Heroin to a heroin addict

2008 has brought a wave of economic gloom but actually lower house prices and lower consumption woul

Newspapers report with alarm the property boom has ended when, in fact, a long period of house price stagnation would be desirable and, with prices as they are, modest falls are probably preferable to further sharp increases.

The trend rate of growth of the economy is probably about 2.5 per cent p.a., or possibly slightly higher depending on what assumption one makes about future rates of immigration.

In the nature of things it follows that periods of rapid growth will be followed by periods of slower growth. This is neither a disaster nor a surprise.

The growth rate I anticipate for this year, of 1.5 to 2 per cent will obviously be a shock to anyone who believed that last year’s figure, expected to be more than 3 per cent, was sustainable. The slower growth rate is similar to what we experienced in 2005 and that hardly felt like an economic catastrophe.

Consumer spending too is likely to grow more slowly in the future. Indeed the rate of saving is so low that it has to. The prospect of slow consumption growth may worry Marks and Spencer but it is less of a worry to economists who can see that high debt-financed consumption today means low consumption in the future.

High and rising house prices impose a burden on future generations in much the same way as government borrowing; they are not a miraculous source of wealth and are plainly not sustainable as a driver of the British economy.

The growth of house prices over the last twelve years, if continued, would inevitably lead to housing becoming unaffordable. And that's neither likely nor desirable. To argue interest rates should be cut to reflate the housing boom and induce people to spend, on the back of rising property prices or to ease debt-financed spending is much like treating a heroin addict with more heroin.

The economy eventually has to be steered back to a position in which consumption is relatively less important and saving is higher. Savings need to be invested. Home investment has risen recently; the capital stock has expanded because, the labour force, boosted by immigration, needs more capital to work with.

But,as Andrew Smithers of Smithers and Co has suggested, many of the incentives businesses provide for managers function much like profit sharing and this is known to depress investment. Thus, unless we find a better way to reward senior management, investment in the UK is likely to remain weaker than in its neighbours.

Fortunately the recent movement of the exchange rate offers more than a ray of hope on the horizon. We have seen a fall in the trade-weighted index of seven per cent since the summer months, largely because UK interest rates are now expected to be much lower than people had then anticipated.

Plenty of people are saying that further falls are likely, although past experience suggests that the best forecast of the exchange rate is its current value.

But even if we give these forecasts the attention they deserve, and assume that there will be no further change, this is a fairly sharp improvement in the country’s competitiveness.

It is bound to lead to higher exports and lower imports reducing, and possibly eventually removing the balance of payments deficit.

Even if we do not become a net exporter of savings, it is likely that the UK economy will become less reliant on foreign savings as a means of financing its investment. This exchange rate change provides a valuable means of moving the economy from consumption-led growth to export-led growth.

The recent wave of pessimism comes after a long period of unjustified belief in the superiority of British economic management and British economic performance.

People have confused a long housing and consumer boom with sustainable drivers of economic growth. Among the illusions shattered by the run on Northern Rock has been the idea that the United Kingdom outperforms its neighbours.

Martin Weale is Director of the National Institute of Economic and Social Research

Chris Ball/UNP
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The fish-eaters and the fasters

With a population split between whites and Asian Muslims, in some ways Nelson in Lancashire feels like similar-sized towns in Ulster: two communities separated by a gulf of non-communication.

In the late afternoon of local election day this month, the chairman of Nelson Town Council was working the terraces of old cotton weavers’ houses on his patch. Sajid Ali was wearing a red rosette and a navy blue cardigan over his capacious white shalwar kameez, and what looked like his dancing shoes.

This was not the forlorn ritual of unanswered doors, blank looks and curt responses habitually experienced by Labour canvassers even in more promising political times. Along these streets Sajid is a figure of some consequence: a jolly fellow and, as one opponent put it, an “interesting character”.

