Northernheckler's Blog

A Yorkshireman's adventures in the big Smoke

Chaos Theory ?

Happened to glance at the front page of the Daily Mail earlier today and saw this headline : £11bn VAT rise shambles: Chaos reigns on High Street with just three days to go before sales tax goes back up

Obviously a little concerning as I was on my way to London to do some shopping with my son and his friends. My dictionary defines “Chaos” as “complete confusion or disorder” – so I wondered what I might find down Oxford Street.

Well surprisingly enough I found it busy, yet strangely orderly. There were queues in some shops, but no real confusion – in fact in Primark they had a man telling people which till to go to – which speeded things up a bit. And at the tills, they seemed to know what they were doing – accepting all the usual credit cards, and cash as well – which wasn’t confusing a bit. And I didn’t see any marauding mobs of disorderly people. All very orderly really.

So “chaos” did not reign on this particular high street, although I’ll await reports of random burning and looting from elsewhere in the country. It seems that retail companies think it’s an insane time to change the VAT back, and don’t know when they’ll actually change their prices.

Not sure why they don’t know really – because they have had 12 months warning of this, and despite the mail saying that this is will be an “£11 billion VAT shock” I can’t really imagine that anyone will be “shocked” – ( feeling of extreme surprise) about this. You’ve known about it for a whole year !

Actually hang on a bit – £11 billion ?  Oh right – that’s how much we “saved” this year – so a net gain for the public, and (assuming their figures are correct ) that extra £11 billion should pay off 13% of the existing national debt – you know the one that the Mail (and the Tories) are always harping on about – which again should bring it in to around 50% of GDP (compare to United States current 71%, Italy’s ~100%, and Japan’s 194%) (Source : UK National Debt) (My figures are assuming GDP remains constant – not necessarily true, but you’ll catch my drift I’m sure).

The article goes on to say that the reversal of the VAT will cost around half a billion pounds to retail companies to change their prices – this averaged over the two changes, one of which has already happened, and one of which will happen sooner or later irrespective of whether it’s implemented this week or in a month or in a year.

Whenever it was implemented it is a predictable expense which well managed companies have had a long time to plan for.

The VAT reduction is an issue which is really quite interesting. It’s not easy for a lay man like myself to tell whether it really has made any difference to the economy – certainly 2.5 pence in the pound reduction is not a cut that’s left me feeling like I suddenly have loads more spending power – but it does leave shops slightly more margin for making a profit – and may well have stimulated the economy – the Mail’s claim that we have a “bumper sales period” amounting to a “shopping bonanza” would seem to indicate that. And yet I know people working in the retail industry who were deeply frustrated by the costs of changing catalogues at the last minute last year.

So why can’t we have some analysis and objective discussion of these issues – which I’d be seriously interested in having a truly expert opinion on ?

I wish the Mail would do that, because as things stand this front page article is not news in any sense that I understand.

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December 29, 2009 - Posted by | news, politics | , , , ,

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