The economic crisis drags on but the coalition fails to see austerity is not working

IT WAS three years ago last week that it all came crashing down for Royal Bank of Scotland, rescued from collapse by state funds.

HBOS, subject to an emergency rescue by Lloyds that is debated to this day, was also part-nationalised as the government moved to prevent the banking crisis from escalating further.

Meanwhile, more than 300,000 savers waited anxiously for news of what would happen to the money they had tied up in Icesave after its owner, Landsbanki, went into receivership amid Iceland’s economic meltdown.

Those days will not be forgotten. In Edinburgh in particular, the scar will take a long time to heal. The memories may seem especially sharp this month, as through quantitative easing the government takes what the Chancellor once called “desperate measures” to halt the economy’s slide into the abyss.

Three years ago it was impossible to predict what was going to happen the next day, let alone the next year and five years. But how many people really thought that the economy would still be in such dire straits three years later?

Many expected that, by now, the government would have sold its stakes in Lloyds Banking Group and RBS, and with some profit left over. As it happens, the taxpayer is sitting on a loss of nearly £32 billion. The RBS share price, as high as 547p four years ago, has slumped to 25p at the time of writing. The taxpayer will be holding onto that particular investment for some time.

The implications of the crisis have touched everyone. Savers, pensioners and low-income families have arguably borne the brunt of it.

Next year, if interest rates rise, it may be the turn of the thousands of families struggling to keep up with their mortgage repayments.

We knew we were in for a tough few years, but as speculation grows over the prospect of another bank bail-out and a double-dip recession, recovery seems further away than ever. We would be in a better position if our government knew how to respond. But as the need increases for a change of tack, the Chancellor buries his head deeper in the sand.

In Edinburgh last week, Roger Bootle of Capital Economics, one of the few pundits who predicted the financial meltdown, warned that austerity alone would not get the UK out of the current crisis. On the contrary, without growth policies the deficit could well rise over the next couple of years, rather than shrink.

When the coalition government embarked on its austerity regime last year, it made great play of the success of similar approaches in Canada and Scandinavia in the 1990s, but such comparisons are pointless. Those measures were not taken in the context of a stagnant global economy, a lame banking system and rock-bottom interest rates.

Bootle was talking in Edinburgh on the day it was revealed that youth unemployment had almost hit the one million mark. Almost four in ten unemployed people are aged 18 to 24 – the same generation whose opportunities in the education sector are also shrinking.

The government has argued relentlessly that you can’t borrow your way out of a crisis. But with its own borrowing rising rapidly and its policies increasingly counterproductive, it has to start listening to the growing majority, including some coalition MPs, now calling for a step back before it’s too late.

Millions of people are already suffering the consequences, from school leavers unable to find work to pensioners watching their income shrink. How much more will it take for the government to realise that this is an economy in desperate need of a shot in the arm?

Shut the door on rogues

THAT many people are still so trusting of door-to-door salespeople and tradesmen is something I struggle to understand.

Of course, in an ideal world our doors would be left unlocked and visitors could expect hospitality, not suspicion. But it’s becoming ever harder to trust anyone turning up on your doorstep selling or promoting a product or service.

It’s only recently that energy companies have finally moved to ban door-to-door sales of gas and electricity contracts, following complaints of mis-selling and high-pressure sales tactics.

Last month the Office of Fair Trading issued a warning over the unscrupulous tactics used by door-to-door salespeople promoting stairlifts and mobility aids. The OFT launched an awareness campaign after getting thousands of complaints about door-to-door tradesmen targeting elderly and vulnerable households.

While the products they sell are genuine, it’s estimated that people buying from them are paying up to 50 per cent more than on the high street.

Yet, in an age when we’re happy to spend time scrutinising our shopping receipts and bank statements for mistakes, 34 per cent of people admit they wouldn’t check for ID if a tradesman came to their door, according to research.

It was carried out by NICEIC, a voluntary regulatory body for electrical contractors, which is warning of tradespeople using fake company documents or logos to con their way into people’s homes.

It estimates that more than six million people have had to spend a total of £3.7 billion on rectifying household jobs that were not carried out properly.

The NICEIC believes thousands of rogue traders are being allowed to get away with it, often at great cost to households.

Not all door-to-door salespeople are trying to rip you off, but if they’re genuine they won’t object to you checking their ID and doing your research before taking anything from them.