Almost everyone was in; Sajid knew almost all of them; and they in turn understood what was required. Sometimes a quick burst of Lancy Punjabi did the job: “Salaam alaykum, yoong maan, how yer doing? What time yer coomin’ to vote?” To older voters his spiel would be entirely in Punjabi and the response would often be a head-wobble, that characteristic south Asian gesture, which, when given to Westerners, can be baffling, but in these cases clearly signified solid intention.

The Labour candidate in the Brierfield and Nelson West division of Lancashire County Council, Mohammed Iqbal, held his seat comfortably on the day his party lost control of the county. And he did so on a poll of 58 per cent: a far higher turnout than in any of the other, whiter areas of Pendle; the highest in Lancashire; and higher than wards with these demographics would usually expect even at a general election. The average across Lancashire on 4 May was 37 per cent. It seems reasonable to conclude that the votes from those of ­Pakistani heritage, marshalled by Sajid, were wholly responsible.

Nelson is a strange, sad, divided, forgotten old cotton town, not without beauty. The weavers’ houses are stone not brick, which, elsewhere, might make them rather chic. A few minutes from town is wonderful Pennine countryside, and to the north the view is dominated by Pendle Hill itself, brooding like some sleeping sea monster.

Pendle is both the borough council and the constituency, where the mix of urban and rural has delivered it to the winning side in seven of the eight general elections since its creation 34 years ago. (Labour took it, five years prematurely, in 1992.) No one seriously believes the 5,400 Tory majority is in play. Nonetheless, Nelson can explain a lot about British politics in 2017.

“This was a cracking town,” said John Bramwell (“John the Fish”), who has been purveying cod, haddock and non-stop banter to Nelson for 41 years, first on the market, now from one of the last white-run, independent shops in the town centre. Nelson had a football team that played fleetingly (1923-24) in the old Second Division, what is now called the Championship. And in 1929 the Lancashire League cricket team, flashing cash in a manner that baffled the national press, signed Learie Constantine, the most gifted and thrilling West Indian all-rounder of his generation.

“When he arrived, no one in Nelson had ever seen a black man close-to,” said Derek Metcalfe, the club’s historian. “People would cross the road when he passed by. But he grew into their affections. He was a highly intelligent man as well as a great player.” Constantine, after a post-cricket career in the law, Trinidadian politics and diplomacy, finished life in the House of Lords as Baron Constantine of Maraval and Nelson, Britain’s first black peer. In July 1943 the Imperial Hotel in Bloomsbury accepted his booking but not his presence, and he promptly sued. His victory at the high court the following year was an early landmark in the fight against racial discrimination.

It was the 1950s before Nelson would get used to seeing non-white faces again, when the mill owners, battling labour shortages and overseas competition, turned to Pakistan to find biddable and affordable workers. They found them in Gujrat District, which is not one of the more worldly places, even in the rural Punjab.

“The first group were young men who in many ways integrated better than they do now. There were no mosques. They went to the pubs with their workmates and knocked around with local women. Then they had to go to the airport to collect the intended wives they hadn’t met yet,” recalled Tony Greaves, the Liberal Democrat peer who is deputy leader of Pendle Borough Council.

The mills disappeared, gradually but inexorably, but the Pakistani community kept growing and has now reached its fourth generation. The young men do not normally spend time in pubs; indeed, in a town of 30,000 people, there are only two left, plus a couple on the outskirts. It is hard to imagine anywhere that size in Britain with fewer. There are, however, at least a dozen mosques. The 2011 census recorded 40 per cent of the population as Asian, but on market day in the town centre the proportion seems much higher. The most prominent retail outlets are two bazaars: the Nelson (the
old Poundstretcher) and the Suraj opposite (the old Woolworths). Few white faces are seen in either: the saris and hijabs are beautiful but of little interest. They are all imported to this textile town from south Asia.

The white people have retreated, either out of the town altogether or to the semis of Marsden, on the hill. In the visible life of Nelson, they are clearly a minority. Population change on this scale can be accommodated, if not always easily, in large cities. It is a different proposition in a small town that was once tight-knit and, despite its closeness to larger places such as Blackburn, Accrington and Burnley, largely self-contained.

