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High street shake-out

Woolworths has gone, many other famous stores will disappear, but a new age of shopping will emerge

Traditionally it is the days and weeks after Christmas that are the most terrifying for retailers. The final quarter of the year arrives when rents have to be paid (this year, it is actually on 25 December), the invoices from suppliers pile up, a visit from the VAT man is imminent and the banks start to get antsy about the swelling overdrafts and feeble cash flow. Within days, the corporate undertakers come knocking.

This year the pattern has been different. Amid the carnage of the credit crunch, no one is taking any chances. Even if you are a company such as Woolworths - which takes in 80 per cent of its income in the six weeks leading up to Christmas - impatience sets in. The first thing to go is the credit insurance, the guarantee to suppliers that they will be paid, come hell or high water. When that happens, the sweet factory demands cash for each shipment of pick'n'mix and banks start becoming nervous. Before the directors have a chance to take emergency action, such as selling off a string of stores to rivals, the plug has been pulled.

The demise of Woolworths, a fixture on Britain's high streets for a century, is not that surprising. Its elder sister in the United States died some years ago and its falling share price has been signalling disaster for some time. But Woolworths is far from being alone. Among the reasons that Alistair Darling chose to make a 2.5 per cent cut in VAT the centrepiece of his pre-Budget report is that it has two important characteristics. Unlike an income or corporation tax, it can be administered swiftly - without the need for a complex finance bill. Second, it does help the consumer and the high street.

The sceptics have argued that a few pence or pounds off prices as a result of lowering VAT makes no difference in a year when Marks & Spencer is conducting guerrilla sales tactics ("20 per cent off" days, designed to catch the opposition on the hop) and other high-street chains are permanently holding sales.

Such observations are economically illiterate: by hook or by crook the cut in VAT will put £12bn into the economy over a relatively short period. Even if the price cut is not passed on, it will mean that smaller high-street boutiques may be able to hang on a little longer (by widening profit margins) allowing them to main tain a job or two that might have been shed in recession conditions.

What is different about the present crisis on the high street, which has seen the demise of Woolworths, MFI, MK One, as well as a slump in the shares of DSG (owner of Currys, PC World and the online Dixons site), is that it reflects changes in retailing and the way we shop.

It is no coincidence that the Woolworths on my local high street in south-west London had already closed by the time the administrators moved in and the premises were being refitted as a Tesco Extra.

The boundaries between shopping chains have changed. When Tesco reached saturation point in food sales, at the point where it became subject to regular competition and monopoly investigations, it headed in the direction of diversification. No longer is it just a grocer. It is a newsagent (watch out W H Smith), a clothing retailer (be careful Debenhams), an electronics outfit (no wonder Currys is hurting) and has moved into the video entertainment business (poor old Woolies). Tesco, the dominant force in British shopping, is not alone in this. There is no longer such a thing as a specialist retailer.

The big grocers - Tesco, Asda, Sainsbury's and, to a lesser extent, Morrisons - realised some time ago that while people came to their stores for their daily bread, the profit margins on food are relatively narrow. But if they could bulk-buy products - from fashionable clothes to flat-screen televisions made in China and the Far East - they could become vast department stores. Indeed, the profit margins on the clothes and electrical goods could be better than those on the 50,000 food items.

Even the venerable Marks & Spencer, still the nation's biggest clothing retailer with around 12 per cent of the market, is in the television and kettles business. Consumers who trust M&S with their lingerie needs are not going to doubt that an M&S kettle is as good as one bought from Currys. The need for the general store, of which Woolworths was the exemplar with its eclectic mix of everything from screwdrivers to chocolate bars, is no longer there.

Also undermining the high street is, of course, the internet. Personally, as much as I love browsing in bookshops, new and secondhand, it is a long time since I made a purchase from one. My book shopping is done online through Amazon or the fantastic used-book site AbeBooks. Online sales are rising exponentially, climbing by 54 per cent to £46.6bn in 2007. This is money that is being cannibalised from the high street. Does all of this mean that the high street as we know it is over? One doubts it. But the line-up of stores will change. Tescopoly has its natural limits. In much the same way as Woolworths has been replaced by its modern equivalent, Wilkinsons (which is seeking to buy Woolworths' premises), in some suburban centres, so Currys is going to find itself under pressure from the American import Best Buy, where the emphasis is on expertise and service.

