Bolitics The New Condem Government

[peterms]

Channel tunnel rail link sold for £2.1bn to Canadian pension funds

So let me see if I've got this right.

Financial institutions caused major, major havoc in the financial system.

To prevent the collapse of the banking system, we baled them out, at massive cost to us and no cost to them.

The government says that we now have a big deficit, which must be reduced.

In order to achieve this, we are going to have a fire sale of the national infrastructure to, er, financial institutions.

Meanwhile, we will make a million unemployed, taking demand out of the economy. VAT will increase. Food prices have risen much faster than inflation and will continue to do so, caused largely by commodity speculation by...could it be...financial institutions?

[TrentVilla]

he deserves to be done for it.

Done? I hope he spend two years being fisted by Abu Hamza. Still, thanks to the EU at least he'll still have a vote to go with his stripey tan.

You think the fist rather than the hook?

[snowychap]

As someone said; It was the best of times, it was the worst of times...

In which case, let us all hope that it is a far, far better rest that we go to than we have ever known. :winkold:

[Awol]

he deserves to be done for it.

Done? I hope he spend two years being fisted by Abu Hamza. Still, thanks to the EU at least he'll still have a vote to go with his stripey tan.

You think the fist rather than the hook?

"Oooooooh no".

[PauloBarnesi]

Channel tunnel rail link sold for £2.1bn to Canadian pension funds

So let me see if I've got this right.

Financial institutions caused major, major havoc in the financial system.

To prevent the collapse of the banking system, we baled them out, at massive cost to us and no cost to them.

The government says that we now have a big deficit, which must be reduced.

In order to achieve this, we are going to have a fire sale of the national infrastructure to, er, financial institutions.

Meanwhile, we will make a million unemployed, taking demand out of the economy. VAT will increase. Food prices have risen much faster than inflation and will continue to do so, caused largely by commodity speculation by...could it be...financial institutions?

They haven’t sold the link; they have leased them the line for 30 years. Not agreeing with the whole thing, but the headline is simply wrong.

Anyway as many will have noted we are gradually renationalising the railways. Its just that they will be run by the German National Railway...

[TrentVilla]

Sold or leased it matters not, its sickening and just the sort of thing I expected.

[peterms]

They haven’t sold the link; they have leased them the line for 30 years. Not agreeing with the whole thing, but the headline is simply wrong.

Anyway as many will have noted we are gradually renationalising the railways. Its just that they will be run by the German National Railway...

A leasehold sale is still a sale. If we want it back before the end of the lease we will have to buy it back.

Unless we nationalise without compensation, of course.

[PauloBarnesi]

Sold or leased it matters not, its sickening and just the sort of thing I expected.

Well in the name of journalism it does!

If the whole network is effectively private, with private operators then it makes some kind of logic; I think the length is probably too long (in the sense of the nature of the franchises). If that money can be effectively used (which I don’t think it will) then it makes sense*. And to be honest I think any of the parties would have done the same (Labour did f••• all to improve the railways). None of them actually seem to care or like these things (as most of the population do).

* i.e. paying for HS2

[bickster]

Woolarse suspended from Labour Party.

Good to see sense is prevailed, they also won't be funding any appeals etc. So effectively he's been cast out, adrift into his sea of misery, completely of his own making. Well done the Labour Party!

[PauloBarnesi]

They haven’t sold the link; they have leased them the line for 30 years. Not agreeing with the whole thing, but the headline is simply wrong.

Anyway as many will have noted we are gradually renationalising the railways. Its just that they will be run by the German National Railway...

A leasehold sale is still a sale. If we want it back before the end of the lease we will have to buy it back.

Unless we nationalise without compensation, of course.

A leasehold sale I am pretty sure is not a sale. That is a freehold sale.

Just reread what you said. I am not sure why we would want to renationalise it? Much as I would like to see all the railways renationalised it isn’t going to happen, nor are the railways coming back as a unified company (the natural state of the railway is as a private company).

Basically the govt and the two wars have ƒucked the railways.

[peterms]

A leasehold sale I am pretty sure is not a sale. That is a freehold sale.

Just reread what you said. I am not sure why we would want to renationalise it? Much as I would like to see all the railways renationalised it isn’t going to happen, nor are the railways coming back as a unified company (the natural state of the railway is as a private company).

Basically the govt and the two wars have ƒucked the railways.

