McDonnell's la la land economics- Don't need no number$

[anonymous-user]

Murph7355 said:

What is government's track record of running infrastructure?

How much profit is actually being made by the current incumbents?

If the end consumer pays just the same as before (presumably the 15yr payback is based on profit figures that are themselves based on the levies to the consumer), what is the point?

We'll simply end up with 2.5tn of debt that cannot be paid back. I'd suggest it would be far better to look to repair the holed/bottomless bucket before we go adding additional complications to it.

The largest 6 energy supply firms(Centrica, EON, SSE, EDF, npower, Scottish Power) apparently make about £2.5bn/year in profit, I think the water companies less than this.

It might take a while to pay it back even including retaining dividends, and assuming margins stay the same and there is no pressure to reduce consumer bills, as £500bn over 15 years is £33bn/year at 0% interest

[Dr Jekyll]

gooner1 said:

I don't quite see how stopping companies charging rip off prices,
equates to making no profit at all.

Have'nt the Tories , more or less, adopted Labour's proposal to cap energy prices, well
at least it was in their manifesto, for a while.

But according to Labour, the mere fact of making a profit means the prices must be a rip off. They think profit is the difference between the price and what the price ought to be. They won't explain why paying interest to creditors is any better than paying profit to shareholders.

[Blue Oval84]

gooner1 said:

I don't quite see how stopping companies charging rip off prices,
equates to making no profit at all.

Have'nt the Tories , more or less, adopted Labour's proposal to cap energy prices, well
at least it was in their manifesto, for a while.

There is barely any profit in residential supply as it is. Profits are made elsewhere. This is why SSE is throwing in the towel and merging with NPower. It's just not worth the hassle for such tiny little margins (generally less than 5%).

Asda probably make more profit selling st roll.

The cap is just political point scoring, all it will do is ensure that the very best deals disappear, in order to fund a price cut for people who can't be arsed to switch.

[ralphrj]

Gargamel said:

Tankrizzo said:

London424 said:

There's also a lot of 'off-book' stuff that isn't even factored in...like pensions.

And PFI! God knows what the total liabilities of those contracts are.

Well here is a handy guide to a couple - only Governments could have possibly thought this was a good idea. Total incompetence ...



The Treasury said that future liabilities under PFI total about £242bn (once existing payments are taken into account) and that this figure would shrink to £122bn if it were adjusted for future expected inflation. Nonetheless, details of the contracts compiled by the Treasury make clear that some NHS organisations will end up paying almost 12 times the initial sum over what is usually a 30-year contract.

For example, while the capital cost of rebuilding Calderdale Royal Hospital in Yorkshire is £64.6m, the scheme will end up costing Calderdale and Huddersfield NHS Foundation Trust a total of £773.2m. Similarly, the cost of building the new Walsgrave district general hospital in Coventry will jump from an initial £379m to an eventual £4bn.

Worth noting that only in 2017 have we seen the annual repayments on pre-2010 PFI reach its peak as many of these projects had repayments deferred for 10 years.

It was entirely possible for a Labour Minister to announce plans to build a new hospital, attend the ground breaking ceremony and attend the opening ceremony before retiring as an MP without the Government actually paying a penny.

In total we will spend £270bn on £68bn of infrastructure. All done this way because it meant that £68bn could be borrowed on top of the existing borrowing of 3% of GDP.

[pavarotti1980]

ralphrj said:

Worth noting that only in 2017 have we seen the annual repayments on pre-2010 PFI reach its peak as many of these projects had repayments deferred for 10 years.

It was entirely possible for a Labour Minister to announce plans to build a new hospital, attend the ground breaking ceremony and attend the opening ceremony before retiring as an MP without the Government actually paying a penny.

In total we will spend £270bn on £68bn of infrastructure. All done this way because it meant that £68bn could be borrowed on top of the existing borrowing of 3% of GDP.

While acknowledging the financial problems of PFI what would have happened if there wasnt private involvement in the public for infrastructure?

PF2 is alive and well during this government remember

[Henners]

ralphrj said:

In total we will spend £270bn on £68bn of infrastructure. All done this way because it meant that £68bn could be borrowed on top of the existing borrowing of 3% of GDP.