Once it was out-of-town shopping that was the threat. But soon the developers realised that people actually like the social aspect of open-air, high-street shopping and have redeveloped the high street from Bristol to Leeds with open spaces and cafes. The high street is organic and over the coming year or so, as the slump bites, empty stores will proliferate. But don't despair - there will always be an entrepreneur ready to bet on recovery and find ever new ways to claim the shopping pound.

Alex Brummer is City editor of the Daily Mail

Retail carnage

Woolworths - the chain has collapsed with debts of £385m and many of its 815 branches (and 30,000 jobs) are expected to go.

Argos - after reporting its biggest ever fall in sales in October, staff had their hours cut by 20 per cent.

John Lewis - reported a 13 per cent drop in sales, its tenth successive decline.

Debenhams - is carrying nearly £1bn in debts, and profits have dropped by 16 per cent.

MFI - the company went into administration last week; 1,000 jobs will be lost.

Character Group - shares in the firm, which supplies Britain's biggest toy retailers, including Tesco and Toys R Us, dropped 20 per cent last week. The company is now valued at little more than the value of its bank deposits.
JJB Sports - selling off assets to repay £20m loan; JD Sports is considering buying its rival.

Land of Leather - the furniture retailer reports sales down 47 per cent on last year.

Majestic Wine - its half-year profits are down 25 per cent.

Wrapit - the wedding gift-list firm went under in August, taking up to 2,000 couples' presents with it.
Rosebys - the textiles chain closed for good last month - 201 shops have shut.

Hardy Amies - the Savile Row tailor and one-time dressmaker to the Queen went into administration in October, forcing the closure of five of its six UK stores.
. . . and even Tesco has posted its worst performance since 1992, with just 1.9 per cent growth. Shares fell 40 per cent in the past year.

This article first appeared in the 08 December 2008 issue of the New Statesman, After the Terror

ANDRÉ CARRILHO
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The Great Huckster: Boris Johnson’s reckless distortions of history

As a scholar of Churchill, Boris Johnson could have articulated a constructive vision for Britain and Europe. Instead, he wilfully manipulates and distorts the historical record.

This month, 76 years ago, the defeated British Expeditionary Force was making for the Channel ports. Thanks to the ferocious resistance put up by the garrison at Calais, and Hitler’s hesitation, the bulk of the men were safely taken off the beaches at Dunkirk to fight another day. Whatever their private feelings during those terrible hours may have been, most of them knew even then that they would return to Europe to finish the job.

Their forefathers had been intervening in Europe for as long as anyone could remember. From Shakespeare’s Henry V through to Elizabeth’s support for the Dutch revolt, the Second Hundred Years War against Louis XIV, the French Revolution and Napoleon, and the First World War, London had always been profoundly invested in the continent. Defending the “liberties of Europe” and thus British freedoms was what Englishmen and Britons did. It was part of what they were.

In early June 1944 – on D-Day – the British, Americans and Canadians hurled themselves into northern France as their ancestors had done since the late Middle Ages. At least one British officer tried to inspire his men that morning as the landing craft approached the strongly defended beaches by reading out Henry V’s speech before Harfleur, in which Shakespeare has him exhort the men, “once more unto the breach”. The film version of the play was released that same year, dedicated to the “commando and airborne troops of Great Britain”. In the popular mind, these Englishmen and their North American descendants were part of the continuity of a European story that went back to the medieval English empire in France.

Some of those liberating Europe thought that they could not simply return to “business as usual” after the war. One of them was the later Conservative prime minister Ted Heath, the man who took Britain into the European Economic Community in 1973. He first defended Liverpool as an anti-aircraft gunner and then took the fight to Hitler as an artillery man during the campaign in north-west Europe. Over the course of the next 11 months, Heath and his comrades fought their way across the traditional battlefields of northern France and the Low Countries, including the Walcheren swamps in which their ancestors had been mired in Napoleonic times; and through western Germany into the centre of the Reich. They were to stay there, at the heart of Europe, for some 60 years. They created a stable European order, based on Nato and what was to become the European Union, which remains with us to this day.

