Penny Bizarre ?

OK we’re in a recession, a credit crunch. These are “hard times”, and there’s economic doom and gloom ahead. So no surprise to see that top UK store and perennial favourite Marks & Spencer are having their share of misery as well.

http://newsvote.bbc.co.uk/1/hi/business/8056809.stm

“M&S cuts dividend as profits fall” reads the headline; on the day that the 125-year-old retailer said it had decided to rebase its dividend payment to 15p a share from the previous level of 22.5p. Shares later lost more than 8% of their value in response to the news.

I’m no economist but I couldn’t help wondering whether this news was quite as bad as it seemed

Annual pre-tax profits fell to £706m from £1.1bn the year before. Quite a drop eh ? But wait a minute - £706 Million pounds – and remember that’s after paying the wages of every employee – they’ve still taken more than £10 for every man woman and child in the country. I wish my company was doing that badly.

Total sales actually rose 0.4% to £9.1bn. – which gives a profit margin of 7.7% - not bad at all. Certainly not compared with what you’d get putting your money in a building society.

But it’s not good enough for the high flying M&S, and they’ve taken a "tough but necessary" decision to close 27 stores, and lose 1,200 jobs in a move to make things better.

I wonder how necessary that really was ? Let’s say the 1200 people were paid an average of £30,000 pa – probably much lower, but it makes my calculations easier, and takes a rough estimate at “on costs” on board. So 1200 jobs would cost them £ 36 000 000 a year – barely a scrape off that dreadfully poor profit of £706 Million. In fact if you took that off the profit you’d be left with a profit of £670 Million – in other words reducing it by around 5%. So assuming that if they did this they’d have to reduce shareholders dividends by 5% as well, then they’d cut them to – well actually about 14 pence instead of 15 pence.

So which is best ? – losing 1200 jobs and giving the shareholders an extra penny a share, or keeping the jobs, and giving them a penny less ?

Well you can see how I’m thinking, but I may be wrong. I certainly am not an economist, my calculations are sketchy to say the least, and I have always heard very good things about how M&S give back to society, and how they treat their employees.

I do feel though that our society is missing something. We’re trying to measure the success of our businesses purely in terms of money. We’re forgetting that money is really only a token to be exchanged for “good things”. Sometimes those good things can be provided in ways that money can’t buy in the usual sense – good things like job security; like economic stability.

I’m not suggesting that M&S share holders aren’t entitled to make a profit, but I know that if M&S was a co-operative, their profits today wouldn’t be seen as disappointing – they’d be seen as fantastic.

I feel that too often businesses judge themselves by how much better they are doing than last year – not how much profit, but how much more profit, and perhaps not even how much more, but on how quickly the rate of increase is improving.

Perhaps what they should really be asking, is – Are our customers satisfied ? Are our employees happy to work for us ? and finally - Have we made enough profit ? because more than enough, can be greedy.

In short I feel that businesses should have a social conscience and should consider it a part of their mission plan, to promote social cohesion, and communal well being.

Idealistic ? I think so – but worthy of consideration I think

Gurkhas, Gordon Brown & Football supporters - musings on a week in politics

As a Labour supporter I wasn't particularly happy at the Government’s defeat on Wednesday over the issue of residency for Gurkhas . Also the flurry of blog postings variously either defending Gordon Brown or calling for a new leader were hardly evidence which pointed to a 4th term in office.

That many of responses on these blogs were also dominated by nihilist trolls after this didn't help much either. We get a lot of talk among politico net newbies these days about "Internet memes" - well the one that sprang to mind on Wednesday was "all your base are belong to us" !

Or if you prefer football jargon : I felt like the away team had taken our end ! Put in plain English, a bad day for Labour.

It needn't be like this. Gordon Brown was until fairly recently, widely regarded as the best chancellor for years, but now in a world where global capitalism is thoroughly discredited who gets a bad time ? The Capitalists ? No – the Labour chancellor who spent year after year counseling against boom and bust economics – but now he's somehow responsible for the whole world's mess.

We're also in a period where Labour leaning blogs and websites are really stimulating sensible and informed discussion about politics - involving voters and politicians on more or less equal terms. It’s certainly connected with me in a way that I’d have never thought possible – the very fact that I’m writing this at all bears testimony to that. Three months ago I would not have.

Great times then ?

No - instead we get Labour lambasted (with some justification) because of "smears" in the McBride-Draper affair, but meanwhile the odious Guido Fawkes site still dominates headlines and pumps out it's infantile bilge. In a rare visit to the site yesterday I found the Prime Minister referred to as a "twat" – which is presumably a pithy high brow intellectual gem of wisdom that went right over my head. Other sites too have a similar level of discussion and if we’re going with the football theme, they’re not dissimilar to the kind of forums that say :

“Man U suck !”