Even after 60 years, hardly anything has melted in the pot. The early migrants were villagers who placed little value on education. Recent history has led Muslims all over the world to turn inwards, to their own religion and culture. This is being exacerbated by white flight and by the advent of religious free schools, a disaster for anywhere in search of cohesion. The old Nelsonians have turned away. “Nelson is not multiracial or multicultural. It is biracial and bicultural,” says Greaves. “I would love to tell you that I go round to Abbas’s house to have chicken jalfrezi and he comes to mine for steak pudding and chips,” says John the Fish. “It’s just not like that.”

Unemployment is high at 18 per cent; there is no shortage of taxis. Educational attainment is patchy. Teachers at the two high schools fear their best pupils will be creamed off further by the promised grammar-school boom.

The vicar of Nelson, Guy Jamieson, and at least some of the local imams do their utmost to make connections between the communities. In certain respects Nelson feels like similar-sized towns in Ulster: two communities separated by a gulf of non-communication. In other ways, this description is unfair. When Burnley, just four miles away, suffered riots in 2001, Nelson stayed quiet. I could sense no threat, no active tension, merely resigned indifference on both sides. “There’s a poverty of confidence,” Jamieson said. “They don’t know how to sit down and engage.”

***

A modern English town council, subordinate to Brussels, Westminster, county and district, is an improbable power base, but Sajid Ali seems to be making Nelson’s work. Its precept is only £330,000 a year but this is not capped, so it suits both district and town if Pendle offloads smaller assets: parks, play areas, community centres. It is a minimalist form of devolution, but harks back to the days when Nelson was a borough in its own right, and looks forward to an improbable future when our towns might again be allowed to take their own decisions as they do in more grown-up countries.

But the council votes on party lines, Labour’s 16 councillors trumping the Tories’ eight. “They won’t work with us,” Sajid says flatly. “They don’t run it fairly for the town itself,” says the Conservative Neil McGowan. “If we put something forward for Marsden, we are always outvoted. One council official told me they’d never come across a town like it.” In Tony Greaves’s words, “The
politics in Nelson were always sour.” In the 1930s it was known as Little Moscow.

When I first met Sajid, however, he was outside a polling station doing a stint as a teller and laughing merrily along with his blue-rosetted counterpart, Arshad Mahmood. Yet things were not quite as they seemed. Mahmood was part of a mass defection of Pakistani Lib Dems to the Conservatives which appears to have nothing to do with Brexit, extra taxes for the NHS or Maymania. What it does have to do with remains elusive even to local politicians: “clan politics” and “personal ambition” were mentioned. It may be even more complicated than that. “So you’ll be voting for Theresa May next month?” I asked Mahmood. “Oh, no, I like Jeremy Corbyn. Very good policies.”

Perhaps this helped Sajid maintain some enthusiasm for the bigger campaign ahead, though he was daunted by one fact: the general election coincides with Ramadan, and dawn-to-dusk fasting comes hard in these latitudes when it falls in summertime. Still, he was impressed by all the new members Corbyn had brought to Labour: “The way I see it is that each new member has five, ten, 15, 20 people they can sell the message to.”

This seemed a bit strange: it implied he thought politics in the rest of Britain worked as it did in these streets. He had boasted earlier that he knew everyone. “All over Nelson?” “Oh, no,” he had backtracked. “In the English community nobody knows their next-door neighbour.” Which was an exaggeration, but perhaps not much of one.

There were no posters along Sajid Ali’s streets – not one. The information about which house to choose was on the canvass return and, more significantly, in his head. Just once he got it wrong. A little white girl opened the door and then a tattooed, muscular figure in a singlet barrelled towards the door. He wasn’t aggressive, just brisk. “Naaw. I doan’t vote.” End of. It was a sudden reminder of the norms of modern British politics.