Now the Brexit stalwart Boris Johnson, my fellow historian, claims that it was all in vain. “The European Union,” he says, “is an attempt to do what Hitler wanted by different methods.” Worse still, the EU is a German plot, whose currency, the euro, was “intended by the Germans” to “destroy” Italian manufacturing and generally grind the faces of its unfortunate members. Johnson has also invoked the spirit of Churchill in support of his arguments. He has since doubled down on his remarks and has received support from other members of the Brexit camp, such as Iain Duncan Smith, though not apparently from more informed figures such as Michael Gove. Unfortunately, Johnson’s claims are as historically wrong as it is possible to be, comparable in their crassness only to his predecessor as London mayor Ken Livingstone’s suggestion that Hitler supported Zionism.

Far from supporting European political unity, Hitler was violently and explicitly opposed to the idea. This was partly because it was proposed by his opponents on the “left” of the Nazi Party, such as the Strasser brothers. They belonged to the “anti-imperialist” wing of the Nazi Party, which wanted a pan-European front against the Jews and the British empire. Hitler’s hostility to the European project was also in part due to a racial antipathy to the half-Japanese Richard, Count Coudenhove-Kalergi, the author of the widely discussed book Pan-Europa (1923). One way or the other, Hitler condemned the Pan-Europa movement as “a fantastical, historically impossible childishness”, which would be no more than a “Jewish protectorate”.

Nor did he hold back with his alternative view of what the continent should look like. “The solution,” he wrote, “cannot be Pan-Europa, but rather a Europe of free and independent national states, whose spheres of interest are separate and clearly delineated.” Comparisons involving Hitler are usually odious but if one is going to draw parallels, his view of European integration then was much closer to that of the Brexiters today than that of the advocates of the European Union.

Moreover, the European project did not originate in the Nazis’ attempt to mobilise the continent on their behalf but rather in the resistance movement against Hitler. Take Sicco Mansholt, who hid Dutch resisters on his farm during the war, at great personal risk. He subsequently became the Dutch minister for agriculture and one of the fathers of the Common Agricultural Policy (CAP). Take Altiero Spinelli, the Italian anti-fascist who spent ten years in Mussolini’s prisons. It was there, in June 1941, at the height of Hitler’s power, that he secretly wrote his draft manifesto For a Free and United Europe.

Take Paul-Henri Spaak, later prime minister of Belgium, first president of the Common Assembly of the European Coal and Steel Community – the forerunner of the EU – and secretary-general of Nato. He was forced to make a daring escape from wartime Europe in the false bottom of a lorry in order to carry on the struggle against Hitler in exile. Indeed, across Europe there were thousands of men and women who fought, died, were imprisoned or tortured because they believed in a free and united Europe. To suggest that they were trying to achieve the same thing as Hitler by different methods is an outrageous slur on their memory. If Johnson ever makes it to the top of the Conservative Party, and thence to No 10, he will have a lot of explaining and apologising to do in Europe.

***

As if all this were not bad enough, Boris Johnson’s invocation of Churchill flies in the face of everything we know of the great man’s attitude to the European project. To be sure, he began as a Eurosceptic. When army reforms were proposed in 1901 to support the creation of a substantial land force on the continent, the young Winston Churchill was one of the few MPs to oppose them on the grounds that the navy, rather than the army, was of crucial importance to British security. Writing in the Morning Post, Churchill argued that “history” and “geography” showed that the British empire was “essentially commercial and marine”, and had been defended by armies of foreigners.

As the German threat loomed large, however, he changed his mind. Churchill, then first lord of the admiralty, told the Australians and New Zealanders in April 1913 that Europe was “where the weather came from”. It was the terrible storm of the First World War that caused Churchill not only to believe in the centrality of Europe but in the need for European – or at least continental European – unity.