So what we're saying is that essentially BrightHouse are in the hospital building game too?

[pavarotti1980]

ralphrj said:

In total we will spend £270bn on £68bn of infrastructure. All done this way because it meant that £68bn could be borrowed on top of the existing borrowing of 3% of GDP.

Is that figure just for the capital repayment or including the ongoing maintenance during the contract period?

[Blue Oval84]

pavarotti1980 said:

While acknowledging the financial problems of PFI what would have happened if there wasnt private involvement in the public for infrastructure?

PF2 is alive and well during this government remember

Surely the answer is that we should have just borrowed more via regular funding channels? Doing it through PFI was just a way to keep borrowing figures looking sweet, and it was never designed for that. Fine for say, a toll road, but not a hospital.

[Gargamel]

Henners said:

ralphrj said:

In total we will spend £270bn on £68bn of infrastructure. All done this way because it meant that £68bn could be borrowed on top of the existing borrowing of 3% of GDP.

So what we're saying is that essentially BrightHouse are in the hospital building game too?

Well it is slightly misleading as in some PFI contracts it is also paying for all the FM and maintenance costs too, including planned refurbs.

But yes there is a good element of never never about these deals.

[pavarotti1980]

Blue Oval84 said:

Surely the answer is that we should have just borrowed more via regular funding channels? Doing it through PFI was just a way to keep borrowing figures looking sweet, and it was never designed for that. Fine for say, a toll road, but not a hospital.

Not knowing the financial markets at all, would this have been possible? Could an NHS Trust find a lender for £500million to build a new hospital?

Of course the only advantage is that the buildings are not absolutely minging and falling apart at the seams as they were

[ralphrj]

pavarotti1980 said:

While acknowledging the financial problems of PFI what would have happened if there wasnt private involvement in the public for infrastructure?

PF2 is alive and well during this government remember

I wouldn't say all PFI is bad. It certainly has its uses. I just think that it was used badly for an extended period.

[pavarotti1980]

ralphrj said:

I wouldn't say all PFI is bad. It certainly has its uses. I just think that it was used badly for an extended period.

Started with Major, used extensively with Blair, Brown and continued with Cameron, May although they have changed it with PF2 to reduce the liabilities to public sector and (I think) contract break clauses?

PFI is good if managed properly, they were just too slow in acknowledging its bad points or just ignoring them

[Tankrizzo]

My sister is headmistress of a school improved and maintained under PFI. She has to call a private company to do any minor maintenance to the building - last year one of the bogs started leaking (flexi hose burst to the cistern) and was chucking gallons of water onto the floor. The company would not permit her to call an emergency plumber to turn the water off, she was told to wait for the "Response Team" (no joke) to turn up. In the end she got a screwdriver and turned off the isolator after googling how to do it. The "Response Team" turned up 4 hours later, it was a big van with four blokes in it to fix one flexi hose. Apparently it was some ridiculous procedure with three blokes watching one bloke take 10 minutes to change the hose.

[Blue Oval84]

pavarotti1980 said:

Not knowing the financial markets at all, would this have been possible? Could an NHS Trust find a lender for £500million to build a new hospital?

Of course the only advantage is that the buildings are not absolutely minging and falling apart at the seams as they were

I meant the government in general, if new hospitals needed building they should have arranged the necessary borrowing on behalf of the trusts if required, rather than tying the taxpayer to more expensive PFI deals all in the name of keeping the borrowing off the books.

[Murph7355]

crankedup said:

...
Agree, stealth austerity born by the less well off.

A deficit can be wiped out in one of three ways:

- increase revenues
- cut costs
- some combo of the above

The tax take is the highest it's ever been. Miraculous ways to get more simply do not exist. One might argue that some fiddling around with who actually pays them could be done...but then the least well off aren't paying much/anything into the system anyway. 1% of people provide 30% of income tax etc etc etc. There's a strong argument that what we need to be doing is increasing GDP...but who typically makes that happen...? (Ignoring edge cases).

So we're largely left with the second item.

Unfortunately the less well off are always going to bear a heavy hit on cost cutting as an awful lot of expenditure goes to...the less well off. Unless we find a means to ensure the "well off" don't get stuff for free. But that won't wash, apparently.

