Unemployment in Birmingham

[i_like_concrete]

Originally Posted by M€tr0l1nk

Indeed, I wonder if those that claim that is being lowered to 15% has had no effect will hold the same view when it is raised to 20%?

I'm sure a 5% increase will indeed have an effect, just like a 5% drop might have had one.

[M€tr0l1nk]

I'm sure that there are a fair few retailers that having an extra 2.5% on their margins this year has been the difference between going under and surviving.

Has it been many companies? Dunno, none of us know, and we won't until after the end of the year, but to suggest that it was £12bn wasted is not true.

Their was never an option of dropping VAT below 15%, the EU would not allow it.

[Erebus555]

http://news.bbc.co.uk/1/hi/business/7995850.stm ...

[markmcd1976]

Hmmm not sure if you can take this in isolation, as a lot of people have a lot of extra cash each month because of the drop in their mortgage repayments.

I'm sure that extra cash has had much more of an effect than the 2.5% VAT reduction.

[M€tr0l1nk]

oh, if you say so Mark, if you are sure that to be the case I will ignore the Centre for Economics and Business Research, after all, what do they know?

Out of interest, what would need to happen for you to believe it had been a success?

How does having extra cash differ from the 2.5% VAT drop?

[M€tr0l1nk]

mark - do you not spot that a £12bn direct tax cut would have, on the whole, been used to pay of personal debt or be saved given the economic situation and as such would do very very little to stimulate the economy or to save retailers that were on the margin?

[markmcd1976]

I'm not saying it hasn't had an effect, just that it can't be taken in isolation.

Seeing your mortgage drop by £300 is much more tangible than the 2.5% tax cut that has been passed on (or not by some retailers)

As for direct tax cuts, yes I agree some of it would have been used to pay off debts, as the mortgage drops have, but again this is a benefit to the banks worrying about their toxic debts.

[M€tr0l1nk]

£12bn in the banks coffers is peanuts in the scheme of things, their potential toxic debts rank up there near £1tn (yes TRILLION), I think a fairly modest £12bn being directed towards retail was a good way of ensuring the money stimulated the economy rather than sitting in bank accounts doing very little.

[markmcd1976]

Yes it is a drop in the ocean, but I still believe the VAT cut hasn't been as effective as the drop in peoples mortgage repayments in helping the retail trade.

I know the help that has that been given to the bank hasn'f filtered through to my business either. Despite never using our overdraft and being profitable for the past three years our bank have just offered us an interest rate of 20% on a small loan to buy a new van... thanks for that Gordon.

[M€tr0l1nk]

Not exactly sure how your suggested direct tax cut would help your credit issues?

Oh, and those of us with no mortgages (the majority of us are suffering due to low interest rates.

[markmcd1976]

I didn't suggest a direct tax cut?

I just said that the VAT cut couldn't be taken in isolation when looking at the increase in retail spend and that it will have to be paid for by the VAT increase next year.

And my credit issues was just to highlight that a lot of what the government is doing offers no help to well run businesses like mine.

[M€tr0l1nk]

What should the government do to help struggling businesses like yours?

That is the question that you are not answering.

[wiggleyleeds]

Metrolink stop trolling. He is disagreeing with the assertion that the 2.5% VAT cut solely explains any increase in spending - given that there are other factors such as a massive ruduction in peoples "debt" due to mortgage payment reductions. He wasnt attempting to find a "solution" to the economic crisis as you seem to be trying to extract from him.

Anyway, for me personally, as a company director, the 2.5% does make a small significant difference, by several thousand per quarter. For many end companies that sell services rather than "retail goods", they have not passed on any reduction in VAT, despite suppliers having cut prices, so the benefit is two fold.

As a consumer however, a 2.5% decrease in vat hasnt made me personally go out and spend more, thats just silly. A £29 jumper being reduced by 80p doesnt really compell you to spend more. Having an extra 500 quid to play with each month due to lowered mortgage payments does though

[M€tr0l1nk]

Grow up wiggles.

All I am asking for is what Mark would do differently than is being done at the moment.

We have one almighty shitter of a problem, people are all too keen to say what is wrong with the current approach, yet no one ever comes up with an alternative.

[NeilM]

The VAT cut was just a public relations exercise trying to convince people that the government were doing the right thing, except most people saw through it, plus there was a requirement for businesses to pass it on, but a lot didn't and pocketed the money, but it was a farcical decision anyway.

That £12bn could have been used as tax relief on NI contributions for example, which would have benefited both people and a wider range of businesses, not just retail.

[markmcd1976]

No offence taken, don't worry...

A couple of alternatives:

Fuel duty, reduce this, not increase it, as this is the life blood of all business in the UK. This would have a positive effect on all businesses.

Force the banks to bring the interest rates of their loans down. So valuable working capital isn't spent on assets that should really be on credit. It would have been cheaper to buy our van on a credit card. That is madness.

VAT holidays for companies with small turnovers. What's better, getting the money six months later or not at all if the companies go bust.

I'm not an economist, but you can see by the state of the Pound that what the current government and its policies are thought of by the rest of the world.

[Biosonic]

As a consumer I can say that the 2.5% reduction in VAT has not made me spend more. it may have helped some companies stay afloat but I did notice that many chose to pass on the saving to the customer. It didn't make me buy anything more though.

The reduction in interest rates has undoubtedly helped people out, and that could explain why people are choosing to spend more money at the supermarkets - having nights in instead of nights out.

Ironically the low interest rates may also be helping some parts of the retail sector because people with decent amounts are savings are seeing virtually no return, so now is the time to replace their car, furniture etc etc.

But the low interest rates are also confounding the banks, and more importantly the Building Societies (who are the most innocent parties in this debacle) as people are spending their savings on clearing credit card debt, new purchases, or ploughing it into National Savings where it is safe and earns a competitive interest rate.

I think the 2.5% VAT cut was nothing more than a PR exercise and something more meaningful could have been done.

We'll see what the budget comes up with.

[feltip]

I know it's not worth shouting about for the reason it's on the BBC as a bad example but Cannock just been on News at 10 for it's unemployment rate and the impact on young people.

[Erebus555]

Hasn't it seen the biggest percentage rise in people claiming unemployment benefits out of anywhere else in the West Midlands? I think it was on Midlands Today when the latest Birmingham figures were announced as well.

[feltip]

yeah was something like that,
Cannock's still in a sorry state; 16 years since the last colliery closed and it's still not what it could be.