Preston's Property Ladder Disintegrates

Preston, Property and the Construction Industry

In a recession, the property market is usually one sector that suffers hard times. Prices drop, credit and fair priced mortgages become hard to find. Those with large mortgages will be some of the worst hit, and along side a slump in the property market, one in the construction industry is sure to follow, isn't it?

I went to see the City council planning Department to see whether they had noticed a slowdown in the number of planning applications received since the credit crunch.

I spoke to Robert Bywater who said: “As far as I understand there has been a bit of a slow down”

As this was not quite as detailed an answer I was looking for, I continued my search, and eventually was able to speak to Mr Paul McGinty of the cities planning department. I asked him whether he had noticed a change in the amount of planning applications in the city, and whether he thought that any change may have been brought about by the current financial crisis. He said that over the equivalent period in 2007, there had been a 21% drop in the number of applications, of all types to the city council. He commented that due to the long, protracted nature of the application process it would be difficult to say for sure whether or not this was directly connected to the crunch.

However, he did mention that the number of staff working in the planning department has dropped by a similar amount in the last few months (not due to the crunch), and that due to this shortage, and the current money saving policies introduced across the board in government, that these staff will probably not be replaced in the current financial crisis.

In related news, there is now slowing the brand new Tithebarn regeneration project in the city centre, it seems as though these plans will go ahead if given the public and council backing, and will play a huge part in the landscape of the city. More information about the project can be seen below.

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It looks as though there will be huge building works over the next few years, so it shows at least one construction company will not be affected by the credit crunch, unfortunately, for every survival story, I fear there will be trice as many going bust.


May 2009

It will not have escaped your notice that there was a lack of comment from building an construction workers in the earlier post on this subject. This was mainly due to the fact many construction companies refused to speak to me about the problems they were suffering at the time. Why this was I could not say, but this time I have had slightly more success talking to actual builders and construction workers, as opposed to council staff.

The construction industry has suffered a 2.4%drop nationwide, with Preston being no different. I met builder Alex Rigby while interviewing people in the cities Jobcentre. This really shows the state of affairs in Preston, as Alex explained that he was no exception to the rest of the construction industry. He said: "I have been collecting benefits for a month or so now, before though I was booked solid for months. I never dreamed I would have gone so long without work. As soon as I finished on the sites I had booked, new work just never came through and I was left in this situation."

His situation is similar to many others, as joiner Daniel Hardman explained when I arrived at his fathers' car dealership to interview about declining car sales. Both father and son have been hit hard by the credit crunch, despite the huge differences in what they both do for a living.

"My Dad said we were lucky Mum didn't own a shop," said Daniel, "then every member of our family would be in deep trouble. As it is, Dad is struggling to sell cars and I can't find work at all."
He added: "In a way its lucky my father owns his own dealership, I can help him sell cars while I'm out of building work. If we can keep the garage going it will be enough for us to survive until construction picks up again."

Even the Tithebarn Regeneration project has struggled in the last five months. Representatives of Blackpool and Blackburn have been desperately trying to delay building plans, complaining of the detrimental affect the regeneration will have on their own towns. The council has also begun to worry that the plans were too optimistic in the first place, believing that the £750 million needed for the project is too much to generate. The plans are now at the mercy of planning inquests and retailers, who may or may not decide to invest the money the council desperately needs. It is very difficult to judge whether or not the plans will go ahead as is, or whether they will be at the mercy of people who do not necessarily have the best interests of Preston at heart. One thing is for certain, the builders and construction companies of Preston will be quietly praying for the go-ahead to be given so some of them can get back to work. That is how desperate the situation is for the construction industry.

Chris Terris Taylor

Preston and the Pre-Christmas Sales

VAT and Me...
December 2008
In light of the Chancellors 'generous' 2.5% cut in VAT in this years Pre-Budget Report, I hit the streets to ask the public how their Christmas shopping was being affected.






