TOM UTLEY: Even an economic dunce like me foresaw the credit crunch


Last updated at 01:45 28 March 2008

Exactly 30 years ago, my colleague Keith Waterhouse wrote a novel, Office Life, whose central character takes a job in the stationery supplies department on the seventh floor of a huge and mysterious organisation called British Albion.

After a while, our hero sets out to discover precisely what his new employers make or do for a living.

I hope Keith will forgive me (incidentally, why isn't he Lord Waterhouse by now - or at least Sir Keith?) if, after three decades, I spoil the enjoyment of those who haven't quite got round to reading it yet by giving away the ending.

It turns out that British Albion, with its vast network of departments responsible for design and maintenance, fire and safety, "traffic control", personnel and accounts - not to mention two whole floors devoted to issuing luncheon vouchers for the staff canteen - does absolutely nothing at all.

It's just a Government front organisation whose sole purpose, apart from servicing its own staff, is to give the illusion to the world that Britain has more people in productive employment than is actually the case.

When it was published in 1978, on the eve of the Winter of Discontent, Office Life seemed an amusingly perceptive satire on Britain's industrial decline and the way the economy was heading.

Today, a decade after Labour's return to power, it reads more like fact than fiction.

I'm reminded of the book every time I see the public appointments section in the Guardian, thick with advertisements for Lesbian and Gay Awareness Officers, Best Practice Managers and Environmental Liaison Advisers.

All these characters would feel blissfully at home on the seventh floor of British Albion in Mr Waterhouse's prophetic pages.

Scroll down for more...

This week, I thought of Office Life again when I read that Tata, the Indian conglomerate, had snapped up Jaguar and Land Rover for £1.15 billion.

Yes, I know both marques passed out of British ownership years ago when they were bought by Ford.

I know, too, that the Tata deal has been broadly welcomed by the two companies' 19,000 employees in the UK, who've been assured that their jobs are safe.

Look more closely at the sale agreement, however, and you will see that Tata is guaranteeing those jobs only until 2011, when it will review the business plan it has inherited from Ford.

That's only three years away, for goodness' sake. What then?

Are we really to suppose that Tata will resist the temptation to move jobs to India, where the workforce is so much cheaper, the employment laws so much more relaxed - and where the universities are churning out ever-growing numbers of highly-skilled engineering graduates?

All I can say is that the sale of Jaguar and Land Rover - the first major Western car manufacturers ever to have been sold to an Indian company - marks a turning-point in world economic history that should set us thinking very hard about Britain's future.

Bit by bit, the industrial base we built up in the 19th century is being eaten away, like our agriculture, as we stop making things that people want to buy and become increasingly dependent upon service industries.

Scroll down for more...

How much longer can we survive and prosper as a nation of bankers, lawyers, architects and theatrical designers, picking up the social bills for an unemployable underclass, while being watched over by an ever-growing army of health-and-safety officers, sexual-equality enforcers, parking wardens and council-tax evaluators?

I should stress at once, before I plunge readers into the deepest gloom, that I'm no economist - and it may well be that the answer to my question is that we can flourish for ever, just as we are, with the great majority of our economic eggs in the service-industry basket.

One basic law of economics I do understand, however, is that we who know nothing about the subject tend to get things right rather more often than professional economists who can talk for hours about neo-classical endogenous growth theory.

Indeed, as far as I remember, only once before have I dared venture an opinion about economics in these pages - and that was 16 months ago, when I said it was utter madness for banks and building societies to go on lending housebuyers as much as seven times their annual salaries.

With personal debt in Britain then estimated at £1.3 trillion, I mused: "Can we really go on living like this, without risking the most catastrophic fall when the economy turns downwards, the creditors start calling in their money - and the never-never becomes the now-now?"

If even an economic ignoramus like me could grasp such an obvious truth, then why did it escape the board of Northern Rock, the Financial Services Authority and the chief economists of just about every big financial institution involved in the American housing market?

What worries me is that if we economic illiterates predicted the credit crunch, long before we'd even heard the term, might we not be right, too, to be deeply concerned about the flight of manufacturing jobs abroad?

It seems to me downright unhealthy that we rely so heavily on our service industries - and particularly the financial sector, which accounts for a highly risky 25 per cent or more of our economy - while strangling manufacturers and farmers in red tape and allowing other countries to get on with the business of producing goods and food.

Too late, I fear, this same realisation seems to be dawning on the Government, as ministers thrash around to find something tangible that Britain can actually produce.

Take nuclear power. For ten years, Labour shamefully ignored the question of how we were to keep the lights burning as power stations neared the end of their working lives and fuel supplies ran low.

Now, suddenly, Business Secretary John Hutton announces - without a squeak of public debate - that he plans to push for an "enormous" expansion of the nuclear industry.

Not only will he replace our own ageing power stations, he tells us, but he will export British technology to the whole wide world, creating "up to" 100,000 British jobs in the process (a figure plucked at random from the air, if ever I heard one).

Meanwhile, the Government stumbles blindly ahead with its Embryology Bill - the main purpose of which, clearly, is to build up Britain's bio-technology industry by making this the world's most relaxed regime for conducting sinister experiments on human cells (and to hell with the ethics of it all).

So there we have Labour's plan to revive British manufacturing: nuclear fission and bio-sciences. Why don't we combine the two, and export human-animal hybrids that glow in the dark?

The great flaw in the Government's thinking is that it assumes Britain will remain a world leader in science and technology. For that, we need a world-class education system.

Instead, our schools and universities are slipping rapidly down the world league tables in all the high-tech subjects, as pupils are encouraged to take soft-option exams for the sake of the league tables.

Meanwhile, Schools Secretary Ed Balls carries on his ruthless campaign to destroy our best schools, in the name of equality and fairness.

Why, only this week he demanded that good schools should be forced to accept disruptive pupils who have been expelled by the country's worst comprehensives. How's that going to help us produce scientists to beat the world?

Mr Balls is the man, remember, who as an adviser to Mr Brown at the Treasury devoted all his energies to wildly expanding the public payroll and so helping to turn Keith Waterhouse's 30-year- old fantasy into reality.

I fear he will find that office life on the seventh floor of British Albion won't be much fun when all the real jobs have gone to India and China, the lifts have stopped working and the canteen has run out of food.

No comments have so far been submitted. Why not be the first to send us your thoughts, or debate this issue live on our message boards.

We are no longer accepting comments on this article.

Who is this week's top commenter? Find out now