In May 1930, the president of the Pan-Europa Union, the former French prime minister Aristide Briand, made a formal proposal for a “European federal union” based on a “European conference” with an executive to co-ordinate economic and military co-operation. The British government of the time rejected the surrender of sovereignty involved but many were sympathetic to the idea of continental European union under liberal auspices. The arch-imperialist Leo Amery, secretary of state for the colonies and later a powerful critic of appeasement, was a strong admirer of Coudenhove and his projects, which he regarded as the extension of Anglo-Saxon principles to the continent.

Likewise, Churchill, then chancellor of the Exchequer, told parliament in June 1925 that he hoped that one could “weave Gaul and Teuton so closely together economically, socially and morally as to prevent the occasion of new quarrels and make old antagonisms die in the realisation of mutual prosperity and interdependence”. Then, he continued, “Europe could rise again”. Churchill did not believe, however, that Britain should be part of any continental political union. “We are with Europe, but not of it,” he wrote in 1930. “We are linked but not compromised. We are interested and associated but not absorbed.”

In mid-June 1940, however, as western Europe buckled under the Nazi onslaught, Churchill went a step further. He made an unsuccessful offer of union with France – involving joint citizenship and a common government – designed to lock the French into the war effort against Germany or, failing that, to secure their fleet. The Nazi threat was so existential, in other words, that it justified the surrender, or at least the pooling, of British sovereignty.

When the threat of invasion passed, Churchill returned to the theme of continental European integration. In October 1942, he “look[ed] forward to a United States of Europe in which barriers between the nations will be greatly minimised. He “hope[d] to see the economy of Europe studied as a whole”, and the establishment of a council of “ten units, including the former Great Powers [and thus presumably Britain], with several confederations – Scandinavian, Danubian, Balkan, etc, which would possess an international police and be charged with keeping Prussia disarmed”.

Churchill returned to the subject immediately after the war, as the Soviet threat menaced Europe. In a speech at Zurich University in September 1946, he urged the continent to “unite”, with Britain supporting the project from the outside. Once again, including the Germans was central to his conception. Churchill urged no less than the full political union of the continent in a “kind of United States of Europe” under the “principles embodied in the Atlantic Charter”. He again praised the work of Hitler’s bugbear, Count Coudenhove-Kalergi’s “Pan-European Union”.

Churchill demanded an “act of faith”, beginning with “a partnership between France and Germany”, assembling around them the states of Europe “who will and . . . can” join such a union. Its purpose was clear, namely “to make the material strength of a single state less important. Small nations will count as much as large ones and gain their honour by their contribution to the common cause.”

Moreover, Churchill argued, “The ancient states and principalities of Germany, freely joined together for mutual convenience in a federal system, might each take their individual place among the United States of Europe.” In short, the new polity was designed to solve not merely the European question but the German problem, the two being one and the same. Once again, Churchill conceived of this United States of Europe alongside but not including the United Kingdom and the British “Commonwealth of Nations”, that is, the empire. Instead, he believed that Britain should be one of the “sponsors of the new Europe”.

Churchill’s attitude to continental European union was, unlike Hitler’s, highly positive. For Johnson to suggest, therefore, that he is donning the mantle of Churchill to prevent the current European Union from achieving Hitler’s aims through other means is a complete travesty of the historical truth.

Far from being intended to promote German power, the European Union was designed to contain it, or at least to channel it in the right direction. Contrary to what Johnson suggests, the euro was not planned by Germany to subjugate Italian industry or any other European economy. It was insisted on by the French to decommission the deutschmark, which they described as Germany’s “nuclear weapon”. Likewise, the Germans are not incarcerating the Greeks in their European prison: Greeks are desperate not to be released back into the “freedom” of the drachma and the corrupt national politics that they joined “Europe” to escape. If there is one thing worse than being dominated by Germany in the European Union, evidently, it is not being in the EU at all.

Boris Johnson may not have known the details of Hitler’s attitude to European integration, or the European sympathies of many resisters, but he is very well informed about Churchill and Europe. His ignorance is thus not just a matter of making mistakes; we all make those as historians. Nor is it simply a matter of these mistakes being, like bank errors, in favour of one’s own argument. To say that Johnson knows better is not a figure of speech: he has shown in print that he does. His recent book, The Churchill Factor, contains a very balanced account of Churchill’s position on Europe, including most of the statements listed above.

