In a speech which did not dominate the discussion in pubs and work canteens the Governor of the Bank of England recently revealed how anxious and angry he is about the state of the nation.
"Some people", he moaned, "are undoubtedly in difficult situations . . . they feel vulnerable and confused . . . The distress suffered by individuals and their families is obviously a matter of concern for all of us . . ." He was not talking about impoverished bankers with their begging bowls obstructing the free passage in the City of London nor about pathetic landowners developing claustrophobic tendencies when they are shut up in their stately homes with only a few thousand acres around them. What stimulates the anxiety of the Governor is the growth of what he calls consumer credit, but which others might call living on tick, which he says has doubled over the last ten years:
Thrift has gone out of fashion. Indeed the all-to-prevalent outlook on life has become I want it, and I want it now.
These sentiments would have been well received in Downing Street, by a prime minister who has such fond memories of her father's dour parsimony and whose professed ambition is to run British capitalism like a thrifty housewife who never gets in debt. The only snag is that the credit boom has happened while the thrifty housewife has been in charge, even if the Chancellor who did so much to help her is now increasingly denounced as a reckless wastrel. It is not new for a moral issue to be made of debt: this governments contribution to this particular piece of hypocrisy has been to link it with what it has called the dependency culture—of single mothers passing their responsibilities on to the state, of scroungers battening on to a naively generous Department of Social Security, of hypochondriacs absorbing almost the entire resources of the National Health Service.
Tally men and credit cards
It is not convenient to this theory that people who rely on earning a wage for their living can hardly avoid getting into debt and that it has been like this for a long time. A lot of today's consumer credit would once have been supplied by the less exotically named tallyman with his bicycle and his mini-ledger and through the "cheques"—credit vouchers—often sold by churches who took a commission on the repayment by instalments. Now these same functions are performed through credit cards, mail order, HP agreements, bank overdrafts and the like. This is not to mention one of the most common forms of modern debt—the mortgage which, according to the Governor, has grown even faster than the other types of credit and which has widely replaced rental as the most available method for a worker to get somewhere to live. At the lower end of the poverty scale, this government has recently created a new tribe of debtors in the social security claimants who are now forced to grovel for a loan from the DSS if they need things like clothes or furniture, where before they were likely to get an outright grant.
But this nation apparently seething with debtors is not a happy place where everyone is getting everything they want now because they can't be bothered to save for it, through the benevolence of the money-lending institutions. A survey of the situation in 1989 carried out by the Policy Studies Institute, Credit and Debt in Britain, found that more than ten per cent of families in the UK were is arrears, some of them with multiple problem debts. The average arrears amounted to £600. which may not be much to the Governor of the Bank of England but is a mountainous sum to a single parent family or someone who is unemployed. In these days of the mortgaged home, rent arrears remain a serious problem; the survey said that over a million families were in trouble over rent last year.
There is no happier news about mortgages, which have long been fondly advertised as the way to a secure home. "Mortgage misery" is a phrase which has been overworking in the headlines of the popular press lately. It encapsulates the kind of evidence published in August by the Council of Mortgage Lenders—that the number of mortgages in arrears of six to twelve months was 95,030 in the first six months of 1990. compared to 58,040 in the same period last year. Mortgages more than 12 months behind rose from 12,030 to 18,750. Those friendly banks and building societies, who have put so much effort into assuring us that their main concern is to help us get a roof over our heads, have responded to this situation by taking the roof back, with the rest of the house. Repossession cases numbered 7,390 in the last half of 1989; in the first half of this year they reached 14,390—almost double. A spokesman for Barclays Bank said (he was trying to be helpful). "Anyone who is having difficulties shouldn't just ignore them . . ." as if it were possible to ignore the trauma of repossession, of being homeless. "We've advised him to go the the council's homeless person's unit", said a local Citizen's Advice Bureau of one man with a pregnant wife and two children who owes £3,500 to a building society. "He’ll have to prove real financial and personal difficulty before they rehouse him”.
Capitalist debts
At the same time we have been hearing of many other cases of people who, whatever the Governor of the Bank of England may think, wanted something now and were willing to get into debt for it. There is a crucial difference between these people and those who fall behind with the mortgage, or can't pay for the fridge they got on HP, or have to apply for a loan from the DSS and that is the scale of what might be called their operations. The Parkfield group, which had investments in engineering, property and entertainments, recently crashed owing £288 million of which £27 million is unlikely ever to be repaid. News Corporation, the huge media conglomerate controlled by Rupert Murdoch whose British papers have worked so hard to keep Thatcher in power and in so many other ways to titillate working-class delusions. has a "long-term” debt of A$7.58 billion (£3.22 billion). The vast and complex empire of Robert Maxwell, who was once a Labour MP and who is still extravagant enough to call himself a socialist, has debts of over £1.5 billion. It is the same story with other groups whose reputations rest on the charisma—or should it be the media hype associated with one person such as Brent Walker and Saatchi and Saatchi. When capitalism was in boom these people were revered as super intellects who had done the impossible—they had produced infinite profitability even if the proceeds were not available to all those readers of the Sun and the Mirror who so admired them. Sales went on soaring and the groups snapped up one expansionary deal after another. It seemed it would never end.
That was all very well as long as profits kept rising and interest rates were low but as the situation changed the extravagant debts of these groups put them under a lot of pressure. Many famous company names—Coloroll. British and Commonwealth—were extinguished while others—Laura Ashley—struggled on. Among the most spectacular of recent struggles has been Polly Peck whose chairman and chief executive, Asil Nadir, has been under scrutiny by the Serious Frauds Office. Polly Peck controlled over a third of the press in Turkey, it owned the Sansui hi-fi company and Russell Hobbs Kettles. Most famously it also owned Del Monte, the canned fruit firm which ran those TV ads in which Mediterranean peasants waited anxiously in the early morning sun for the Man from Del Monte to sample the fruit and give the go-ahead for it to be picked for canning . . . Polly Peck borrowed about £570 million to buy Del Monte: its total debts were estimated at around £1.3 billion and Asil Nadir anxiously grovelled to the Turkish government to help rescue him before disaster, not to mention the boys from the SFO, overtook him.
These debts put into proportion the problems of mortgage, HP and rent arrears. The working class, who depend on employment for their living, need to borrow money—sometimes to survive, sometimes to buy something which the Governor of the Bank of England and Margaret Thatcher's father would no doubt regard as a luxury like a TV set or a washing machine. At one time they did this through "cheques" or tallymen or the pawnbrokers who lent small amounts on the flimsiest of security such as a man's best (and only) suit. There was always a certain stigma attached to these methods—tallymen did not advertise themselves and there was nothing brazen in the manner of those who slipped into the pawnbrokers on a Monday. But this does not apply to credit cards or bank overdrafts or mortgages: in most cases these are seen as evidence that a worker has arrived at some sort of economic maturity: they have solved the problem of poverty and can read the financial press with the same interest as a Maxwell or a Nadir. Not many people regard themselves as members of the working class when in the company of their Flexible Friend.
But capitalism can wipe out delusions as fast as it promotes them. Facing reality can be a painful business, for the worker whose dream of a secure home turns into a nightmare of council bed-and-breakfast accommodation and possibly for the tycoon whose financial juggling act falls into disarray and ends up in bankruptcy. Except that when this happens it usually leaves them down to their last few million, their last few thousand acres, their last private jet and yacht. It is the class who end up in homeless families accommodation who make all these things, who produce the profits which finance the machinations of people like Murdoch and Nadir but who suffer the anguish and the humiliations of poverty. And that will not Do Very Nicely.
Ivan
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