Figures, they say, can tell any story that you want them to and they are probably right to some extent. But, despite the efforts of the spinners of Whitehall and Fleet Street, the recent figures on insolvencies tell a story that can't be easily disguised. A record number of individuals were declared insolvent during last year, with 134,142 people losing the battle to keep their heads above the water line. It's the highest level seen since records began in 1960 and, given the almost unending series of closures, lay-offs, short-time working deals and heavily leveraged takeovers which rack up tremendous company debts and demand staffing cuts in the last year, you don't have to look far to find the reasons. People are being dropped into debt and unemployment by companies that will do anything to avoid corporate problems, including sacrificing their workforces, and they are being left there by a government so fixated on entrepreneurship and dodgy business creation as the way out that it sees no percentage in direct intervention. And at least one insolvency expert has warned that "we should expect to see a further rise of around 12 per cent in annual insolvency figures this year and these levels are likely to remain until at least 2012."
So the nightmare will continue for a growing number of the unemployed and discarded. But it's not only personal insolvencies that should concern us. Company failures also soared to their highest level for ages when more than 19,000 firms succumbed to the recession last year. It's been 16 years since the figures have been that bad and these figures also show little sign of being the end of the story. The figure is a terrifying increase of over 22 per cent on 2008. And it's what industries the failing companies are situated in that should give major cause for concern. Because the rate of attrition in industries that should be leading the way out of recession is huge. We don't yet have the figures for the last quarter of 2009 broken down by industry, but the existing trend since 2007 is startling enough.
Trading-related bankruptcies have soared. In manufacturing, the quarterly rate of collapse has nearly doubled, with more in the third quarter of 2009 than in the eight previous quarters combined. Be it rubber and plastics, metal fabrication or transport equipment, the collapse continues unabated. In construction, the picture is similar, with companies folding at twice the rate in 2009 as in 2007; in retail the decline is less obvious but still there.And we haven't seen the last by a long way. The Bank of England has paused quantitative easing for the simple reason that it hasn't worked and that's not surprising. The way the bank organised it, buying gilts was just putting money into pockets of banks which still refuse to loose the reins on borrowing. Little was reaching the firms that government is mistakenly relying on to revive the economy. In fact, their rate of collapse just keeps on growing. It is clearly time for far more direct intervention by government. Relying on a failed market economy is a thankless and rewardless procedure and cannot be allowed to continue.
The government now theoretically has control over several huge financial institutions and it must start using them as vehicles of policy, directing investment where it is needed, not where speculators see fit. Potentially viable firms cannot be allowed to go to the wall at the behest of an uncontrolled and speculation-dominated economy, but growth must be directed consciously, without the randomness of a system that says "soak the workers or go under." It's long past time for direct intervention and an attempt to build a planned, reliable economy. The free market has failed, so let's not waste valuable time trying to revive a corpse.
A blog for the socially and politically conscious, written by a young, gay activist who strongly believes in equality and justice.