No clever headline, no pun, no alliteration. Enough is enough.
by Matt Coot
If my sums are correct, which they are, I estimate that at least 10,500 jobs throughout the UK have been announced as being ‘at risk’ since the start of 2018. We are only seven days into the third month.
Carillion, Toys R Us, Maplin, Prezzo, Jamie’s Italian, Strada, Carluccio’s, Byron, Carpetright, Mothercare, Debenhams, New Look, House of Fraser, Airbus, Thomas Cook, and Devonport dockyard (Babcock). These are the names of businesses and organisations that have announced difficulties, closures, and job cuts so far in 2018. Add to that warnings from the UK car industry that thousands of jobs would be at risk if there’s a failure at getting a trade deal during the Brexit negotiations, and we are just at the beginning of a major crisis for UK industries.
Today, New Look, Babcock at Devonport dockyard, and Airbus have all announced that jobs are at risk. New Look announced that they would be cutting 980 jobs from their nationwide workforce. Babcock, at one of the country’s most important naval dockyards, has announced that a tenth of its staff will need to be lost, putting 500 jobs at risk. Airbus has warned that 3,700 jobs throughout its four “home” countries are at risk, which would be 250 for the UK. That’s 1,730 jobs at risk announced just today.
This follows the high profile crises of: Carillion, which has made 1,450 people redundant so far; Toys R Us, which has put 3,000 jobs at risk; and Maplin, which has put 2,300 jobs at risk.
We have also seen multiple chain restaurants facing difficulties. Peter Kubrik from accountants UHY Hacker Young, has said that with “Brexit hanging over consumers like a dark cloud” that people are becoming more reluctant to be spending more of their ‘leisure budget’ on eating out. But that isn’t the only problem that Brexit has caused with restaurants, as since the referendum result, sterling has fallen and the cost of imported ingredients has rocketed up.
Of course, I’m not naïve enough to blame it all on Brexit. Other issues include the rise in costs of paying staff with a series of above inflation rises with the National Living Wage, but also with consumer spending power reduced by low wage growth and higher inflation. In other words, customers can’t afford to eat out at these restaurants, and the restaurants can’t afford to pay their staff.
Big high street casual dining chain restaurants such as Prezzo, Jamie’s Italian, Strada, Carluccio’s and Byron are all announcing difficulties. Prezzo will be closing 94 outlets, putting 1,000 jobs at risk; Jamie’s Italian will be closing 12 branches, putting 450 jobs at risk; Byron will be closing 20 of its 67 branches, putting an estimated 500 jobs at risk; Strada will be closing 11 branches, and Carluccio’s has called in the accountants to advise on possible strategies.
Other high street names House of Fraser and Thomas Cook are both facing problems. House of Fraser are seeking refinancing of their debt package, whilst asking landlords for rent reductions, and their Chinese owner plans to sell their majority stake. I hope that the House of Fraser can find a way through their difficulties. These is a name that is respected throughout the UK and one that if it falls, will show that nobody is ever truly safe and secure in the retail market. Another respected name, but in the tourism industry, is Thomas Cook, who is closing 27 stores with 210 jobs at risk.
Sticking with the tourism and travel side of things, as I mentioned already, Airbus has announced that 3,700 jobs are at risk across four countries. In the UK, Airbus employ 250 people. It has been said that it is “likely” to be reassigned to other projects. However, that “likely” isn’t a certainty.
Another announcement made today, and as I already mentioned, is one that is close to home. Many people I know either work at, or knows someone who works at, the Devonport Dockyard. The dockyard’s operator, Babcock, employ 5,000 people. The announcement that a tenth of its staff are facing redundancy has spread uncertainty and fear throughout the local area. Five hundred people will be losing their jobs. This is 500 too many.
Although the government has said that the job cuts are down to Babcock’s “internal restructuring”, there is also debate over whether these job losses are due to defence cuts by the government. The deputy general secretary of the trade union Prospect, which represents a large proportion of the workforce at Devonport, has said that the “government needs to show greater commitment to speeding up the process and committing to UK procurement for naval support ships to invest in defence jobs and skills”.
The government continues to make cuts to vital sectors. The defence of this country seems to be weakening under the Tory government’s cuts. With five hundred jobs being cut from Devonport Dockyard, can Babcock guarantee that the work that is carried out there will continue to be done effectively? Or will the loss of five hundred people from the workforce mean that the quality of the work will suffer? I’ll be honest, I have no idea either way, but logic would suggest that any reduction in workforce when the work involved isn’t reduced can only mean that the quality will drop. If this government cared about the defence of this nation, or in fact cared about the citizens it is responsible for, then they would not have allowed this to happen.
The Conservatives face a political dilemma
Talking about what the government reacts to, I wonder what they will do in response to warnings about the UK car industry. You see, they face a dilemma. Theresa May has been quite clear (sort of) that any Brexit deal will see the UK leaving the single market, but that we will be trying to get trade deals to allow some access (or something like that – ask her, there wasn’t many details on what she meant). The EU has been quite clear that no deal will allow the UK to cherry-pick access to the single market.
