Staffs FC wrote:
The company I work for closed an entire manufacturing facility on the site where I work around the turn of the century resulting in hundreds of voluntary/regular redundancies and loads of (lucrative) early retirements. They are currently re investing around 35 million pounds in the facility that remained. At our plant in Scotland the workforce was trimmed by several hundred between around 2000 to 2007. They are currently investing 55 million over 5 years in new infrastructure which will create jobs and critically safeguard those already there.
Without the trimming of staff and subsequent increase in competitiveness it is likely that the company would have completely ceased operations in the UK. Whilst difficult for some (not all) of those involved in the original cut backs it is a fact of life that business must remain competitive in order to survive. This is life in the private sector. It will be the private sector creating wealth, and jobs, that leads the country out of recession so any news of this type, regardless of what may or may not have happened before, is good for the country. Some people need to look at things from an apolitical perspective on here just once in a while.
Government policy is never apolitical and it has a direct baring on how or if money is invested in the UK economy.
It is very political of the government to suggest the kind of investment you mention would be happening at a sufficient level to offset the rising level of unemployment we see. I think the answer to that politically motivated suggestion is simply "no, it's not".
If you look at the unemployment figures you can see two sets of stats. The number of jobs lost and the number of jobs created. If you look what you will see is that while many permanent jobs (many in established industries) are lost the kind of jobs created are often part time and in sectors that at little to no value to the economy (i.e. they are not involved in any kind of activity that adds value such as manufacturing).
I for one am rather sick of hearing that Tesco's or Morrison's are opening X number of new stores and so will employ a few thousand people because while no doubt those getting the jobs want them, these jobs are just not the same as an employer like BAE taking on large numbers of people.
The idea the private sector will step in to take up the slack as the public sector is cut back is simply not working. The idea it would was nothing more than a politically inspired theory and the actual observed practice says it is not working.
A big factor why it isn't working is that private industry is sitting on a vast pile of cash it is simply not investing in the UK economy. I read somewhere yesterday it amounts to £750bn!
This makes it all the more crazy to cut corporation tax (something that has seemingly gone unnoticed in the budget) because all this will do is give private industry even more cash to sit on. So instead of being available to the government to invest directly in the UK economy the government chooses to give it to private industry who MIGHT invest it in the UK economy. Given private industry is NOT investing the money they already have, a cut in corporation tax at this time seems as bonkers to me as giving the rich a tax break by scrapping the 50p tax rate.
The governments decision to do this is again a political one. Or if you prefer idealogical.
My own view is that given the economy is in the state it is in the idea the private sector will come to the rescue is a forlorn hope. Therefore it is stupid of the government to take money out of the tax system and give it to companies when they have no idea other than a right wing theory that this will stimulate growth especially when current observed practices suggest that is just not happening.
