IF ANYONE was still in any doubt about parlous state of family finances in this country, new figures revealed today must surely have been enough to convince them that the average British household is under a degree of strain unprecedented in recent times.
A survey showed that household bills have increased by a quarter since 2008, while pay during the same period has increased by only 6 per cent. People are now more concerned about their finances than they are about their health.
First and foremost, this situation puts incredible pressure on families trying their best to get by in increasingly difficult situations. Money troubles breed anxiety for individuals and trouble in relationships. None of this is good for children in under-strain households, who inevitably pick up on their parents’ worries.
But beyond the human stories, there is an economic narrative here that does nothing to instil any confidence about Britain’s ability to drag itself out of the financial despond. Because one consequence of more cash going out than is coming in is the instinct to save money, to provide a buffer between you and some half-expected, half-feared calamity such as unemployment or the crash of a business enterprise.
Obviously, money saved is money unspent. And money unspent means money not ringing the cash registers of the high street, or being spent on upgrading that eight-year-old car, or on a city break in Edinburgh or Glasgow. Money unspent means the triple-dip recession is more likely, and sustainable economic growth seems more like something that used to happen long ago, in a different age.
Next week in the Budget, Chancellor George Osborne faces the tricky task of coaxing a reticent economy back into growth – or if not growth, then the kind of conditions conducive to growth. How this can be done when one of the major drivers of the economy – consumer spending – is so hamstrung is difficult to discern. The consensus that the Chancellor has to go beyond his rigid adherence to Plan A is now so broad and so authoritative – from Nobel prizewinners to international organisations such as the International Monetary Fund (even the Office for Budget Responsibility has had to remind David Cameron of the effect austerity has on growth) – any pretence that Mr Osborne is driven by purely economic considerations is now without credibility. Plan A has for some time been a political badge of honour for a wily political strategist who knows the public does not like U-turns.
Yet, surely something more akin to political self-preservation must kick in soon in the considerations. Because if Mr Osborne cannot get Britain back into growth by whatever means, then the chances of there still being Tory occupants in Numbers 10 and 11 Downing Street after the next election are minimal. He needs to put some cash back into people’s pockets.
Let’s stay on track for the greater good
News that Edinburgh council has agreed to free up some green belt land to the west of the capital for the building of 2,000 new homes might not immediately seem like the kind of information on which conspiracy theories can be built. But add in the contentious subject of Edinburgh’s trams, and it becomes all too easy.
The council says it wants to provide new homes to meet a growing demand from people who want to live alongside the new tram route, which stretches from Edinburgh Airport through the west of the city and ends up in York Place. There is a logic to this. Edinburgh undoubtedly needs new homes. And a property on the western fringes of the city, with quick and direct access to the centre, is an obviously attractive proposition for many people. An added benefit for the council itself would be an increase in the anticipated public use of the tram network. And this is where the conspiracy theory comes in.
One of the fears surrounding the truncated network is that predicted passenger figures and, therefore, revenues will not be met, leaving the whole thing something of a white elephant. What if, those of a cynical
disposition might say, the freeing up of this green belt land was primarily motivated not by housing needs but by the needs of the tram network to have fare-paying passengers? How better to increase the route’s prospects by building a few thousand homes near its stops?
So, is this a cynical move by a council desperate to help make the trams a political and economic success, by whatever means possible? But perhaps in this case we should put it down to a happy coincidence, for the greater good.