Saturday, 2 April 2011

This week on the High Street

Officers Club collapses into administration again

Easy Living Furniture in administration

400 jobs under threat as off-licence Oddbins heads for administration

Daily Sport and Sunday Sport owner in administration

‘New Woolies’ is latest High St chain to fail

Mothercare reveals more UK woes

Dixons issues second profit warning

19 comments:

dearieme said...

Apart from that, Mrs Lincoln, ......

Anonymous said...

Notwishing to make light of this but - do you suppose this might be evidence of a nation slowly reconciling itself to the fact that going out and buying precious shiny things "on tick" or by exhausting any savings they have, or by "utilising the equity in their house" may well have people like Charles Bean and Anatole Kaletsky clapping like seals, but just lands them, eventually, firmly in the clarts, and when it does sadly no one from "government" turns up on the doorstep with a "Good Citizen "we'll pay you debts for you" Award" to reward them for their devotion to the cause when the bailiffs start sending them nasty letters because they let their enthusiam to "help out and do their bit" as counselled by Charles and Anatole etc. perhaps go a bit far ? I only ask because in her piece yesterday Polly Toynbee, as well as mentioning some of your listed casualties, also threw in this "H Samuel and Ernest Jones sales are down: no money for jewellery. Argos, Comet, Mothercare … on and on the rollcall goes of sudden falls in sales and profits."

Mark Wadsworth said...

D, the play was a success.

Anon, I don't make light of anything - this is probably largely down to the VAT hike (the worst tax of all - even worse than Employer's NIC), which has pushed a few more businesses over the edge.

Yes, I know newspapers are zero-rated, but cover sales is only half their income - the other half is advertising, which is very much VAT-able.

Anonymous said...

MW - oh yes that VAT hike - I seem to recall that some sage voices were pointing out at the time it was announced that Shire Squire George (or the people advising him) might have been being more than a "tad optimistic" in his/their forecasts of how much "extra" revenue it would bring into government coffers !

So on the evidence we have to date, how soon will we begin to see that "private sector taking up the slack" thingy start working do you think ?

And I wonder if any of the "siren voices" crying out for "taxes to rise" as an alternative to "the cuts" (and yes I know "cuts" means many different things to different people so let us not get into when is a cut not a cut territory) would draw any connection between "rising taxes" stifling demand by emptying people's pockets, which is why high street stores and the like start going belly up as foretold by the old old economic rule that "no customers equals no business" and might therefore be contemplating having a rethink of their "master plan" ?

Mark Wadsworth said...

Anon, rather surprisingly, during 2010 it is reported that 'the private sector' added 428,000 new jobs. How many of those were real jobs and how many were in all these new companies that friends of Tories are setting up to cash in all the outsourced shite like "Back to work advisers" is unknown.

But that'll now go into reverse. This whole 'running the economy' business is quite simple:

1. Cut the worst taxes (VAT, Employer's NI) and increase the best taxes (Council Tax, Fuel Duty). The Lib-Cons have merrily decided to do exactly the opposite of this.

2. Cut the most wasteful government spending (in particular, that handed over to 'private' companies, but in general all the quangocrats). The Lib-Cons are in fact doing the opposite of this.

3. Try and get the deficit down to +/- nil (and aim to run a surplus and pay it off in good years, which is unlikely to happen, but at least you can try). The Lib-Cons pay lip service to the idea, but they still intend to run up colossal deficits each year for the rest of this Parliament.

PS, Labour would have been just as bad.

APL said...

Anon: "So on the evidence we have to date, how soon will we begin to see that "private sector taking up the slack" thingy start working do you think ?"

Where Anon, do you think the government gets it's money, but from the private sector?

Its instructive to watch the HMRC put Oddbins into administration with potentially a loss of 400 tax producing jobs rather than allow it some leeway with its tax bill do we really really believe the government sector can actually take up the slack?

We have a gordian knot, the private sector cannot take up the slack while the public sector has its fangs in the jugular of the private sector. But then if we slashed and burned the public sector ( as I would like ) with accompanying massive reductions in tax, we would have to throw about 20% of the public sector out on the streets, a fore taste of which we saw with last weeks demonstrations in London. Those BTW were the comfortably off ones with assured incomes.

Mark Wadsworth said...