A leasehold sale is the sale of property rights for a set period of time. A freehold sale is the sale of those rights in perpetuity.

Why might we want to renationalise it? Well, just because we, as a nation, would be better off. We would be paying less for the asset than if we let the private sector run it. Private firms are fighting over toll-generating facilities from Sydney to Texas, because the money they make will more than repay the purchase price - ie they will extract value from us.

Same as we are paying more for facilities funded through PFI/PPP, same as our utilities bills are higher to generate wealth for shareholders at our expense.

Whether we wish to have this profit element held by society as a whole or a smaller subset of private shareholders is obviously a political judgement.

Completely agree that the railways have been allowed to get into a very poor state. They should be exactly one of the main things receiving government investment - building long-term infrastructure which generates economic benefits and is environmentally better than the alternative.

[snowychap]

...he'll still have a vote to go with his stripey tan.

It appears as though he might not. C4 news are reporting that the section in the act that refers to a ban on being registered (and thus able) to vote for those three years also applies - though I've seen some dispute over that.

[Awol]

...he'll still have a vote to go with his stripey tan.

It appears as though he might not. C4 news are reporting that the section in the act that refers to a ban on being registered (and thus able) to vote for those three years also applies - though I've seen some dispute over that.

[Ads]

They haven’t sold the link; they have leased them the line for 30 years. Not agreeing with the whole thing, but the headline is simply wrong.

Anyway as many will have noted we are gradually renationalising the railways. Its just that they will be run by the German National Railway...

A leasehold sale is still a sale. If we want it back before the end of the lease we will have to buy it back.

Unless we nationalise without compensation, of course.

A leasehold sale I am pretty sure is not a sale. That is a freehold sale.

Just reread what you said. I am not sure why we would want to renationalise it? Much as I would like to see all the railways renationalised it isn’t going to happen, nor are the railways coming back as a unified company (the natural state of the railway is as a private company).

Basically the govt and the two wars have ƒucked the railways.

The state still hold the freehold reversion.

£2.1 billion for 68 miles of track? I know next to nothing about the high speed rail network, so I can't really comment on how good a deal this is.

[peterms]

£2.1 billion for 68 miles of track? I know next to nothing about the high speed rail network, so I can't really comment on how good a deal this is.

Neither can anyone else, without knowing what conditions are attached, what limits on what they can charge and so on.

However, they clearly wouldn't have bought it unless they think it's a good deal for them (though financial institutions do seem to have a history of making spectacularly crap judgements on things).

More significantly, tory governments do have something of a track record (sorry) for selling the national silver for a knock-down price, partly to get rid of state-owned assets on general principle, partly because they and their mates benefit.

I would be utterly astonished if this deal turns out anywhere near good news for us, as in the general population of the UK.

[PauloBarnesi]

I would be utterly astonished if this deal turns out anywhere near good news for us, as in the general population of the UK.

I am not sure any of us know if the government were actually any good at running the thing. Certainly they haven’t made the leap of say running trains from the rest of Britain through the tunnel, though it appears that DB will be doing it the opposite way.

As I ve pointed out the railways are not naturally a nationalised industry, and under the government they seemed pretty poor, only to become even worse in privatisation. Maybe we no longer know how to run something we invented; ala football?

[Ads]

The only thing I do know about the train network, is that ours are pretty poor due to all the bends in the old layouts making for high maintenance and low speed.

[peterms]

As I ve pointed out the railways are not naturally a nationalised industry, and under the government they seemed pretty poor, only to become even worse in privatisation. Maybe we no longer know how to run something we invented; ala football?

I would say that railways are a prime example of something which should be run socially, ie "nationalised". We don't want discontinuities in ticketing, season tickets, track maintenance and the like. It's a natural monopoly, and the state is the only sensible owner of a natural monopoly.

Isn't it interesting how when nationalised industries are denationalised, they get worse, and give out loads more money to senior managers?

As you say, even worse under privatisation.

[Awol]

I would say that railways are a prime example of something which should be run socially, ie "nationalised". We don't want discontinuities in ticketing, season tickets, track maintenance and the like.

With you on this and I'm also against the private ownership of toll roads. Critical infrastrucutre should be owned, operated and maintained by the state. Even the Indian railways (the world's largest employer btw) are now run at a profit so I don't see why it should be beyond the people who invented them.

I'd also include our nuclear and defence research infrastructure in that basket of critical infrastructure, both at the cutting edge of technology and both flogged off by Labour. Christ, Brown even decided to flog the port of Dover!