“No they don’t they rule – Chelsea are crap”

“F*** off Man U are Sh***”

“No you F*** off – Chelsea are scum”

You get the drift – no logic, no debate, just childish vitriol – often not even connected with the events of the day or the comments under discussion. No room for any consideration of opposing points of view, or even any real acknowledgement of concurring points of view”

Commenters and bloggers of this kind should be like fish in a barrel - easy to shoot down - and yet they're continually making negative waves for the incumbent Government with apparent immunity.

To come back to yesterday’s defeat in parliament; giving greater rights of residency to Ghurkas should have been a feel good story for Labour. It has obvious public support potential and offers an opportunity to make pseudo-racist media grit their teeth and welcome some foreigners, all relating to a fairly inconspicuous bit of business. But clearly the proposals didn’t go far enough – and look what happened !

Did no one think to look on Facebook and see how many people were shouting up about the Ghurkas ? - the public support was certainly obvious to lots of other people. It’s an episode that gives an impression of the Government being out of touch with the public.

The other self-inflicted non-story which shouldn't be doing damage, but is, is the petition to get Gordon Brown to resign, on the Government’s own Downing Street web-site.

Again there are parallels with football – it reminds me of the web poll which suggested that Wembley Way be renamed after a Scottish footballer, and the other poll deciding that the new stand at Manchester City would be named the Bell End. Who is moderating the PM’s web site ? It's not restricting free speech to have rules that say "Don't diss the PM on his own site !" . The net result is that a fairly lame schoolboy prank, ends up making the Prime Minister look silly, and steals the headlines .

But sad to say I can't help but feel there are more banana skins in the pipeline. This week we had announcements from Harriet Harman on equality legislation hinting at positive discrimination (as has been already negatively spun by the Daily Mail), and also word from Jacqui Smith on internet service providers and phone companies having to keep a record of all web, email, and phone contacts (Daily Mail ). Leaving aside debates about these issues, it seems clear to me that both of the provide potential for controversy both inside and outside the Labour party – which frankly it could well do without just now.

Positive discrimination hands a free shot to the BNP in run up to the Euro elections. I haven't seen the details of the proposals and I suspect many haven’t - but when has that ever stood in the way of a nasty Daily Mail story ? Whilst I appreciate the difficulties that exist in some spheres, of promoting minority groups to take up a more realistic and greater representation of roles within those spheres, theres a very strong argument that says that discrimination in favour of one group, is discrimination against another. In the current climate, the press would (will) have a field day with this.

Similarly the internet & phone proposals will be seen to put the party that champions freedom of information, on the backfoot on that very issue. The Labour party is traditionally seen as one that promotes libertarian values, that doesn’t want individuals to be under surveillance and constantly checked up on – so this will be an area that will be exploited by opponents – and will inevitably get mixed in with the confusion on ID cards.

Note I’m not passing any comment on either of the proposals – I’m sure there are very good reasons for them, and pluses and minuses in both. Yet it’s so obvious what the media will latch on to : “powers to discriminate in favour of women and black job candidates” and “Yesterday's consultation document made no attempt to hide the fact it was considered the most 'effective' way of spying on our every move”

In the current climate these are weak areas for Labour to push to the forefront, amid a not very benevolent press culture. If they win the next election, then they’ll be able to debate the finer points.

So that brings me finally to the issue of leadership of the party – should Gordon Brown resign ? Should he be forced out ?

Well we’re back to football again – if the team’s not doing well : Sack the manager ! Well sacking the manager sometimes creates a long term improvement. Sometimes it creates a short term bounce, and sometimes it creates a short term dip. It always creates a difficult transition time – which any team/party could do without in the run up to an important game/election. I don’t think you should sack the manager if you can help it.

This manager/Prime minister though looks nervous. The much trumpeted faux pas yesterday on leaving the chamber too soon – trivial in itself, was indicative of a man under stress. He also looks nervous – odd even – on the videos on YouTube – which seem stilted. It seems odd that a man who could be on prime time television more or less any time he wants to be chooses to use a means of making his announcements more attuned to Al-Qaeda than to the British Government. I couldn’t help wondering if Osama Bin Laden were watching this in his hideout somewhere saying – “Well it looks like him, but maybe it was filmed a few months ago, and we think the audio has been overdubbed – it could have been filmed anywhere”.

But I’m not going to go calling for resignations. What I would call for is for the Labour Party to recognise the seriousness of the situation, and demonstrate the leadership and verve which brought them to power in the first place.

There are elections to be won – not lost ! – Does anyone really want to return to the greed and arrogance of the Thatcher years ? Does Gordon Brown being made fun of by a juvenile website make me forget that this high spot for unemployment in Labour’s tenure – was actually the low spot of unemployment for the Tories ? Do we really believe that the cure for woes inflicted by corrupt greedy capitalist bankers and financiers in the current economic downturn will be to elect the champions of the rich and selfish elite ?

I don’t think so – but then not everyone is as interested in politics as I am. Some will need more persuading. The time is ripe for some very strong leadership from Gordon Brown, and indeed the rest of the Labour Party : Cometh the hour – cometh the man ! (as they say on Sky Sports !)