In making his arguments, Johnson is not appealing to the baser instincts of the electorate; it is far worse than that. The deeply ingrained British instinct to fight European tyranny is not base but fine. What Johnson and those who defend his rhetoric have done is to take something virtuous and pervert it. The European Union is not, as we have seen, the continuation of Hitlerism by other means and to suggest so is blatant manipulation.

The shame of it is that there is a perfectly plausible Eurosceptic argument on its own merits. It was well stated by Michael Gove at the start of the campaign. It insists on the historical distinctiveness of the United Kingdom, whose history does indeed set it apart from the rest of the continent. It makes the case for a reform of the EU. It rejects the scaremongering of “Project Fear”, on the cogent grounds that the United Kingdom has the political, economic and military weight to prevail even without the stabilisers of the EU. It scorns President Obama’s impertinent warning that Britain would have to “get to the back of the queue” for a trade deal after Brexit, with a reminder that Britain and her empire defied Nazi Germany for two years before the Americans joined the fray, when Hitler declared war on them (not vice versa). One does not have to accept every detail of this discourse to feel its force. Uniquely among the democratic European powers, the United Kingdom can “stand alone” if it must or wants to.

The Achilles heel of the Brexit campaign, however, is that it has no viable vision for continental Europe. Even Gove falls down here, as his idea of a British departure unleashing a “democratic liberation” of the continent is pure fantasy. It seems odd to have to explain this to Brexiters but Britain really is special. Casting off the bonds of Brussels will not emancipate mainland Europe but let loose the nationalist and xenophobic demons tamed by the integration project. This is clear when we look at the rise of radical anti-European parties in France, Hungary, Austria, Germany and many other parts of Europe as the European project fragments. These developments should not surprise anyone who knows the history of mainland Europe before the mid-20th century and to a considerable sense beyond.

***

 

Most of continental Europe had failed before 1945 and even now the European Union is only failing better. Unlike virtually every other European state, which has at some point or other been occupied and dismembered, often repeatedly, England and the United Kingdom have largely – with very brief exceptions – been subjects of European politics, never merely objects. In this sense, too, she is exceptional. Yet this should not be an occasion for British triumphalism. Whatever the outcome of the referendum on 23 June, the European Union is not an enemy of the United Kingdom. It should best be understood as a modern version of the old Holy Roman Empire; hapless and officious, perhaps, but not malign. It needs help. The failure of the European project and the collapse of the current continental order would be not only a catastrophic blow to the populations on the far side of the Channel but also to the United Kingdom, which would be
directly exposed to the resulting disorder, as it always has been.

In short, the Brexit camp in general and Boris Johnson in particular are missing a great opportunity in Europe. A student and partisan of Winston Churchill, the former mayor of London was qualified to articulate a constructive vision for Britain and the continent. He has failed to understand that the only safe way that Britain can exit from the European Union is not through Brexit – whose consequences for mainland Europe would be dire – but through Euroexit; that is, a Churchillian political union of the continent in close co-operation with the UK.

Instead, in addition to their distortion of the historical record, Johnson and the Brexit camp are committing the cardinal sin of making a decision before they need to. The European Union is not, sadly, a United States of Europe, even though it needs to become one to survive, and is becoming less like one every day. If and when it musters the strength for full political union, there will be plenty of time to leave. Meanwhile, the EU needs all the support that Britain can give it from within.

In 1940, the British forces had been defeated and retreat was the only option. The situation could not be more different today. This is no time to head for the beaches in what will be a legislative Dunkirk of epic proportions, with incalculable consequences not so much for Britain as for the rest of the continent. Unlike in 1940, the United Kingdom is not being forced out of Europe. It has hardly begun to fight there, unless shooting oneself in the foot through Brexit counts as combat. The battle in Britain today is a distraction from the great struggle on the mainland. There is much work to be done in Europe. It is time the British stop tearing themselves apart and return unto the breach once more.

Brendan Simms is a NS contributing writer. His latest book is “Britain’s Europe: a Thousand Years of Conflict and Co-operation” (Allen Lane). He is president of the Project for Democratic Union

This article first appeared in the 19 May 2016 issue of the New Statesman, The Great Huckster