The Industrial Clearances

Industrial Clearances.

There can be no mistaking the air of desperation pervading the political establishment now albeit that with the sense that despite the overweening emphasis being placed on the need to carry out ‘the will of the people’, ‘they have spoken’, ‘their views cannot be overridden’, the people have ‘won their sovereignty back’ and the house of lords – being unrepresentative of the people – they cannot delay or deny that decision; that there is a great mounting feeling of uncertainty. This uncertainty, carefully choreographed to asphyxiate realism in public arena and cohered within the executive system as a positive frontal stance for overall PR consumption, would seem to be attempting to disguise the panic that is hardly deniable from the blasé and disingenuous assertions expressed on the simplification of how easy and marvellous everything can be, once we (whoever that is) get our country back! The unfolding ambiguity on the whole range of topics that have to be sorted out is clearly unsettling for the range of industrial / commercial activities which will be affected. It is not just disquieting within the different divides of the accepted definitive decision but also in the direction and conclusion to be adjusted to once the partition offer is decided upon and taken though ‘The House’.

If one looks at the key players involved, one can detect that the bombastic pro leave attitudes is not having such a beneficial effect, etched as it is on the face of the team now tasked with the responsibility of negotiating the terms of the separation debacle and the reality of just how fraught the situation is. Unravelling the links of 43 years of economic complexity and practical / psychological cohesion is not just at the behest of this government but is to a greater extent reliant on the good will of all the EU nation states, goodwill which has, thus far, been sourly tested. As much as the leavers crow against the re-moaners ‘to get over it’, ‘suck it up’ and don’t even try for a second vote; the price of brexit is to be, long term, very expensive, potential unaffordable without adjustment to the nations revenue intake stream and is unlikely to provide, in any practical way, a good deal for the people. It is an unenviable odd bet that the people of the UK will be worse off over the next 50 years, to be paying for the decision of the 23.6.16.

One can become somewhat dispiriting lethargic in the viewing the attitudes and unfolding events of 2007/2017. It is staggering to simple look at the damaged done within a supposed wealthy prosperous buoyant country, to have to witness the impoverishment taking place across a range of public assets and services, the degradation one can see that is becoming endemic over the last decade, enhanced by political incompetence might be only a precursor to what is to follow and without having to look too hard, to understand the superficiality of the hype being expressed in getting “ a better deal” (better than what has gone before?) with the unravelling of the country’s relationship within Europe’s EU.

For the levers the supposed benefits to be gained, as offered by the duplicitous brexiteres, on self determination in regaining (imaginary) sovereignty, definite reduction and more control of immigration, retention of finances wasted on the EU, greater flexibility to choose who one trades with outside Europe and still retain access  to the EU market; are all looking decidedly problematical.   

What we are stepping into is reminiscent of the 60’s to early 90’s, a period when the UK was warped in the beginnings of the international movement of business and looking at a very bleak future with falling productivity, rising inflation, higher deficit between import vs exports, labour force that did not agree with butt end deconstruction and a prevalence of industrial asset strippers. The economy was in turmoil and heading for serious issues, saved some say with the fortuitous find of North Sea oil which was promptly wasted in covering the cracks of divisive government policies of the mid 70’s to late 90’s. Thatcher turn her face against any industrial development policies and made it clear that she preferred the new world of globalisation, monetary policy, commerce and financial activity; so much that she presided over, what might be called ‘The Industrial Clearances’ period, stripping out of the country any activity that held an organised labour content which meant the large scale mature productive and manufacture sectors, primarily of the midlands and northern counties, had to go. From this there was little choice but to follow where the business was going – Europe and to seek a negotiated beneficial relationship, hence the act of accession 1973.

