Column in the John O'Groat Journal
“Most stop-go problems that Britain has suffered in the last fifty years have been led or influenced by the more highly cyclical and often more volatile nature of our housing market.” With these words Gordon Brown as Chancellor for ten years put his finger on the core problem of each trade cycle. The quote appears in a book written by Fred Harrison published in 2005 entitled Boom Bust, house prices, banking and the depression of 2010.
Unfortunately our Prime Minister failed to heed the facts that every boom and bust since the eighteenth century has rested on bank speculation in land and property which has scythed through the savings of ordinary working people on each and every occasion. He was joined this week in failing to identify the roots of the problem by analysts as far apart politically as Will Hutton in The Observer and Eamon Butler of the Adam Smith Institute in Monday’s Scotsman who took a view of the current crisis starting in the 1890s and 1977 respectively.
As deputy convener of the Economy, Energy and Tourism Committee I and my colleagues are taking a series of soundings from banks and businesses as to the effects of the credit crunch and the liquidity crisis throughout the world.
The 18 year trade cycle has hit new highs in the widespread devastation across many countries that this present bust has triggered.
It has been noticeable that some commentators such as Alf Young in The Herald have quickly pounced on the problems of Ireland and Iceland. He dislikes the SNP emphasis on small northern European nations. We call them the Arc of Prosperity, he echoes Iain MacWhirter, also in The Herald who now says they are the Arc of Insolvency. However MacWhirter notes that Norway and Sweden, who the SNP would include in the Arc, are calm and weathering the storms having reformed their banks in previous crises.
What are we to make of the problems that rock financial institutions large and small, of nations large and small, too? Being large did not protect Lehman Brothers, failing to moderate the housing boom in Dublin did not protect the Irish economy and the Icelandic bank crash was caused by rash investments by Icelandic business in a wide range of consumer firms in Britain. Of course Ireland and Iceland are not clambering to return to rule by Britain and Denmark. We know that international rules will have to be developed to avoid the causes, not just the symptoms of this crisis in future.
All Holyrood committees will be picking elements of the Scottish government budget for next year and trying to suggest ways that the unprecedented world economic crash can be addressed by government-led investment here at home.
CHILD POVERTY indices have been published of late. Statistics that cover each Westminster constituency show that 44% of children in Caithness, Sutherland and Easter Ross live in low income families. It is dreadful indictment of UK policies that condemn so many to the benefits trail. Campaigners say that low income means where no-one is working more than 16 hours a week or the family is receiving the full amount of Working Tax Credit. They say this is not a direct measure of exactly how many children are in poverty, but is a good indicator of which areas have the highest child poverty levels.
The Far North is in the upper half of the UK constituency figures for child poverty. Whilst Dounreay has underpinned a third of the family incomes over several decades the poverty of many others has steadily got worse when oil jobs disappeared, fishing and public service cuts reduced demand for shops and services. Now the world banking crisis and its knock on effect of likely increases in unemployment and consequent defaults on mortgages and deeper personal debt is in all our minds. But we need a determined effort to get low income families into real jobs that are not as part time as the campaigners identify as measures of poverty today.
The Scottish Parliament with limited spending powers has one hand tied behind our backs. But we will have to try and identify projects that the Government can back to rebuild shattered confidence and give young lives some much needed hope.
POST OFFICES that have survived closures and cuts are once again at the mercy of the Department of Work and Pensions in London. The DWP is largely responsible for the mess in which the Post Office network finds itself due to their decision to pressurise people to get pensions and benefits paid into bank accounts, slashing 40% of sub post office business.
Post Office card accounts were only introduced after fierce pressure and have proved to be a huge success, despite the obstacles put in its way by the UK government. It would be the ultimate act of vandalism if the DWP now compounded its original disastrous decision by removing the Card Account contract from the Post Office.
At a time of economic difficulty this would be a horrendous attack on the High Streets of towns and villages across Caithness, Sutherland and Easter Ross and, indeed, the whole of Scotland.
So keeping Post Office branches going is just part of the job of getting our economy onto its feet after rounds of unwanted deregulation. We know that the wider economic crisis demands that all parties must work together to address this crisis and stabilise the economy.
Also the Chancellor must get ahead of events, act to protect people's savings and ensure proper liquidity in the banking system. Banks must also have the confidence to once again lend to each other and more importantly to individuals and businesses in the real economy. The Westminster Government has been on the back foot – reacting to events. The Scottish Government is seeking their help because we urgently need a more proactive approach with a comprehensive plan to bring stability back to the markets.