You regularly come out with the wealth gap "issue" but am not sure you've ever put a value to it...nor how this would be implemented. Nor spelt out exactly why it would make any material difference to our finances (unless that's not actually the objective. In which case why mention it on this thread ).

[Gargamel]

Murph7355 said:

A deficit can be wiped out in one of three ways:

- increase revenues
- cut costs
- some combo of the above

The tax take is the highest it's ever been. Miraculous ways to get more simply do not exist. One might argue that some fiddling around with who actually pays them could be done...but then the least well off aren't paying much/anything into the system anyway. 1% of people provide 30% of income tax etc etc etc. There's a strong argument that what we need to be doing is increasing GDP...but who typically makes that happen...? (Ignoring edge cases).

So we're largely left with the second item.

Unfortunately the less well off are always going to bear a heavy hit on cost cutting as an awful lot of expenditure goes to...the less well off. Unless we find a means to ensure the "well off" don't get stuff for free. But that won't wash, apparently.

You regularly come out with the wealth gap "issue" but am not sure you've ever put a value to it...nor how this would be implemented. Nor spelt out exactly why it would make any material difference to our finances (unless that's not actually the objective. In which case why mention it on this thread ).

When we are looking at how to reduce costs, always start with the largest spend items first. Makes it simpler and has the biggest impact.

Firstly offer a tax break on Private Healthcare, eg any PHI premiums are automatically tax deductible. Remove some pressure from the NHS.

Persuade the Insurance sector to offer a Redundancy Payment protection of say 60% of salary for two years, prevent anyone from signing on for two years (who has insurance) Offer a tax deductible on the insurance and make it competitively priced.

Second - Build a proper procurement team for the NHS/Civil Sevice/Defence, with some world class operators, sure you need to pay them, but on a £100bn spend they would earn it 10 times over

Third, Working Tax credits... Phased out over five years - gone

Fourth - Housing Benefits ... this is a tough one, but steps must be taken

[gooner1]

Dr Jekyll said:

But according to Labour, the mere fact of making a profit means the prices must be a rip off. They think profit is the difference between the price and what the price ought to be. They won't explain why paying interest to creditors is any better than paying profit to shareholders.

Did not the BOE economist say it was the amount of dividends being
paid to shareholders, that was holding back investment?

[anonymous-user]

gooner1 said:

jsf said:

What profits?

The reason given to nationalise is to "stop rip off prices. "

That translates to no profit.

I don't quite see how stopping companies charging rip off prices,
equates to making no profit at all.

Have'nt the Tories , more or less, adopted Labour's proposal to cap energy prices, well
at least it was in their manifesto, for a while.

You can end rip off pricing by giving the regulator proper powers. There is no need to nationalise the industry and introduce the malaise that always produces whilst spunking hundreds of billions in the process. A bit of paperwork would achieve the same thing.

[sidicks]

Murph7355 said:

A deficit can be wiped out in one of three ways:

- increase revenues
- cut costs
- some combo of the above

The tax take is the highest it's ever been. Miraculous ways to get more simply do not exist. One might argue that some fiddling around with who actually pays them could be done...but then the least well off aren't paying much/anything into the system anyway. 1% of people provide 30% of income tax etc etc etc. There's a strong argument that what we need to be doing is increasing GDP...but who typically makes that happen...? (Ignoring edge cases).

So we're largely left with the second item.

Unfortunately the less well off are always going to bear a heavy hit on cost cutting as an awful lot of expenditure goes to...the less well off. Unless we find a means to ensure the "well off" don't get stuff for free. But that won't wash, apparently.

You regularly come out with the wealth gap "issue" but am not sure you've ever put a value to it...nor how this would be implemented. Nor spelt out exactly why it would make any material difference to our finances (unless that's not actually the objective. In which case why mention it on this thread ).

Indeed! Particularly when the discussion appears to be about income rather than wealth!!

[Not-The-Messiah]

For a party that hates the bankers and the supper rich they seem to love giving them loads of money.

Our interest bill at the moment is more that the NHS wage bill. The people who profit the most from this are the banks and the supper rich who have the money to lend in the first place.

Labour can't wait to give them even more money by the looks of it.