In England of the 1930's Colonel Brown could always borrow a few bob from his local Martin's Bank if he was short. Money and debt was a class thing. Upper class people borrowed from the bank, lower class people went to the pawnbroker. But managers were always looking for people who wanted to better themselves, that is move from one class to the next. The manager, himself a curious intermediate figure in the class structure, a eunuch of money who rarely borrowed, had an acute ear for accent, dress, politics and the state of your nails. Like Captain Mainwaring of Dad's Army he could smell class. He would have had no trouble in lending money to Diana Mosley, but with the lower orders a slight nuance of counter jumping, an over-eagerness to please, could see credit refused.
But by the 1950s the deserving lower middle classes were being lent more money. My father, an engineer, was able to borrow £5000 to buy a small farm. He believed implicitly in authority and never missed a penny payment. It took the whole family from the lower middle class to the middle class. My grandfather was a railway carriage painter, my brothers went to Oxford, Cambridge and Exeter. I went to medical school.
Then in the seventies came the credit card. The high
street bank and the manager lingered on for a couple of decades but by
the nineties banks had become boutiques and managers 'investment'
advisors selling certificates in the tech boom. Day to day money
lending, or banking, was done by phone and cash dispenser. The bank
manager was replaced by voices with Scottish accents in call centres.
Scottish accents, marketing experts assured the banks, implied honesty.
Debt was 'normalised'. Money became a commodity. Credit card companies
sold it to anybody who asked. Most people managed to pay the price
asked, about 27% a year. Those who couldn't were expected to go bust.
One way round disaster was to buy money from another credit card company
to pay off the first and so on. In an era of tumbling interest rates it
Now economists assure us that interest rates are to
rise. That those who have saved, who have always paid their credit cards
on time, who have only a few hundred pounds left on their mortgages, can
soon expect their reward. They should look forward to taking their seats
on the Last Day of Borrowing, when interest rates will rise, and those
who spent too much will cry 'Lord Lord I did'na ken.' And Mervyn King,
the Governor of the Bank of England, will say 'Well ye ken the noo.' It
to happen yet. We are first going to have to pass through a valley in
which the middle classes will see their wealth expunged. A type of
Marxist revolution is afoot, with a Dictatorship of the Bankrupt in
The conventional wisdom is that in a world of low
interest rates those who hold cash are king. The price of goods, fuelled
by the miracle of globalisation will fall, so those who have been
prudent and hung onto their money will now reap their reward. 'Come unto
me all ye who have saved and I will give you a half price Caribbean
Cruise.' Half price because the crew will be made up of Tamils to whom
£12 a day is riches beyond compare, half price because the ship will
have been built by near slave labour in a Chinese shipyard at a fraction
of the price of anything similar made in Europe.
Left behind will be the overpaid debt-ridden workers
of Britain, often to be found in Labour's most desperate≠ly sought
constituency, floating voter land. These are people who have been given
no warning of the consequences of debt. Instead on TV and through their
letter boxes they are encouraged daily to ruin themselves on credit
cards, assume second mortgages that will, if inter≠est rates rise, take
their houses, or enter debt consolidation schemes that have only one
exit, the bankruptcy courts.
whole generation has being brought up to believe that the low cost,
cheap credit, global bonanza will go on for ever. They have not been
told that to be in debt and facing lean, poor hungry economies who can
sell their labour at a tenth of yours is to face destitution. But as our
major companies shift their call centres, factories and transport to
cheap third world countries, many workers will be left with falling
wages or the dole. As I write HSBC has announced plans to close 4000
jobs in the UK, 10% of its workforce, and transfer them to Malaya, China
and India. What better time for such companies to start taking to the
lifeboats. With many of its employees strangled by debt, few are in a
position to strike.
At present there is no shortage of jobs. But what lies
ahead? Britain is being flooded with labour, both ille≠gal and legal.