As you can see, the general opinion is not glowing for the VAT rate cuts. It just doesn't seem to be enough to make the public want to increase their shopping this Christmas. The retailers themselves are having a much bigger impact on the way people are spending, offering sales of up to 50% before Christmas day, which must be a first.

Also, it is clear the way the media is following the Credit crunch is also making a difference on the public perceptions, as one man put it: 'people are frightened to death of spending money', and this is certainly the feeling of the majority of shoppers.

May 2009

It is still hard to assess the impact of the VAT cut just before Christmas last year. From my Vox Pop in December, it was clear that the people of Preston needed more than just a 2.5% reduction in order to make them forget their economic woes and spend wildly on the run up to Christmas. It does not seem to have impacted sales in the way the Chancellor was hoping.

In general, the credit crunch did affect the way people spent over Christmas. According to one newspaper poll, 59% of people asked said they had changed their habits over the Xmas season. This has also occurred in 2009, with many people continuing to curtail their spending and constantly on the look out for the cheapest option.

The high street has suffered as a result. The retail sector has been hit extremely hard, with the credit crunch responsible for the death of Woolworths after 99 years of supplying communities with household goods. This has left ugly holes in the high streets, not just in Preston but nationwide.

Woolworths is one of many retailers that have been forced to abandon Preston High Street

Preston's high street has an empty shell where the Woolsworths used to be. It is still recognisable as a Woolworths, with the red lettering still advertising a brand that no longer exists and the shelves still visible through the glass. It has been empty for several months now, along with other shops that retailers have abandoned due to lack of profit. The Works, JJB and many independent retailers have been forced to leave their premises in the last few months, only to be replaced by pound shops and other cheap retailers. It is these cheap retailers, such as 'Poundland' that have really benefited from the credit crunch. Many have sprung up all over the country, filling the gaps made by failed businesses and empty Woolworth stores.

Shoppers are still convinced that the VAT cuts did not affect spending in the way the Exchequer hoped. Many of the people I asked said that their situations have grown much worse since Christmas, and that the 2.5% cut is even more of a joke now then it was originally. The bleak picture of the retail sector during the credit crunch has not been changed by the VAT cut. Something more will have to be done to increase spending, as the VAT cut is too superficial to really help those in need. "Cutting VAT is all well and good, but what is a 2.5% saving really going to achieve," said one shopper. "You only notice the difference on expensive stuff like cars and electronics. I am a joiner by trade and I haven't worked in over two months, how is a saving of two and a half pence on the pound going to help me?"

Preston suffers collapse of car sales during the Financial Crisis

The Motoring Industry in Preston slams on the brakes...

December 2008

Car Sales in Preston, both for new and second hand vehicles is at a low ebb. The drop off in sales numbers, for new cars especially, has dropped by a huge margin and is responsible for a crisis in the automotive industry in Preston.

Selling your car in this financial climate is hard work

Preston is far from exempt from the terrible financial difficulties being faced by those involved in the automotive industry. Car sales in Preston, like anywhere else, have dropped by a huge amount. The national statistics for car sales that were released a few days ago show that in November of this year, car sales in the UK had dropped by nearly 37% over the same period last year. This crisis even drove one car salesman to offer a 'Buy one get one free policy' on new cars in his showroom!

Short of giving away cars for free, is there much that can be done to reverse the trend that Preston car dealers are suffering at the moment? I spoke to several car dealers in the area, both new and second hand, and what became very clear whether they were selling Ford Fiestas or brand new BMW's, that unless a dramatic turnaround occurs in the near future, people will lose their jobs and businesses will go bust.

I first spoke to the owner of 'Penwortham Garage' in Penwortham, Mr Alec Gabbatt. He has been running a car dealers for over 26 years, making him one of the most established second hand car dealers in Preston. He says that as of 5-6 months ago, customer traffic through his showroom 'completely shutdown'.

Likewise, down the road at 'Priory Car Sales', Mr David Hardman has noticed a very similar slowdown, and tells me that his sales in the last 5 months have dropped by up to 90% compared to similar months in previous years.