The adjustment was, some might contend, a success but it came at a high personal sectoral expertise price. The lack of any coherent industrial statgey in favour of the idea of market forces, foreign inward investment, with allowed exploitive supremacy of the financial markets was endemic and favoured in the phrase often used over the time by both parties; that the UK was “open for business”, any business will do and aided with lovely generous grants which were available to smooth the way to the adjustment by ‘SFA’ at up to 45% of capital cost. There was during the clearances ultimately a loss of industrial sector skills, de-skilling across trades, and little investment in practical retraining as training provision and technical colleges were shut down, with the industrial sectors also reducing their own need to offer quality apprenticeship placements while they gained, over the years, the reduction in corporation tax.

Today with the decisions being made and the even greater uncertainty of having an expansive profitable future, that has in the past largely been on the basis of exporting goods and services, can no longer be based on the productive / manufacturing capacity; with much of the manufacturing sectors striped out and owned by foreign investments and now contributes less than 20% of GDP, has left open the clear vision that the UK has flung open the doors as in being “open for business” which can be instead interpreted as being “Up For Sale” for any willing buyers. To evidence this one has only to consider the high number of prominent UK businesses that have in the past twenty years been taken over and link this to the fact that the value of the pound being driven low in the past decade means that it is again a prime target for very opportunist buyers to force aggressive hostile acquisitions of other key commercial, technical, service or productive known brands.

Take over’s are not necessarily good for the long term UK economy nor the industrial sector overall, there is a short term benefit generally for the shareholders, always willing to sell or be forced out (BHS, microchip designer Arm Holdings, the loss of Cadbury, the recent T-O Unilever attempt by Kraft) but once they are gone from the UK productive scene, investments decisions are ultimately controlled externally and open to more generous productive competitor pressures. (1)

The fact is, the UK is the most open accessible market for such acquisitions and although established political forces and liberal economist emphasis the benefits, (arguable transient) no other European country has copied the UK model of being “open for business”, they all have some form of strategic sectoral protective proscription against the hollowing out of their important productive earning capacity. Governments (primarily Conservative) have been averse to installing safeguarding measures e.g. coal, steel, utilities, telecomm industries and banking crisis etc, held to ransom by their own privatisation dogma seen increasingly as a policy disaster – sold off cheap and losing influential control. Some economist, over the years, have taken issue against the false wisdom of the relaxation / abandonment of managed market forces yet despite the outstanding evidence that traditional economics has failed and continues to be dangerously divisive, no real attempt is on offer to stop the systemic degradation of the UK or drain the swamp of government policy ineptitude.

There is no clear strategic direction, (disregarding the political spin that there is one) rather the country is just drifting into a uncontrolled and more uncertain future than at any time in the past 70 years, over a period when there was exploitive opportunity of mercantile projection onto a world platform that offered little competition in all forms of commercial, trade and services activities. Now that situation is no longer so open. The ability for every modern country to reach out to the world to provide their own offerings is at a substantial competitive level and the UK is no longer in a position to be a dominate player.

In order to meet the trials of the next 20 years, the UK will, with the advent of the split from the EU, have to find measures that secures or retains or generates the foundation of a new economic model; it is a high risk gamble to carry on with the outmoded position of being relaxed with open for business and a fast exit door for any key businesses. Becoming a great manufacturing country again is unlikely (unless the sweat shop policy becomes more extensive) and commercial service provision can be done anywhere in the world. This exposes the much lauded financial sector which is in danger and not just from the potential ‘passport’ restriction. It is clear that the UK will soon become a net importer of goods and services, none of which will be mitigated by a pursued offer of a better deal (with Europe or the world) than what has gone before. New stronger tax streams will have to be found and perhaps the much hated but usefully justified trade barriers may have to be installed to gain restructuring time. For the moment the UK is on the precipice of creating a failed economy, it is in no foreseeable position to redress its debt or minimise deficit and it is without forceful action, possible to see not just a rerun of the clearances of what is left of the productive sectors but likely to be one of the financial / commercial clearance of this decade.           

© Renot

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 (1) Hostile Takeovers in the UK and Short-termism.

        The need for an anti-takeover law John Hann

        www.civitas.org.uk