Sunday, September 28, 2008

Has anyone got any practical policies..?

The effects of the global financial crisis are still a long way from the pockets of ordinary people. Much more obvious are the soaring food and energy bills which have little to do with Fannie Mae – although the dangerous slide in the value of the £ is also having severe high street consequences.

Never before has a financial meltdown like this occurred when such a large proposition of the UK population was employed by the public purse in its many guises. A huge slice of the population is now being paid to perform non-jobs to avoid embarrassing the government employment statistics. For the most part, you probably know who are, and have been wondering how long your gravy train could possibly stay on the rails.

We ain’t going to fix this mess by expecting large companies to invent new jobs. Most large companies are going into damage limitation mode, and preserving their resources while they wait and see what the outcome of the banking mess actually means in terms of rising interest rates and costs. Corporate tax receipts are going to fall off a cliff (other than from the energy behemoths), the government will not be able to afford to do anything. Although whether or not they will just print more money anyway, remains to be seen..

We need concrete ideas on how to enable start ups to start up before they are shut down again by the piles of red tape that have been massively expanded by EU membership and other pointless nannying regulations that have no purpose, other than to employ the otherwise unemployable in a string of non-productive jobs ranging from diversity enforcement officers to HIPs inspectors. Do you think China or any of our global competitors wastes a penny on such irrelevance? The only other country outside the EU that seems to have caught up in the same costly PC fiasco is the only other one with such a diverse population of "swing voters" to appease - the USA. And as examples go, that's not a very smart one.

For an immediate eye-catching start, TMP suggests keeping it simple. Instead of making it nearly impossible to employ people as a result of numerous impositions in the form of PAYE/NI contributions and regulations a foot deep – allow start-up employers to retain 15% of employee PAYE/NI for the business. In effect, reward them for providing employment that is not costing the public purse anything.

This can easily be cost-neutral if we scrap most of the wasteful subsidy schemes that provide employment to the quangos and timeservers like regional development authorities.

This would work in enterprises of up to say 25 people (maybe a sliding scale thereafter), and help offset some of the massive advantages being enjoyed by larger companies that can absorb the costs of operation more readily. And if this means that companies in the awkward size zones of 25-100 employees decide to split themselves down into smaller operational units, then that’s good news too, as the skills and chutzpah for operating a business will be spread more widely.

After all the efforts of recent governments to put obstacles in their way, small enterprise and self employment of all types has to be made simpler and more attractive - and FAST! What other ways are there available to take up the fallout from the disasters affecting bigger businesses, or redeploy the talent presently wasted on non-jobs producing £3 cups of coffee, and those legions on the the public payroll..?

The last financial crisis on this scale lasted ten years (1929-39) and was accompanied by an employment crisis, the like of which we have yet to see emerging. However, that crisis was only ended by a world war in Europe that was paid for by selling the jewels of the British Empire at knocked-down prices to the yanks; and although bold public projects like the Hoover Dam and the freeway network in the USA helped to revive the US (Roosevelt's famous "New Deal"), that too required the war to properly get its economy moving again using massive deficit spending.

Any of which other than "massive deficit spending" seem like unlikely options just now.

Will the energy economies of places like Kuwait and Qatar be willing to write the cheques to ensure that their rulers will still be able to get a decent Latte at the Ritz? Will the Chinese feel obliged to prop up the US treasury some more in order to keep orders coming for Chinese factories?

If we don't want to continue to rely on the age of fairy money, J K Rowling aside, the way out of this mess is to enable new businesses to emerge, survive and then flourish. Something that Gordon Brown's Labour Party wouldn't know how to do if their lives depended on it - but yours does...

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