Now, the dilemma will soon become clear: a report by the Commons business, energy and industrial strategy select committee into the impact of Brexit on the UK’s car industry has advised that “retaining good access to the single market is more important than securing the freedom to secure new trade deals with third countries” and that “leaving the EU without a deal would undoubtedly be hugely damaging to the UK automotive sector, more so than to other European countries”. How damaging? Well, the UK car industry directly employ 170,000 people. They indirectly, through the supply chain, are responsible for employing a further 800,000 people. The warning was clear: thousands of jobs would be at risk.
What was that dilemma? Ah yes, that. Well, if Theresa May sticks to that whole having her cake and eating it too strategy, then the EU will continue to laugh in her face, and the entire UK car industry will collapse resulting in 970,000 jobs being put at risk. However, if Theresa May reverses her decision, then she will be accused of a U-turn so large that she will be a laughing stock to the entire country. Also, no U-turn would be large enough to keep us in the single market other than cancelling Brexit altogether. Either way, whatever decision she makes, her political career as Prime Minister of the country will be so unstable that she would need to resign. That is the dilemma that she now has to face.
People are losing their jobs. Why?
What does business need to survive and thrive? Well the Confederation of British Industry (CBI) is quite clear that “stability and clarity” about the future is always a good start. The “dark cloud” of Brexit does not promote a stable or clear future. The Brexit process certainly has a lot to answer for. The process is causing many issues for businesses throughout the UK. Who is blame for this? The Tories.
We’ve already faced difficulties with our economy. The uncertainty after the referendum result led to sterling dropping in value. “Hard Brexit”, which is where we will be heading if the Tories have their own way, will mean relying on World Trade Organisation (WTO) rules, which the PwC and CBI both predict will mean more massive drops in the value of sterling. The tariffs that the EU will legally have to enforce for the UK trading with the single market, will mean even higher prices. British businesses are already struggling with the high cost of their imported goods, but, if this is the way we are heading, then even more businesses will struggle, especially when competing against other companies who are in the single market. What does this mean? Absolute devastation for businesses across the UK. What happens to our economy? I dread to think.
Of course, as I’ve mentioned before, Brexit doesn’t just cause issues for the businesses themselves, but also with consumers. Uncertainty of Brexit means that consumers have become more reluctant to spend. It isn’t just Brexit, but also inflation above wage increases, meaning none of us really have the money to buy, buy, buy.
The Conservative government has led this country into crisis. I’ve said it before in other articles, and I will continue to say it. The United Kingdom is in crisis caused by the Conservative government. Not only are businesses facing increasing business rates, but they have also been forced to face a series of increases in salaries with the National Living Wage. The government failed to give the support to the business sector to make this happen, and this has seriously damaged businesses. The Living Wage is important, and I am fully behind people being paid what they need to live, but not offering any kind of support when businesses are already facing pressure has meant that instead of making the life of these workers more secure, the government has meant that workers are facing unemployment.
What will happen next?
The dominoes are falling and I fear what it means for the future. Do we face another economic crisis such as the one we faced in 2008? I think it is inevitable.
In 2017, the UK’s personal debt rose to £1.6 trillion. 99,196 people were declared insolvent. This massive rise of people declaring bankruptcy is the highest level since the aftermath of the 2008 financial crisis. 59,220 people turned to individual voluntary arrangements (IVAs), rescue packages where they agree to much lower payments. This was a record high and was up nearly 20% from 2016. In January, the Royal Society of Arts released a study that said that 70% of the working population are “chronically broke”.
There has also been a worrying trend of people relying on credit cards and finance deals. Every day spending, for example at the supermarket or petrol station, now seem to be done on credit cards, increasing personal debt. When we are buying high-price items, we are entering into credit arrangements to pay over time. What does this mean? More and more debt.
Returning to the original discussion on businesses, during 2017 corporate failures rose to a total of approximately 17,243 companies entering insolvency. This was the highest number of insolvencies since 2013. As I’ve already mentioned in a different article, we also witnessed a rise of 46 thousand unemployed people, resulting in a grand total of 1.47 million unemployed by the end of the year. This year has so far seen the continuation of these problems with more businesses facing insolvency and more workers facing redundancies.
Poverty in the UK is also on a rise. One million children are living in poverty. Since 2010, when the Tories entered government, the UK has seen an increase of five million people living in poverty. One in seven children of public sector workers are in poverty. Half of those living in poverty live with someone in work. This is absolutely disgusting for the sixth largest economy in the world. What has the Tory government given us? Increased wealth inequality with millions living in poverty whilst the rich continue to get richer.
In January, at the World Economic Forum in Davos, a warning was given by a group of experts and leaders in the financial world that banks do not have a plan to deal with another financial crisis.
I don’t like scaremongering. In fact, I hate it. However, it is my opinion that we are on the edge of economic crisis and I fear that warnings are going unheard. I hope I’m wrong. But, no matter what, people are losing their jobs and others are living in debt. This country is suffering and the government continues to fail the people. Something needs to change.