Wednesday, 28 October 2009

It's a win, win, win, win

There is an excellent rant in today’s Guardian by Simon Jenkins which can be found HERE. Nothing exceptional about this per se, I suspect Simon’s blood pressure has been an issue for some time with his doctors as regular readers will know he has trenchant views on the 2012 Olympics (he reckons he could do it for about a quarter of the price by using sport stadia we already have) and Afghanistan (he quite rightly points out that this is the fourth war we have fought over there and we have lost each time).

Anyway, today’s target for his rage is scrappage. Don’t get me wrong, he is in favour of the car scrappage scheme, rightly pointing out that it has been an extraordinary success despite the fact that only £400 million has been spent on it (compare that to how much we have spent on failed banks). Why he wonders is the scheme not extended to other household goods to stimulate demand?

It’s a fair point and one that has been vexing British business for some time. I was talking to a client in the heating sector only a few weeks ago who has been quietly lobbying for a scrappage extension to old, inefficient boilers. Let’s be clear, my client does not expect the Government to provide a short term boost to his sector and bottom line with no contribution from his end. His view is that such a scheme will help boiler manufacturers; small businesses such as gas installers; help homeowners to reduce their heating bills and the Government itself to hit its climate change targets. This is what could be called a win, win, win, win.

So why don’t we do it? Simon blames it on the class system – in that the Government and bankers are much happier doling out cash to each other in the hope that some of it will trickle down to us via increased lending, rather than giving it directly to us. Coming from a man who was educated at Mill Hill and St John’s Colleage Oxford this is strong stuff.

Apparently Mandelson had to fight tooth and nail with the Treasury to get the scrappage scheme go-ahead which tells me that this is a Government wedded to monetarist economic policies which now seem as outdated as Keynesian demand stimulation seemed a decade ago.

Worth a read.


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