This year the government issued 150,000 work permits virtually on
demand. It plans to issue more next year, and all permit holders are
effectively guaranteed a permanent home in Britain. Apostles of
globalization say that an expanding labour market coupled with the
growth of free trade is a win win situation. We can all only go on
globalisation could be the pyramid sale of the century, a South Sea
Bubble to end all bubbles. Do we really believe that some of the most
repressive and corrupt countries in the world hold the secret to a
universal expan≠sion of world trade and wealth for all? Do we really
think that importing a large non-tax-paying black market labour force
coupled with an open door policy on work permits will protect the jobs
of the indigenous British? And if these are not solutions, what is
likely to happen to a country burdened with personal debt, not only
among people who eat hamburgers and watch daytime TV, but to its
backbone, the careful middle classes, who believe globalization was the
final cure to poverty, mortgage and remortgage?
Until a couple of years ago few people worried, but
now those of us with experience of modern management know that people
live not in constant hope of increasing wealth, but in fear of the
suddenly summoned meeting at work in which they are told that due to
global condi≠tions, they are going to be 'downsized', and are so much
in debt they have to accept less money or just meekly leave. No wonder
globalisation is trumpeted through city boardrooms as the wealth
creating engine to end all wealth creating engines. It is for the rich.
Who is going to pay for a coming army of the dispos≠sessed and
unemployed who find their jobs have, at the magic touch of
globalisation's wand, being lifted from Crawley to Lahore, or snatched
from under their noses by brickies from Bosnia? Not the waiter on the
Caribbean cruise, the work permit shark working out of Liechtenstein at
£3000 an application, the sweatshop workers in the east end who do not
know what income tax is, or the call centre worker in Calcutta hugging
£25 a week to his chest and thinking himself rich beyond the dreams of
avarice. It will have to be by taxes. Taxes that keep interest rates low
and credit card demands bearable. Taxes that will fund the dole and keep
Labour in power for another term.
Big companies will not pay. They will just threaten to
go overseas, and with virtual seats at Blair's cabinet table they will
be listened to. Instead it will be the thrifty and the law-abiding
middle class of Britain who will be milked. Those who have paid off
their mortgages, saved for their pensions, insured themselves against
illness, or despite government regulation, run small businesses. You
bought a private medical insurance policy a few years back? The
government already takes a small cut of the premium, why not a slice
more? You have provided for your family after your death? How unfair -
Let's increase inheritance tax for the middle income earner by 25%.
Council taxes? Not quite the political dynamite they might at first
appear. Why not cap them for people over 65 and increase them by 15% for
anybody else with a house over £300,000? You have a son at private
school? Let's add a ten per cent education deduction to the fees. Free
travel for everybody in London? Means test it.
But why stop there? Regulation is an even better way
of financing debt. It is attractive because it relieves unemployment at
the expense of those in work. You own a successful florists shop? We'll
send somebody round to check on disabled access at your expense. It will
only cost £300 for the first visit and £125 a year thereafter. You
employ a handful of people in the business? Let us burden you with the
same mass of regulation as a multinational. You complain that the cost
of administering your employees' tax and family benefits will drive you
out of business? All the better. One of Labour's big corporate donors
can buy you up for a song.
time these corporations will be all that are left. Then they will put
away their cheap credit cards, their discounts, their special mortgage
offers. The offers of free credit cards falling through the letter box
will cease. The only thing on offer will be pittance wages. Then the
true meaning of globalisation will hit us as the middle class vanishes,
wages tumble, true deflation sets in, and Britain becomes, along with
the rest of Europe, a sleazy economic annexe to the mighty capital
engine of the US. Blair would then go down in history as Britain's Eva
Peron, promising everything to everybody in return for adulation. After
the Perons came an army of the dispossessed, and eventually, a day when
the banks closed and savers stood in the streets wondering from where
their next meal would come.
Ecologists know that destroying a habitat leads to the destruction of the species. Our habitat: work, rectitude, a horror of debt, independence in old age are all under threat. No country can survive without a stable middle class. Blair's Britain may be incubating a dreadful version of Weimar and the Reich