Monday 28 March 2011


Sometimes, the stories just write themselves. After a weekend of the jobs-for-me&mine and benefits for our progeny brigade in London we have the ultimate dialectic - cuts at Northern Wreck. 680 jobs are to go at this massively loss making organisation (this link is to their annual results for 2010, £232.4 million loss).

Now, readers here will know that right at the start, indeed, before the start, we advocated letting Northern Rock go bust as the costs of keeping it alone would outweigh the merit. Low and behold, Labour decided State Ownership was the path to success.

Now, even the state owners (who, mercifully, are people like Ron Sandler who does have a clue about running a business) have twigged that this old bird needs a nice trussing to make it a appealing. One way is by reducing the costs so that the abysmal returns it makes on lending appear better. Remember Olivant and Virgin Money looked before but could not make the numbers add up.

But the response of the Unions is perfect:

Senior Unite official David Fleming expressed outrage at the latest round of cuts.
"This appalling news of 680 job cuts is scandalous. Another round of brutal job cuts is simply a step too far for this workforce that has already lost a third of colleagues," he said in a separate statement.
"We are witnessing another move to scale back this already lean organisation, in a desperate bid to find a private buyer."

A desperate bid to find a private buyer - so the alternative is a loss-making state owned business. That is the implicit suggestion here. Not even a bone to say that maybe at least the state has saved jobs for a couple of years at fantastic cost to the taxpayer? No, just no job cuts. Imagine if the jobs were going to India....

Proof that you can't argue with stupid people. All of Northern Wrecks rivals are cutting jobs as fast as they can, RBS, Lloyds, all the building societies that still exist. many like Bradford and Bingley and Dunfermline have gone under and suffered a worse fate as they were smaller. Good news too, as all were poorly run and managed. Privat esector companies all realise that in this very strange mortgage market there need to be cost reducations as sales are not going up anytime soon and pricing is tight (except for the banks to whom the state lends money for nothing..).

But as to logic, where does it end? No cuts if you are state owned!

Perhaps they think if they shout it loud enough that will be enough.


Ralph Musgrave said...

Another recent “profit increasing” change at Northern Rock is that they’ve reintroduced 90% mortgages. Wait six months, and they’ll reintroduce 125% mortgages: the sort of dodgy behaviour that brought them down.

Of course this will improve profits, and make the business more saleable. Likewise if I was trying to dispose of a second hand car dealership, I’d flog cars with dodgy brakes.

Timbo614 said...

Same attitude I guess they are taking at BA once again. Let's guess the timing - Easter getaway / long bank holiday anyone?

Old BE said...

So now the unions are in favour of subsidising bankers? I thought they wanted to tax them into submission five minutes ago? I can't keep up.

Dr Evil said...

Ah but Labour only bailed them out for the votes. If it was Southern Rock they wouldn't have bothered!