'Usually in July, August I can sell anything up to 12 cars in a month,

in July of this year, I sold one.'

This is a truly shocking decline in sales, it may not be totally typical, but for many second hand dealers in the Preston area, this will be unpleasantly familiar. It is no wonder then, that the automotive industry in Lancashire is struggling to such a degree.

Mr Hardman also says that due to the crunch, the customers that are buying are asking to much for their money. He has had several families who are searching for a car for as little as a thousand pounds, and want the world for it.

'Some customers don't play fair, they come looking for a car for a grand and are looking for totally unreasonable deals. Am I supposed to make just £200 profit on a vehicle and then provide a warranty? What is the point?'

It is easy to understand this mentality, the profit margins are so slim, if you even manage to get a sale at all. It makes dealers like Mr Hardman wonder whether it worth getting out of bed in the morning. Now, not all will be suffering in exactly the same way, but we can sure that all those in the industry will be fearing what the future holds, no car dealer can rest easy.

Many dealers will face sleepless nights as business grinds to a halt...

This is also the case for the new car showrooms, with many of the luxury brands seeing their sales nose dive. This is directly related to two different areas of the financial crisis, personal financial difficulties and businesses suffering as a result of the crunch. I went to Bowker BMW near Preston and found that the 26% loss of sales being felt world wide by the company is certainly affecting sales in the Preston area.

Luxury cars companies are some of the worst hit when the world decides to tighten its belt...

The majority of which is due to the dramatic decrease in company car sales. BMW's are very popular as a company car as they meet many businesses specifications and also provide the owner with a bit of affordable luxury. However, while the financial crisis is gripping the business world, companies are very reluctant to allow employees to spend so much money on company cars. Hence, the luxury car manufacturers all show declining sales, so much so that many are forced to reduce manufacturing. This in turn causes huge problems, as it means that the factories have to lay off staff to keep costs low. It is a vicious cycle, one which shows no signs of slowing down in the current climate.

The automotive industry as a whole has suffered massive blows in the last year, so much so that the American giants General Motors had to ask the American government to keep them afloat. In Preston, though the manufacture of vehicles doesn't occur here any longer, the local automotive industry is in dire straights. Neither the Luxury Showrooms or the local second hand dealer is safe.

May 2009

It has now been five months since I last looked at the motor industry in Preston and the UK, and thankfully the garages that I visited last December are still open. I was genuinely worried that the two second hand showrooms I visited, Priory Car Sales and Penwortham Garage may have become victims of the decline in car sales.



Unfortunately for the owners, the fact they are still open is probably the best news they have had since my last visit. Business is still slow, motionless at times, and again I am reminded how few cars the garages are selling compared to a normal year. Mr Hardman, of Priory Car Sales has seen little improvement in the last five months: "Business is still on its arse, to be blunt. Normally we could have sold five or six cars on a typical summer weekend. This month I've sold four in total. Its desperate stuff."

Mr Gabbatt tells a similarly depressing story, quoting sales figures that been stagnant for the last six months. He said: "Myself and colleagues are doing all we can to stay adrift at the moment. That is all we can hope to do."

Nationwide, the plans created by the budget to revitalise the motor industry seem to have received a mixed reaction. The car scrappage scheme introduced by this years budget has not made the impact the government was expecting. The idea is simple, if you have a car which is over ten years old and scrap it, the government will give a two thousand pound discount on a new car. Intended to push people into updating their wheels, the scheme is not popular with most manufacturers, especially at the top end of the scale.

It is true that there has been a rise in orders and test drives, but this is limited to the lower end of the spectrum and only a handful of manufacturers have seen the benefits. Small cars, at the cheapest end of the scale seem to be the only benefactors, with budget Korean manufacturer Kia reporting 4000 new orders for their 'Picanto' minicar. This has also been seen by French manufacturer Citreon, whose tiny C1 car is certainly benefiting from a government backed price reduction, meaning the little car is one of the cheapest new cars on the market.