Let's stop pretending it's only the Tories who pawn the family silver and condemn them all for selling assets that actually belong to the tax payer.

[snowychap]

Social Housing: the End?

The graphic is from this week's edition of the housing trade mag, not some alarmist leftist publication. It refers to the end of public subsidy for the capital costs of building social housing. If the Tories really mean what they say, we're in uncharted waters.

Housing finance is notoriously difficult and dull, so let's strip it back to its essentials: to cover the costs of building houses you can either pay a lot upfront to cover the initial costs or borrow that money and pay the loan off by hiring it out on a periodic basis. The smaller amount of money you sink into the scheme upfront the higher the periodic charge. This is not rocket science.

Since the late 1980s, we've not had 100% capital subsidy for social housing - indeed, housing associations have bid for funding partly on the basis of how little capital monies they need to deliver any given project. Naturally, the first result of this system was to send rents - the 'periodic charge' - through the roof in the early 1990s.& high rents do tend to produce very high Housing Benefit bills.

So a decade or so ago the government introduced a system of 'target rents' which apply to both council and housing association rented stock. Basically, this system sets the rent of any given socially rented property, new or existing, in accordance with a formula based on the size and value of the property and relative local manual wage rates. So this reined in the tendency to produce low capital subsidy/high rent schemes.

The Tories have decided to rip this system up: they want rents to be capped at 80% of the local market rate for all incoming tenants, even those going into existing social housing, which has enjoyed past capital subsidy. This is laughably called 'affordable'. Public capital subsidy is being reduced to more or less nothing. The promised 150,000 new 'affordable' social tenancies are supposedly going to be financed primarily from either these higher rental streams or via loans mobilised by big housing associations on existing stock where previous capital subsidy means the debt is now largely paid off.

Wake up at the back there - I know this is boring and detailed and rather more than you perhaps want to know. So let me put this in context: this means that rents for a two bedded socially rented property in Islington would rise from £91pw to £232pw: a three bed social rented house in Cambridge would go up from £93pw to £128pw. I can only assume that the application of the word 'affordable' to such rents is some kind of sick joke.

& what's more this means that the Housing Benefit bill is going to go up, not down. The housing associations' trade body is saying that, in Hackney, you'd have to earn £54,000 to escape HB eligibility and be in a position to keep the bulk of your additional salary and be better off in work.

For all the dull, grey complexity of housing finance it really is that simple: higher rents= deeper benefit traps for wider numbers of people. No amount of huffing and puffing about a Universal Credit is going to change that.

Nor is this simply a problem for the minority of the population who live in social housing. House prices are now such that it is increasingly difficult for people to get their foot on the ladder. A new report from the Home Builders Federation puts this pretty graphically:

"...the average first time buyer (FTB) would have to save every single penny of their earnings for more than two years to have a chance of getting a foot on the housing ladder. In London it would take three years.

Even over five years, young people have to save almost half of their take home pay every month to save a deposit for a house, with some areas even higher."

So rents matter: even if you're in the 70% of people who are currently home owners your children are probably not going to be any time soon if they live in London and the SE.

Addendum: the definitive explanation of the impact of the Housing Benefit changes, found in possibly the most unlikely place on earth for sensible comment, CIF.

I was, boringly, watching some of the CRS committee's questioning of a couple of ladies from the CAB, David Orr from the National Housing Federation and the head of a London housing association yesterday (I only caught the last twenty minutes or so but at the moment their evidence is available to view here). The housing guys did say that they think there is a possibility that the change to intermediary rents may allow for 150,000 homes to be built.

They did also point out how the security of housing benefit was going to be important for any future private investment in any building projects (so might some of the reforms overall be seen as a transfer from subsidy for private landlords to subsidy for private investors?); how, even were these targets to be met, this is a net transfer from social housing stock (in support of the headline above); that the change to intermediary rents is likely to prove a large barrier to work without some real thought and a change to the current proposals (which would suggest to me that there will be attempts to change the system again if any universal credit system comes in to being and that this is a first step, a testing of the waters or a preparation for what is to come - we may have an insight next week when IDS's white papaer is published), and that, more importantly, the intermediary rents proposals do not work very well (at least in principle and in models) outside London and the south east.

Edit: The one other thing which I did stumble across here is that the new intermediary rent is proposed to be 80% of the LHA amount.