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Retailers likely to be among the scapegoats for poor Labour election results

by Scott Bicheno on 5 May 2008, 11:16

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Re-arranging the deckchairs on the Titanic

After winning only 24 percent of the vote in the local elections on 1st May, the Brown government seems to be about to use the Office of Fair Trading (OFT) against retailers as the spearhead of its drive to regain control of the headlines and to show that it ‘shares consumers’ pain.’

Up for election were whole councils in all 22 local authorities in Wales, and a third of the seats in most of the 137 (of 388) local authorities in England. Of 8220 (of over 20,000) council seats, the Labour Party lost 331, and nine of 27 councils it previously controlled.

The body blow, however, came in the results from all 37 English metropolitan authorities, and the defeat of the Livingstone machine in Greater London by the Conservative Party’s court jester Boris Johnson. The suburbs, it seems, have finally turned decisively against the Labour Party.

The whole New Labour project hinged on becoming the natural ruling party by appealing to the aspirational elements in British society. That appeal has been eroded by increased taxation to pay for bloating and privileging the public sector.

Inflationary forces

By pouring money into the least productive sector of British society, the Brown regime unleashed inflationary forces it will not now be able to control. Brace yourselves: the Labourites always blame private enterprise when the consequences of their economic mismanagement catch up with them.

Ideas floated in the media over the weekend include measures to restart asset price inflation in the housing market, and to beg OPEC to increase oil production, so that a suspension of the usual increase in petrol tax will work through to the pump price.

The only measure that might seize the headlines, however, and which would also throw rebellious paleo-Labourites a bone, is the decidedly Old Labour device of blaming retailers for rising prices.

Anyone who manages to make what the government judges to be excess profit in the months ahead could well be investigated by the Office of Fair Trading. With the government desperate for funds, expect more retrospective taxes on ‘windfall’ revenues.



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