Same old Tories - how David Cameron is copying Margaret Thatcher's policy of speeding up the painful process of creative destruction


Anyone who is a member of the Labour Party can easily reel off the story of 1980’s Britain where the rise of China, India and other economies elsewhere began to drive the deindustrialisation of the UK and yet Margaret Thatcher’s policies deliberately sped up the process and did nothing to support the communities and individuals affected by the radical change befalling them. Yet despite many shouting ‘same old Tories’ about many of this Government’s policies few seem to have noted that the legacy of their ‘too far, too fast’ cuts programme is already becoming clear – a second period of hyper-speed creative destruction in one of our key industries, putting millions of jobs at risk.

The industry I mean? Retail. The retail sector employs 1 in 10 workers in the UK (3m people) and generates roughly of 8% of GDP. Yet look at any nearly any High Street across the country and you’ll see an ever-increasing amount of empty shops, 14.3% of shops are empty according to the British Retail Consortium. People will argue that net loss is not that bad because in 2011 5,268 shops were closed, 5,094 opened (net loss just 174) but this ignores two important devils in the detail.

Firstly the type of shops closes and the type that are replacing them. Out go your traditional, middle of the road retailer to be replaced by one from either end of the scale – ‘pile ‘em high, sell them low’ poundshops and other bargain retailers or their opposite number, the John Lewis-market boutique retailer. This phenomenon is so symbolic of the nation’s current economic situation and enforced by this Government’s policies. The many are cutting their debts or have less money due to their hours being cut back, their job being lost or just reductions in working tax credits etc. whilst the richer residents are protected by low interest rates and the very rich given a 5% tax cut. The result on the ground is that the middle of the road stores, with an eye on quality as much as low prices, a use of nice displays and higher staff numbers are the first to go, sharply replaced by the bargain basement retailers selling products with less frills and thus much lower costs. Surely this is a good thing? It is, to an extent, for customers who can offset their personal financial woes with these savings on consumption costs, yet in many cases – particularly clothing – quality will be lower. It is particularly bad however for employees, remember those 3,000,000? That number is dropping, rapidly, because these replacement shops – with less care for tidy displays, less concern about queue length and customer complaints – don’t need as a many employees, and of course it is these budget retailers who are the most enthusiastic users of the Government’s unpaid work experience scheme.

The second key point that hides beneath the not-so-bad veneer of net shop opening/closure figures is that we are seeing an increasing gap between poorer areas and wealthy areas. I’ve seen this first hand, here in Newbury there are closures but at the other end of town a whole new mini-shopping precinct has been opened, yet in my old university haunt of Newport, South Wales, it really is more of a ghost town. This is borne out in data collected for the Daily Telegraph back in February:

More than one in three shops are vacant in Margate, Kent, and Leigh Park, Hampshire. On the other hand, many parts of London such as St John's Wood as well as Cambridge and St Albans have fewer than one in 10 shops vacant.
(H.Wallop, Daily Telegraph, 7/2/2012)

Just like in the 1980s where whole towns, cities and even regions were based on the mining and manufacturing industries that had existed there since Victorian times were beginning to close down only to be egged on the Thatcher Government causing rapid closures, rapid job losses and thus rapid social decline – this is why the Conservatives are still seen by so many as ‘the nasty party’ and why they are unelectable in the urban centres of Wales, Scotland and the North of England. Worst of all Thatcher offered the victims of unemployment little in the way of re-training. As I said in the start deindustrialisation was obviously coming, indeed already happening when Thatcher arrived in power, we shouldn’t gloss over the role that unreasonable wage demands from Trade Unions played in speeding up the process too, but with this radical change being so obviously on the horizon educational resources should have been focused on these areas most at-risk to support people with the transition to a new ‘knowledge economy’. This didn’t happen, instead the process was sped up, no support was really offered.

The decline in physical retail is inevitable, internet shopping has been taking an increasing share of the market for over a decade now. Without the cost of buildings and sales staff prices can be much lower online without compromising on quality. Yet rather than realise this and beginning to put in place a serious strategy to offer re-training, careers guidance and support for displaced retail workers this Conservative-led Government is making the same mistake again. Doing nothing to stem the rapid decline of physical retail that has been sped-up by the recession, indeed they are speeding up the decline with their economic strategy that is cutting demand out of the economy while it is too weak to withstand such cuts. The new National Careers Service - in reality a new website and phone service offering careers advice - is a weak response, whilst it isn't a long-term solution Labour's proposed cut in VAT would at least improve spending on the High Street to stem the tide, let's not forget Osborne's first move as Chancellor was to raise VAT to the record high of 20%.

We are seeing a pattern, Thatcher sped-up the decline of manufacturing and mining, Cameron will now oversee the death of physical retail, both will then bemoan the social collapse that ensues – Ed Miliband is right, the ‘nasty party’ is back, but Labour need to win over the 3m retail workers by highlighting what is happening sooner rather than later. Like the plaudits awarded to Ed Balls for predicting the Tories would push us back into recession are showing, ‘I told you so’ can be quite the vote-attractor...providing you have a plan to sort it out.