Lloyds Banking Group wants to strip out 9,000 jobs that are no longer needed.
Technology is the swinging axe. It is the same across so many white collar industries, where either digital messages can replicate the processes previously carried out by a member of staff, or the person minding the computer is following a software programme that does most of work. In the case of Lloyds, the cuts come on top of 45,000 posts already lost since it rescued HBOS with a merger in 2008.
It is right to feel sympathy for the workers affected, even though most cuts at the bank so far have been achieved by natural wastage and voluntary redundancy. Free marketers and restless entrepreneurs love to exhort Britain’s 31 million workers to embrace change and the likelihood of managing several careers in their lifetimes, but most people have more interesting lives outside work and need the stability of a safe job to pay the bills.
Yet adapt they must. As Lloyds chairman Lord Blackwell says, the pace of change across the UK financial services sector is unprecedented, “with more fundamental change happening over the next 10 years than has happened over the last 200 years”.
He may be overstating the case a little. Nevertheless, the story for his bank is replicated across much of the high street, at least as it is currently constituted. There will be jobs that entail selling goods from stores, but probably at much smaller firms dispensing niche products. As a result, there will not be the career structure or safety of a job for life, as there was at a bank. Bigger retailers increasingly see shops as a marketing tool for online sales, or as a click and collect depot. As an indication of this trend, John Lewis’s sales over the last couple of years have seen a substantial increase from web purchases.
These changes to the career path of the average white collar worker demand that staff have more skills, whether it is in marketing or finance and accounting, or the confidence and ability to provide advice to customers.
Alan Milburn, the social mobility adviser to the government, wrote a report tackling this very problem. As a dying act of the last Labour government, it failed to gain much notice. But it highlighted the need for a more professional workforce.
His report is worth revisiting for its holistic vision of an education and careers structure that attempts to cope with job losses at companies like Lloyds. If banking is going to become a utility function, then it puts even more pressure on policymakers to train people for what Britain is good at: knowledge jobs.
Milburn identified legal services as one of many ripe for expansion, not just for the Oxbridge high-flyer, but the clever A-level student. Some firms have heeded his advice, but not many. The laissez-faire attitude of the current government means we won’t bridge the gap from one industrial revolution to another without unnecessary pain.
George Osborne’s big idea for 2014, and for the Conservative party to keep its hands on power, is pension reform. In his March budget he set savers free to blow their retirement pots on whatever they like. Millions of people were judged to have thrown their hats in the air, such was the excitement at this new freedom. Thatcherite thinktanks hailed it as the recognition of a human right.
Of course it was no such thing, especially when much of everyone’s pension savings are funded by the taxpayer through tax relief. It is a sad fact that higher rate taxpayers benefit the most, with 40% of their savings attributed to the taxpayer’s generosity.
Then there is the possibility that savers fall on hard times after a binge and ask taxpayers for a second handout.
Osborne studiously ignored studies in Australia that show only half of retirees maintain their savings while the other half cash in their pensions to pay credit card debts, if not to fund a cruise and a sports car. A survey for financial adviser Hargreaves Lansdown shows Britain is likely to follow the same path. More than one in 10 respondents, equivalent to 200,000 retirees, said they would grab all of their private savings the moment they retire.
It might make a big payday for whoever is the next chancellor. Withdrawing a lump sum in one year that was saved in a private or occupational scheme over a lifetime could push many savers into the higher tax band. Hargreaves Lansdown estimates they’ll pay £1.6bn in tax following the chancellor’s move, compared with the Treasury’s estimate of £350m. But it will be tax receipts from desperate or foolish people and cause huge pain for future generations.
House price reality
The crazy days of June and July have passed and a calmer housing market prevails. In particular, London house price inflation has come off the boil and the Land Registry figures for September verify the trend. So for the time being, the rise of the £1m home has eased. It cannot last. London is gaining around 100,000 inhabitants a year. The UK population is also swelling. Britain is now home to 64.1 million people, five million higher than in 2001. With this level of pressure on housing, price inflation has only paused before taking off again.
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