Playing Blink

 

The Chancellor’s July budget from the all-new, all-Conservative government was disappointing for small businesses. George Osborne described it as ‘a budget for working people’ but not many were impressed. There were no new incentives for entrepreneurs or start-ups and the only rabbit he produced out of his hat was the ‘National living wage’ set at £7.20/hour from April 2016. But this was for over-25’s only with under-25’s still stuck with the lower ‘National minimum wage’. This was retained for under-25’s to ensure they can ‘secure work and gain experience’ i.e. not be priced out of the labour market. Despite this the independent Office for Budget Responsibility predicted job losses, particularly in the agricultural sector so in response George cut Corporation tax from 20% to 19% (from 2017) and increased the National Insurance ‘employment allowance’ which waives contributions from small businesses to the tune of £3,000 per annum.

Small businesses are deeply unimpressed

Research confirms small businesses are deeply unimpressed. Those in the retail sector consider this no substitute for the more, errrr…informal wage arrangements often seen in the Markets industry. They would far have preferred an increase to the Vat threshold – a very real disincentive to making the leap into Vat-registration.

The budget also contained proposals to review the old Chestnut of Sunday trading legislation

The budget also contained proposals to review the old Chestnut of Sunday trading legislation. Osborne suggested decision-making might be devolved to local Councils to support ‘bricks and mortar’ retailing versus it’s online competition. The arguments for and against are well-rehearsed – increased costs over 7-days without increased takings etc – but unfortunately his glamorous blonde colleague and Minister for Small Business, Anna Soubry MP (Con. Broxtowe, Notts.) forgot her job title before going public with the proposals. She should have consulted with a few more small business representatives before suggesting critics such as ‘Keep Sunday Special’ are “…harking back to a world that probably didn’t exist. Sunday was the most miserable day of the week”. She should, for instance have talked to the Federation of Retail Newsagents or Association of Convenience Stores. They rejected Osborne’s proposals, suggesting less than one in ten customers wanted changes. Other critics included ‘The Sun’ newspaper which – after ditching Page three’s ‘News in Briefs’ – let columnist Rod Liddle loose to sum it up nicely as ‘a wonderful excuse for me to buy yet more crap’.

Nor were the proposals well-received by two of the ‘Big four’ supermarkets. Tesco and Sainsbury own lots of Convenience store outlets which can stay open already, so don’t fancy opening expensive Supermarkets as well. Asda and Morrison though don’t have the same High Street presence so were enthusiastic. This proposal is now out for consultation so if you’d like to share your views about trading 7-days per week I’m sure Anna would like to hear from you. She can be emailed at: [email protected]

What the report really highlights is a total lack of regulation in this important area

At about the same time the CMA (Competition and Markets Authority) confirmed it had found evidence supermarkets are misleading customers with price promotions – but the pricing guidelines mean the problem is more of a cockup than a conspiracy. This came after a 3-month enquiry triggered by a ‘Super complaint’ lodged by the Consumer Association magazine ’Which?’ The CMA confirmed although there was evidence of misleading pricing on the 40% of grocery sales on promotion at any one time, the problem is not widespread. Supermarkets generally take compliance with pricing seriously and the problems identified by ‘Which?’ are caused more by lack of clarity in the pricing guidelines. The CMA made some weak recommendations about price comparison data and ‘Was/Now’ promotions, where by law the period on offer of an ‘Is now’ price cannot exceed the period of the higher ‘Was then’ price. The industry-funded and entirely voluntary Retail Ombudsman suggested pricing guidelines need updating because “The problem is the current rules are merely guidelines, which present retailers with a lot of wriggle room. What the report really highlights is a total lack of regulation in this important area”. This sounds rather like the problems of food labelling and the impossibility of legislating for every possibility.

Meanwhile in the dysfunctional world of Euroland ..

Meanwhile in the dysfunctional world of Euroland the Germans played a game of blink – and lost. The unblinking Greek Prime Minister Aleksis Tsipras called the EMU’s bluff and after three (or was it four?) sets of ‘final negotiations’ agreed to some watered-down austerity measures in return for a bail-out of the Greek Euro. The Bundesbank smiled at the breakthrough through gritted teeth as the UK blocked it’s £1 billion contribution to the Euro Stabilisation Fund and City of London bankers stuck two fingers up at their rivals in Frankfurt. The Euro dropped to 72p from 97p in 2008 and although sterling is not yet back to it’s pre-financial crisis exchange rate, it is going the right way. Which is nice.

The German Chancellor reportedly arrived in Athens for the last round of emergency talks to be greeted by an officious Greek immigration officer armed with a clipboard and a list of questions: “Name?” he asked:“Angela Merkel” she replied. “Nationality?” he asked. “German” she replied. “Occupation?” he asked. “Nein – not yet” she snapped. ”First ve haf to talk……”