The Kia Picanto is benefitting from the governments scrappage scheme

However, as I mentioned earlier the scheme is far from perfect. Though it may benefit the small, fuel efficient cheap cars, you do not have to look much further up the price range before you hear complaints from manufacturers. Mini, BMW and other luxury car companies have seen almost no impact. One spokeswoman for Jaguar said: "If you've got a 10 year old car you'd like to trade in for scrap, you're not going to buy yourself a new Jaguar."

This is the problem with the scheme, it does not go far enough. Two thousand pounds, though a lot of money is only the fraction of the cost of a new luxury saloon, where it is a large percentage of the cost of a small car. This scheme was always going to be more beneficial for cheaper cars. There is also the problem that affects the likes of Mr Hardman and Mr. Gabbatt. Which is most second hand car showrooms do not have models less than a year old, and therefore the majority of second hand showrooms will not benefit from this scheme at all. Both car salesmen agree that extending the age of the new car would benefit some second hand dealers, not just the car showrooms. Mr Hardman said: "If the government extended the age to a car that is two or three years old, the whole industry could benefit from it, not just the big dealers who are able to sell the cars cheaper in the first place."

The tough times continue in Preston, as they do nationwide. It makes me wonder, if I returned again in another five months, how many of these dealers would still be around? How many small businesses and car showrooms will shut down in the next five months? It has come to the point where you have to do everything possible just to stay afloat. As Mr Hardman put it: "Somebody is going to shut down, but I promise you that if I have anything to do with it, it won't be us."

Chris Terris Taylor

Preston and the effects of the Credit Crunch

Looking at the 'Global' Financial Crisis through Red Rose tinted glasses...

As everyone is well aware the financial crisis is in full swing, banks being driven to the brink of collapse, governments across the globe are throwing vast sums of money at companies and financial institutions in order to keep them afloat. It may seem a million miles away when you hear the news about the American hedge funds collapsing, but over the last year the financial crisis has crept into our day to day lives and has taken control of the way everyone thinks about money. It affects everyone no matter what your circumstances, and even the young, who usually can expect to escape the immediate effects of a recession, will be feeling the long term implications for many years to come.


In Preston, there are certainly many businesses that have fallen as a result of the crisis. Some of the worst hit have been in the Property and Motoring industries, with estate agents and car dealers suffering one of the largest slumps of economic history in this country. These, alongside the retail industry, have seen sales plummet after a period of 'boom' for the economy turns quickly to 'bust'. Now, before I begin to sound too much like a Tory backbencher, I will elaborate on my plan to commentate on the impact of the financial crisis in Preston.

As I said above, the three industries that are among the worst hit are:

• Property and Construction
• Motoring
• Retail

As you can probably guess, it is these three industries I will concentrate on for this exercise. How are these sectors (in Preston) fairing in a global crisis? I am sure that anyone who watches the news will know just how bad it is for these industries on a world scale, but are the businesses in Preston suffering as much as the global industries as a whole? That is what I hope to discover with the following exercise.

Any economist will tell you that you measure a recession not in days or weeks, but in months and years. That is why each section will be divided into two halves. One will be looking at the crisis in December 2008 and the other will return to the same areas five months later, in May 2009 to examine how the economic crisis has evolved.

Business and Commerce Beat - Preston and The Financial Crisis

Sharoe Green takes a back seat for the time being!

It has been impossible to escape from the topic that has ruled the media headlines in the last year, the Financial Crisis that has the global markets in turmoil. After the near collapse of Northern Rock, prompted by the biggest run on a British bank in more than a century, it became clear that crisis would affect businesses very close to home. Even now, we do not seem to be closer to seeing the end of the downturn, and the affects of the credit crunch are being felt in every household.

Preston, like any other city, is feeling the effects of the financial crisis in every way conceivable. As my beat is Business and Commerce, it was obvious that the crisis would be the focal point for almost all of my reporting throughout the year. Therefore, I plan to use the blog as a way of expressing my thoughts on the Credit crunch, and the affects it is having on Preston and the surrounding area. Keep posted!

Chris Terris Taylor