Monetary policy sounds bland but it kills vegan shoe factories


Monetary Policy

From 1979 until about 2008, all UK political parties supported a thing with an innocuous, technical-sounding name which was Monetary Policy, as a tool to avoid inflation. It sounds like adjusting a thermostat somewhere on the wall at the Bank of England. When it came-in in 1979 it was raw, extreme, and experimental, run by ministers rather than the Bank of England, A fifth of manufacturing closed within five years. A quarter of the workforce was un incapacity benefit, income support, or one of the vast schemes like Youth Opportunities or the Community Programme. Others did pointless college courses on student grants, just to stay off the dole. I did economics, which should have been a good course for finding explanations and diagrams but no: diagrams like this only emerged much later. This one is from the Bank of England's report to MPs on a select committee, about the time that the policy went out of fashion.

Interest Rate

Official Rate sounds technical, but the important point is how much government pays to borrow the national debt, which is big. Governments would usually pay the minimum they can, but if one pays a fraction more, it will attract investors from all over the world looking for somewhere to lend money. They convert their money into pounds, causing the bottom left arrow. It's also very expensive to taxpayers, but the point of it is to cause the bottom left arrow so that's what's on the diagram.

Exchange Rate

Exchange Rate is what you'd expect. The pound gets more expensive if so many people convert their own currencies to pounds. This takes us around the bottom row of arrows to import prices. If you work in a factory that mainly exports because the goods are so good, then you have to stop. MG cars had to close very soon after 1979, while less memorable cars made in the UK to sell in the UK stayed in production a few years longer. The same went for Tredair, Solovair, Hawkins boots and the like, although some of them were sold in the UK and a bit of production continued, mainly for the best-known brand. 

Meanwhile, there is a recession at home. So many factory workers loose their jobs; confidence in the future is low, money is expensive to borrow. Government started the problem by offering more for the money it borrows, and if the national debt is about half of national income, that's a lot of extra money to spend on debt interest. It also has to pay benefits for the employment schemes and benefits for the unemployed. There are government spending cuts to make-up.

You might think that this is a kind of sabotage that no sane government would get elected to do, but the economists and the pundits don't have much to do with factories; they work in services where the effects are not important. If they live in a service area like London, they find loads of people move-in to get the remaining jobs, house prices rise, and it feels as though the recession is over. What these people are interested in is the next box.


Inflation was a problem in the 70s because of an oil crisis caused by Saudi Arabia pushing-up the cost of petrol. It was widely blamed on under-invested factories and strike-prone unions, and the theory was that a knock to the system would stop the habit of inflationary wage rises, maybe close the odd lame-duck factory, and allow the economy to chrystalise again according to the rules in economic theory books which would create loads of new jobs. Some of this, slowly, eventually, happened. Some of bad bits would have happened anyway because North Sea oil pushed the exchange rate up without providing jobs, while the new containerised docks like Felixtowe made imports easier. The difference is that they happened far worse and far quicker than they needed to. There are other countries with similar wage rates for shoe factory workers that have far more shoe factories left than the UK.

Shoe styles and choices

History affects our taste in shoes, wholesale or retail. Some styles of boot and shoe were popular in the 1980s because they brought people together; they were among the things that policeman and coal miners, musicians and audience, one political party or another had in common. Whether this is relevant a few decades on, I don't know, but it's part f the history of what people liked to wear.

A similar fashion worked the other way in the 1930s recession.  A government was convinced that the Stirling Area - mainly the UK - should stay on the Gold Standard rather than float at the going rate. So the currency was too high, while another government department failed to introduce national insurance or a welfare state in the colonies, causing a lot of unfair imports and rapid closures of the textile industry. Bangladesh finally got a workers compensation scheme for workplace accidents in 1939, 32 years after the UK, and never got national insurance even after independence.

In the UK, there was so much unemployment that the new national insurance system couldn't cope and workhouses remained open. On going to these council institutions as an unemployed person, you were often issued with a pair of clogs. People often wore clogs for the Jarrow march on London, arranged to try to explain to politicians how important factories and benefits are. This might have brought clogs into fashion, but it had the opposite effect, and now they're very seldom seen outside of clog-dancing clubs.

Why there aren't more UK Shoe factories

The quickest effects of monetary policy  on shoe factories were after 1979, when most mainstream footwear production moved to Europe and Asia, leaving pockets of production and niche markets. There used to be a shop in Clapham, London, with a shoe lasting machine in it for making dance shoes. WJ Brooks Devine company, known as the Kinky Boot Factory in a documentary and a musical, closed but continued for years with boots made in smaller workshops. They had a page about it on their web site - the one in Holloway Road, London, that closed for example. That was mentioned on a similar page on one of my rivals' web sites about their constant search for small footwear workshops in the UK that tended to close soon after being found. There was a Shoe Trades Directory with a lot of them in it. There was one in a basement opposite Tesco Dalston, makeing girls school shoes. There was another in a basement in Shoreditch making welted boots for Shellys, who mainly used a factory on the North Circular, and those are just the factories in London; Northampton and Leicestter had loads more. There was even one on the Isle of Mann making Blizzard Boots for M&S, who still bought British products until they lost interest in the idea in 2005.

After the 2008 recession, monetary policy never quite came back into fashion; inflation wasn't a problem. Meanwhile the cost of shipping goods from Asia rose, as did prices in China. The list of big companies closing became lists of retailers who had imported stuff from China. The supply chain was slow, but they could afford to order too much and run clearance sales to make-up. This hasn't been true for them recently, and every winter we hear of another retailer going bust again as people buy more in the internet anyway. Maybe customers will buy straignt from UK factories sooner or later and cut-out internet retailers like


I don't know what to conclude, but people search for this stuff on the web site and it's good to write it after studying economics in the UK in the 1980s.

Related pages about 21st-century shoe PR that got government subsidy


    There are too many to list on this page so they have their own page of juicy reading which is easy to skim read. You have to imagine an organisation launched into the media with regular interviews and shows all-over the place, putting UK firms out of business, and then discovering that they are government-backed and bogus. A scheme to help the electorate understand the thinking of trade and development officials, while appearing to be a real trade association. It was underhand, so we don't know the names of the ministers and officials who promoted it.


    Fashion Forum set-aside a page to discourage people from buying goods made in Britain, or buying them on ethical grounds. This was a kind of government consumer education page, answered here point-by-point

    About shoe fashion, against a background of fashionista's comments from the likes of Ethical Fashion Forum. Hard to sum-up but worth a glance.

    One of the ways the previous governments have closed a lot of UK industry, leaving the remainder fragile. There are others going back years. That's why "robbing in a hospital" came to mind as a way of describing the kind of PR stunt that Ethical Fashion Forum was. Another short economcis page:>

    The phrase people reach-for when justifying imports from badly-run countries. When you google it, you see a gap. What happens if a country with a welfare state trades with a country without a welfare state? It doesn't say.