Biggest spend is yet to come

By Jonathan Thompson and Dan Gledhill

By Jonathan Thompson and Dan Gledhill

26 December 1999

SIT BACK, put your feet up and save your strength, you're in good company. Britain has just started its biggest ever festive shut-down, with much of the nation now on holiday until the next century.

But don't get too comfy, there's shopping to be done. Offices are closed and factories are working on skeleton staff, but city centres will be crammed today and for the rest of the week as the sales begin. It is now that shopkeepers will be hoping to make up for a worrying lack of profits before Christmas. This year, many customers waited until the last minute before buying presents in the hope of bargains. It may be too early to tell who won the battle of wits, but if the retailers make serious money they will be the lucky ones - the mass shut-down is expected to cost British business an estimated £6bn.

That is 60 per cent more than ever before. Because of the way the calendar has fallen this week there are only two official working days between now and the New Year, and many companies have decided to cut their losses and shut down. Those in the manufacturing industries who have to employ a few hands to keep the machinery ticking over will face a hefty bill for overtime. Electricians, carpenters and others brought in to do essential maintenance can also expect to do well.

The City of London has shut up shop for a fortnight, as it usually does at this time of year, at a cost of £1bn - which includes huge bonuses for computer experts who will be up all night on Millennium Eve ready to ward off attacks by the expected millennium computer bug.

The cost of paying staff not to overdo the bubbly has deterred many businesses from operating over the bank holiday.But, according to Doug McWilliams, chief executive of the Centre for Economics and Business Research, the workforce should be rested and ready for a productive year ahead. "The extended break means that people are being forced to take part of their annual leave now, which is better for the economy in the long term. The system functions more effectively when this happens, rather than having holidays staggered, which reduces overall productivity."

A spokesman for the Confederation of British Industry said that people deserved time off. "Britain certainly could not be described as lazy. In fact, we have less total holiday than the European average." Britons have 33 days off a year, on average, including bank holidays. The Austrians have 41, and the Italians 37.

The stores, meanwhile, are banking on our spending our holidays in the high street. Marks & Spencer is said to have seen a 20 per cent slump in sales before Christmas, and other retailers blamed the knock-on effect of that for their own poor performances. Adrian Wright, the manager of Europe's biggest shopping park, Blue Water in Kent, was predicting massive discounting next week. Arcadia, the company that owns Top Shop and other stores, only managed to keep sales up by slashing prices in December. Other mid-market outlets, such as BhS and Dorothy Perkins, were also suffering, according to retail analysts.

One Newcastle shop had reportedly been telling customers they could get their money back on pre-Christmas purchases - if it snowed on the 25th.

Discount retailers, such as Peacocks and Matalan, did well before Christmas, as shoppers looked for cheaper presents. In contrast, De Beers, the world's biggest diamond producer, reported that worldwide sales had risen above £3bn for the first time ever, with jewellery expected to be a popular gift for Millennium Eve. But other stores who gambled on a big demand for formal wear that night have been left with warehouses full of unsold stock.

One of the biggest success stories was mobile phones with an anticipated four million people receiving one as a present yesterday. In time honoured fashion, the other big seller was Delia Smith cookery books.

While American fundamentalists caused a run on bullets, bibles and cans of beans in anticipation of an apocalypse, the British turned up their noses up at the idea of stockpiling. Sainsbury's said there was "absolutely no evidence of panic buying" on a large scale, and Barclay's confirmed its customers had not been stockpiling cash. "In fact, withdrawals are low for this time of year," said a spokesman. "In America there have been stories of people liquidising their assets and burying cash in the garden, but nothing like that has happened here."

Action 2000, which sought to prepare us for the turn of the century, says that for people in Britain, in an emergency, it would be far easier to organise food deliveries. "Britain's infrastructure, the water, gas and electricity, is also fairly self-sufficient. The bug, if it strikes, has very little potential to cause serious damage. People realise this, and that is the reason why stockpiling has not emerged as either a trend or a problem."

The Chartered Institute of Purchasing and Supply said businesses had ignored the scare stories. "Many companies are doing the opposite of stockpiling - they want to keep lean and fit - and don't want to be carrying too much stock in to the New Year."

Neither do they want to pay people any more than is necessary for working on the Friday night. According to the Low Pay Unit, the going rate in other key industries is about £500. Staff at the Benefits Agency will earn 12 times their normal rate if they work overnight, while those at Three Valleys Water have been offered theatre or cinema tickets and a meal for two. But police and fire fighters will get no bonuses at all.

Overtime pay for prison staff will cost the Government nearly £1m more than it might have, because of Prison Service bungling. Confusion over timetables has meant that all prison staff will receive a bonus payment of £100, in some cases for just half an hour's work. The service's pay policy unit agreed to hand out the extra amount to staff working after 5pm on New Year's Eve, assuming that the day shift finished then - rather than half an hour later. This means that all day staff have to be paid an extra £100, at a total cost of £800,000.

Martin Narey, director general of the Prison Service, has privately admitted that the decision on pay was "a very expensive" mistake.

As far as transport goes, most trains are running normal Saturday services this week, although some companies, such as Great Western, will operate a reduced service on Wednesday and Thursday. On New Year's Eve most will run down this service after 10pm, with the last Intercity services arriving at their destinations an hour earlier. Almost all rail services will then be suspended until 11am when they will resume under a Sunday timetable. Normal services will start up again on Tuesday 4 January.

A threat by Connex to cancel extra train services from London on New Year's Day appears to have been lifted following the granting of a High Court injunction against Aslef, the train drivers' union. There had been fears that union members were not prepared to work the extra millennium services and the company was planning to cancel special services to Kent, Surrey and Sussex between 1am and 4am for those celebrating the arrival of the millennium in the capital .

On New Year's Day, London Underground will run its first 24-hour Tube service since the coronation of George VI in 1937. Travel will be free from 11.50pm on 31 December until 9am on 1 January.

Up to 450 drivers will be working on London buses on New Year's Eve, with extra services provided in addition to the usual night schedule. Across the country, National Express services will run until late afternoon and then be suspended until January 2.

For further information on national rail services contact the National Rail Enquiries Service on 08457 484950. Further details of London Transport services can be obtained by telephoning 0171 222 1234, and leaflets are available from stations in the capital.