can’t help wondering whether he has retired because George Osborne made him a better offer. I’ll bet he turns up in some advisory capacity or another to help the Government stimulate business and grow our way out of this mess.

At the same time it was announced that The Order of the Holy Paraclete – an order of Anglican Nuns in Whitby, North Yorkshire, intends to sell farmland around St Hilda’s Priory for the development of housing and a 35,000 sq ft Tesco store. Not surprisingly this has upset many residents of this charming fishing port, which is home to a ruined cliff- top monastery founded in AD657 by St Hilda. Objectors have been doing their homework and pointing-out that the development will damage the character of the town, take business away from local shops and worsen traffic congestion.

What makes it worse is the Nuns are staying tightlipped about the deal. Helen Barker, leader of the ‘Whitby Residents against Tesco’ campaign protested “They are not a silent order, but they do seem to be silent on this”. More than 2,500 people have signed a petition against the development but Mrs Barker says “It’s not very Christian to antagonise the local community…and they don’t seem to want to discuss it”. Other locals have pointed out that from their priory the nuns can look out over Whitby harbour where, according to Bram Stoker’s classic horror story, Dracula leapt ashore in the form of a black dog. Given it’s history of unwelcome visitors, I hope Whitby doesn’t soon have another.

Jonathan Owen is a director of Quarterbridge Project Management – a specialist consultancy providing business advice and design services to market owners and trade associations. He has a keen interest in the politics of retailing, growing vegetables and eating well.

Market Matters, published in Market Trade News magazine