***

Another norm is that, at any local count, no one ever thinks much of the big picture. The rise and fall of prime ministers, earthquakes and landslides are no more than distant rumours, of surprisingly little interest to the principals; what matters is the here and now. Where did that ballot box come from? How big is the postal vote? Any chance of a recount? When the five seats for Pendle were counted the next day at the leisure centre in Colne, one stop further up the clanking branch line from Nelson, no one was talking about the Tory takeover at County Hall.

Here there was something for everyone: Mohammed Iqbal won, just as Sajid predicted. Azhar Ali took the other Nelson seat even more easily for Labour. Both results were greeted with more effusive male hugs than would be considered seemly in Berkshire. In Pendle Central the Tories knocked out the sitting Lib Dem, but – heroically, in their eyes – one of the Lib Dem candidates grabbed a seat in the rural division.

But the most interesting result came in the most trifling contest: a twinned by-election for two vacancies in Nelson Town Council’s lily-white ward of Marsden, so electors had two votes each. The seats were won by a Conservative married couple, the Pearson-Ashers, who got 426 and 401; the single BNP candidate had 359 votes, with one Labour candidate on 333 and the other on 190. The first of these was called Laura Blackburn; the second Ghulam Ullah. This suggests a good deal of vote-splitting that Labour might find rather unpalatable.

In fact, Marsden already has one far-right relic: Brian Parker, who sits on Pendle Borough Council, is the last survivor in the top two tiers of local government of the BNP mini-surge that took them to 55 council seats across the country by 2009. Of Parker, two opposing councillors told me: “He’s actually a very good ward councillor.”

Curiously, Ukip has made little impact in Nelson or in Pendle as a whole. So there is not much scope for the party to fulfil what appears to be its immediate destiny: as a way station for Labour’s historic core voters to catch their breath on the arduous journey into Theresa May’s arms. According to John the Fish, whose shop functions as a kind of confessional for white opinion, they may no longer need a stopover: “I’m getting plenty of people, staunch Labourites, telling me they can’t stand Corbyn.”

I asked him how many Pakistani regulars he had. He broke off from chopping hake and held up five fingers. On 8 June the fish-eaters of Marsden can be expected to rouse themselves more energetically than the Ramadan fasters across town.

***

Seedhill, the cricket ground graced by Constantine, is pretty Nelson rather than gritty Nelson, even though a chunk of it, including the old pavilion, was lopped off years ago to form an embankment carrying the M65. Upstairs in the pavilion is a wonderful picture of the great man, eyes ablaze, down on one knee for a full-blooded cover-drive. It would have made a better monument in the town centre than the 40-foot weaving shuttle that has dominated Market Street since 2011. I thought it was a torpedo; children think it’s a giant pencil.

The packed houses that watched Constantine lead Nelson to seven league titles in nine years have dwindled now: there were only a couple of dozen to watch his successors play Accrington recently. But it was a drab day with a chilly breeze and Burnley were at home to West Brom in the winter game down the road.

And generally the club thrives better than the town. Given the lack of hotels and pubs, the pavilion is much in demand for functions, and the team remains competitive. Nelson fielded four local Asians for the Accrington match, which suggests that, in one activity at least, integration is just about where it should be.

It seems unlikely that a similar situation would apply at the crown green bowls or the brass band, or any other of the long-standing recreations in Nelson (though small but growing numbers of Pakistanis are now taking allotments). The knee-jerk liberal reaction might be that this is somehow the fault of the white Nelsonians. I think this attitude is a grave oversimplification that has done much damage.

In one respect the incomers have re-created the old life of Nelson. In the hugger-mugger stone-built terraces, the neighbourliness, the power of extended families, the external patriarchy and the internal matriarchy, the vibrancy, the sense of communal struggle . . . that is exactly what this cotton town must have been like a century ago. 

This article first appeared in the 18 May 2017 issue of the New Statesman, Age of Lies

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