Short-changed by growth years

It is not hard to see why. The overall size of the economy can increase simply because more people are working, but that does not mean income per head has increased. The influx of young, energetic eastern European immigrants has boosted the growth rate but its effect on income per head is much less evident. Depending on how productive the additional workers are and whether or not they earn more than the average, it is possible for economic growth to continue but for a significant number of people to be worse off.

That is what has been happening in recent years. This column has argued for some time that increases in income tax and national insurance appeared for many to be greater than those in pay, with the result that disposable income was declining every year, particularly when inflation is taken into account. It helped explainwhy people felt grumpy even when the economy was doing so well. Few (apart from those on big City bonuses) felt better off, and that was because they were not - though just how much they were falling behind was often masked by their ability to borrow to keep spending.

The Centre for Policy Studies has put hard numbers on this idea, and the result is as startling as you would expect from a think-tank with close links to the Tory Party. In a paper called Why Do We Feel So Broke?, Charlie Elphicke calculates that a couple on the median average income after tax and housing costs have seen their income fall by 6% or £950 in nominal terms since 2002, and this of course would be significantly larger - more than twice as much - after inflation.

Political opponents will argue about the use of the median average and the inclusion of housing costs - higher mortgage, gas and electricity bills - and it does seem odd that these should be included. But even with them stripped out, the overall message is clear. We are nowhere near somuch better off as our decade or more of growth would imply, and now our ability to pile on debt has been curtailed it will become ever more obvious.

JIM FALLON of investment banking boutique McQueen argued persuasively at a conference in November that there was more consolidation to come in the pubs sector.

Though the top five pub companies already accounted for 68% of pub profits and the next five a further 14%, the momentum of the business favoured further consolidation - partly to put yet more pressure on the brewers for cheaper beer, partly for the economies of scale that come with branding and marketing, but also because everyone will be looking for cost savings as the economic downturn and smoking ban make this a tough year for the sector.

Punch Taverns' approach to Mitchells & Butlers this week will therefore be no surprise to him, but it raises an interesting issue for the competition authorities. Almost 20 years ago, the Monopolies Commission recommended that the number of pubs owned by an individual brewer should be curbed, and the pub orders of 1990 brought this into law.

The intention was to cap the power of the brewers in order to preserve choice in local markets. The result was the industry had to choose between brewing beer or running pubs. Thousands of pubs were sold off, making possible the rise of today's pub companies.

But the impression one gets is that the cure has been worse than the disease, and these companies have far more power to restrict choice to customers and to bully landlords than the breweries ever had. This will become even more evident if another of Fallon's forecasts comes true - that there will be a massive attrition in the next few years of the remaining independent pubs and free houses.

Already they account for a quarter of the pubs total but make just 9% of the profits - so they will obviously take the bulk of the casualties, and the dominance of the big pub companies will become even more marked. Not everyone thinks that is a good thing, so despite having made a pig's ear of the business first time round, perhaps it's time the competition authorities took another look.

INTERNET bank Egg has made news by saying it will withdraw credit cards from people it believes are likely to get into difficulty by borrowing and spending more than they can afford, and whom it wants to save from getting into an even deeper mess.

Given the state of the nation's finances, it's a pity the Government is not one of those Egg credit-card holders.