APL, it's about half the public sector which is superfluous to requirements BUT what most people don't realise is that the govt spends one-and-a-half times as much on 'private sector procurement' or subsidies to privately owned businesses as it does on public sector salaries and pensions.

It's funny how the Lib-Cons are looking at public sector employees but not private sector largesse, which is 'low hanging fruit' as far as I am concerned.

APL said...

"Lib-Cons are looking at public sector employees but not private sector largesse, which is 'low hanging fruit' as far as I am concerned."

Then pick it as far as I'm concerned.

I take it you mean the likes of Crapita and their consultancy malarky?

Douglas Carswell's hobby horse is MOD procurement.

I guess the low hanging fruit is the result of Tories* trying to encourage the 'private sector taking up the slack, thinggy' your earlier correspondent talked about.

* Leave aside the venality of many Tories who are just as enthusiastic about popping their hand into the pie of public finance as Socialists.

APL said...

MW: "Cut the worst taxes (VAT, Employer's NI) and increase the best taxes (Council Tax, Fuel Duty)."

I'm interested in your desire to raise fuel duty, which is already at a rate that dwarfs the actual commodity itself.

At that rate it is, it seems to me a drastic drag on every single economic action anyone in the UK undertakes.

Mark Wadsworth said...

APL, yes, in particular the £5 billion they are going to give to these 'back to work providers'.

As to cars, I'm against VAT on cars or petrol (I'm against VAT, full stop); the annual car tax is far too high (about £50 for processing the forms seems fair enough); which leaves us with fuel duty. Now, a lot of people complain that there are too many cars on the road (not just Greenies but car drivers as well!) so that must mean that either there aren't enough roads (cue Greenie and NIMBY wailing) or that petrol is 'too cheap'.

Hiking fuel duty is not a drag on the economy. If the number of cars fell by a fifth as a result, then people who really need to drive (commuters, lorry drivers, salesmen etc) would get around much quicker, and it is quite possible that the value of the time they save exceeds the extra duty they pay - it's like LVT for roads.

It is possible that fuel duty is already so high as to be the optimum level but I doubt it.

The Stigler said...

I can't comment on Officer's Club but...

Easy Living Furniture: furniture chains frequently collapse. Except Ikea, ironically.

Oddbins: partly supermarkets, also the problem with some sort of lawsuit about losses. Also, Majestic have really improved in the past few years. Oddbins used to be where I chose to go for my specialist wine, but I've been to Majestic for the past few years.

Daily Sport: people can read complete bollocks and get porn on the internet. Plus all the advertisers are all on the net now.

"New Woolies": Tesco and the internet sells everything woolies did, just as conveniently, or cheaper.

Mothercare: As someone who had kids, I rarely shopped there. Either similar stuff was cheaper at Tesco, or you could get for the same price (but with much better service) at a local specialist, or you could go to fancy shops for fancy baby stuff.

Dixons: A company that is thankfully being destroyed by the internet and the supermarkets. While competition is normally a good thing, PC World are total scum.

We need around 2/3rds of the retail space we needed a decade ago. Retail shopping is basically clothes and the sort of "overpriced treat purchasing" that goes with women buying clothes (Hotel Chocolat, Lush, Body Shop).

DNAse said...

If fuel duty was cut to zero people would clearly drive more; taking on that job that is an hours drive away because is is affordable. Then when oil goes from $100 to $200 a barrel (it will given that it is a finite resource), their costs double and the negative economic impact is much more than at present with the big tax buffer.

Car ownership is not the problem it is non-essential or inefficient usage. Fuel duty is a fairly crude but simple measure to encourage efficient usage. Congestion is a clear negative externality however and this is independent of type of fuel. If all cars went electric overnight and fuel duty no longer had an effect, there would be a big case for road pricing and I think as technology progresses the case gets stronger.

Mark Wadsworth said...

JT, sure, you've highlighted why these businesses were first to be tipped over the edge, but think about the timing - three months after the VAT hike...

DNAse - fuel duty is also a useful buffer against oil price rises as it dampens the percentage increase in pump price when oil price goes up. VAT just exacerbates it. So yet again, it's Fuel Duty -1; VAT-0, after extra time.

If electric cars were cheaper or more efficient that petrol, then we'd use them. Only they aren't so we don't. Even if they were better, it wouldn't be too difficult to slap an extra tax on the electricity they use (if that were necessary - I have no idea what pence per mile cost of electricity is).

APL said...

MW: "£5 billion they are going to give to these 'back to work providers'."

Agreed.

MW: "Now, a lot of people complain that there are too many cars on the road so that must mean that either there aren't enough roads or that petrol is 'too cheap'."

Or the roads are not utilized to their optimum. Drive along the motor way system at two in the morning and you will see miles and miles of largely empty roads.

MW: "(not just Greenies but car drivers as well!)"

That is largely a result of it being too expensive to live in the larger conurbations - where the actual work is or the fact that everyone chooses to travel to, for example the lake district in July.

MW: "Hiking fuel duty is not a drag on the economy."

That is a matter of opinion, if instead of the specific case of fuel I change my terms and say energy, in an energy based economy which we are, then the cost of performing any economic activity be it heating your factory or driving the machinery in the factory to transporting your finished goods to your customer is 'impeded' (the cost and resulting price ) is driven up by a high tax on energy.

That is without taking into consideration that we are competing with countries which have a much lower duty on fuel (energy) for example China where they can manufacturer the 'trinkets' at much lower cost - Now I recognise that China also has access to significant 'slave' labour but our costs in the UK would fall if we reduced the cost of actually doing anything.

DNASE: "Then when oil goes from $100 to $200 a barrel (snip), their costs double and the negative economic impact is much more than at present with the big tax buffer.

1. The cost of crude even at $200 per barrel is still relatively minor compared to the amount of VAT, excise duty imposed on the refined product.

2.The tax regime does not act as a buffer. I have never heard of the excise duty going down because the cost of crude went from $20 to $90 excise and VAT just do not go down, the do not act as a buffer.

Mark Wadsworth said...

APL, fuel duty is not a duty on 'fuel' as such, it is a simple and effective kind of road pricing. If you sail along the empty motorway at 2 in the morning, you do 40 mpg, so pence duty/mile = 2p. If you are stuck in morning stop-start traffic when demand for road space is high doing 10 mpg, then pence duty/mile = 8p.

Simples. That's like scrapping fuel duty and having road pricing of 2p/mile at 2 in the morning and 8p/mile during rush hour, only with out the surveillance nonsense and administrative faff :-)

This is quite different to saying that there 'should' be a tax on energy used by industry or domestic heating etc (I don't see why there 'should' be personally - people in big houses would be paying more Land Value Tax anyway, so no need to clobber them twice over).

Remember: our industry is competing with Chinese industry, but our traffic is not competing with Chinese cars on Chinese roads!

As to the buffer, it is a simple mathematical thing:

Cost of raw material + refining, transport = 20p per litre + duty 80p = pump price £1.

If cost of raw material doubles, then pump price goes up to £1.20, so only increases by 20%.

I never said it evens out oil price rises in ABSOLUTE terms (because clearly it doesn't) but it evens out pump prices in RELATIVE terms, and that is what is important.

it is VAT that EXACERBATES flucutations in pump prices in ABSOLUTE AND RELATIVE TERMS, which is argument number 8,379 why VAT is the shittest tax of all.

APL said...

MW: "I never said it evens out oil price rises in ABSOLUTE terms (because clearly it doesn't) but it evens out pump prices in RELATIVE terms, and that is what is important."

My concept of a price buffer would be a mechanism that maintained the price of a thing at a known value.

Price of crude goes up, excise & VAT goes down result - price of fuel at the pumps stays the same.

Your idea of a buffer seem to be a little bit different and the result is that the price at the pump goes up .. but less than it might have.

OK, but I prefer my definition.

Mark Wadsworth said...

APL, are you going all politician on me and suggesting a "fair fuel stabiliser"?

Think about it - if our notional road price is 2p/mile in the night time and 8p/mile during morning rush hour, would there be any pressing need to change this just because the oil price goes up (or hopefully down)?

Methinks not.

The Stigler said...

Mark,

You might well be right. I think it's just perhaps my reflexive action to a lot of the talk about businesses failing in recessions.

Bayard said...

"If electric cars were cheaper or more efficient that petrol, then we'd use them. Only they aren't so we don't."

Electric cars are a damn sight more efficient, and they are are not really that much more expensive. The problem is the energy storage capacity. The answer is internal combustion/electric hybrids, but all that has been produced along these lines are cars like the Toyota Pious, which I find baffling (cue conspiracy theory involving Big Oil).