Who pays for infrastructure?

 

        On Monday the Commons approved the government’s legislation to support its infrastructure programme.  The Opposition did not oppose the £50 billion authorised spend, nor the broad thrust of the programme.  They did not examine  most of the operational detail of the proposals.  Time was very limitied to do so. The Bill passed without a vote at third reading.

         The legislation was needed to allow the Treasury to put in place its “UK guarantees programme”. When this was announced on 18 July 2012 we were told that up to £40 billion would be available as guarantees  for private sector schemes in “transport,energy, communications and environmental sectors set out in the National Infrastructure Plan”  and  £10 billion for housing.  The idea was to allow the government to issue a guarantee or indemnity so the private sector could raise the necessary money from banks and markets to build the schemes. The government would charge a fee and aim to end up with no bill for the projects.

          However, when I read the draft legislation I discovered that this had changed between July and September. The bill widened both the scope of the projects that can be included, and greatly widened the types of financial intervention in projects which the government can make.   They added health, education, courts and prisons to the areas which can be financed in this way. They added   to gurantees and indemnities, loans, and “any other kind of financial assistance (actual or contigent).” This includes subsidy, grant, purchase of equity or simply paying the bills.  They dropped the planned divsion of the £50 bn between housing and the rest.

          The nature of the spending no longer has to be just capital works. It can include  “acquisition, design, construction, conversion, improvement, operation and repair” – in other words just about any kind of revenue as well as capital spending.

          I asked why the Bill had to go so much wider than the original  guarantees scheme. I asked if we could have some indication of how much might be spent under each heading. I asked if the Minister agreed that spending  money on coruts, prisons and public sector health and education were different in kind from offering a guraantee on private finance for a new power station or broadband link?  After all, these latter can be rewarding private sector projects, where end users pay for the service. The whole point of the NHS and state schools is they are free to users, so the provider cannot earn a return from customer revenues.

         I look forward to finding out what the government does intend. It was not clear on Monday.

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139 Comments

  1. Denis Cooper
    Posted October 18, 2012 at 6:08 am | Permalink

    “Easy come, easy go”.

    OK, I realise that this may end up costing nothing, but it could cost a lot, and when it slips through the Commons so easily that suggests that many MPs on both sides are falling down on the job.

    Which brings me to that important article by Allister Heath yesterday:

    http://www.telegraph.co.uk/journalists/allister-heath/9613297/Britain-will-feel-the-pain-when-the-QE-bubble-finally-bursts.html

    “Britain will feel the pain when the QE bubble finally bursts”

    “Money creation on a massive scale has become the new normal, the only way the economy can cope, and a convenient crutch for a chancellor whose grip over the public finances remains frighteningly fragile.”

    “one branch of the state (the Treasury) is borrowing money from another branch of the state (the Bank of England)”

    “our central bank is now financing almost a sixth of all public spending on an almost permanent basis, blurring the distinction between monetary and fiscal policy.”

    “Thanks to QE, Osborne is raising more than £100bn a year without having to ask Parliament to hike taxes and without having to convince investors to part with money, while unfairly taking the credit for avoiding national bankruptcy. This is bad for democracy and accountability; is fuelling complacency about the deficit (and emboldening Keynesians who want to borrow even more) and propagating the myth that resources can be conjured up out of thin air.”

    This has been going on since March 2009, with one longish pause from just before the general election until Osborne started it up again, and it really is time that MPs got to grips with it.

    • A.Sedgwick
      Posted October 18, 2012 at 7:07 am | Permalink

      QE is one of many examples of political wilful blindness.

    • Disaffected
      Posted October 18, 2012 at 8:29 am | Permalink

      Cameron reaffirmed his view that he doe snot want an in/out referendum at PMQs yesterday. So, presumably, we ought to ask Germany about what infrastructure we are allowed to have.

      QVM is central to the EU influence and the UK will have little or no say in what happens in the EU. So the garbage line about the UK’s influence is a damp squib. Nov 2014 is coming fast, the public need to vote UKIP next year at local elections and UKIP in the European elections in 2014. it is the only way to bring about change. Vote Cameron you get Labour.

      • Jerry
        Posted October 18, 2012 at 10:43 am | Permalink

        @Disaffected: “Vote Cameron you get Labour.

        Vote UKIP get the real Labour Party, not just a Tory party with socail awareness, as we have under Mr Cameron…

        • Disaffected
          Posted October 18, 2012 at 12:25 pm | Permalink

          No longer a scare, the Tories have done nothing different from the last shower. Look at the mess and continuing mess. Their cuts are exactly the same as Labour proposed. Borrow, spend and waste.

          Today we hear energy policy is in a mess- really! How long does it take them to wake up to the problem? Energy is costing us all a fortune and it is not likely to change any time soon with these loony green tunes in charge. Cameron had an open goal and completely missed hitting the ball let alone the goal.

          Look at the way he negotiated, or capitulated, with the Lib Dems for the coalition agreement. No wonder they said at the time they could not believe the ground the Tories gave way on. This was the start of recognising his lack of negotiating skills as we now see with the EU.

          • Mark W
            Posted October 18, 2012 at 1:47 pm | Permalink

            Vote UKIP get real Labour. True.

            Labour are worse than the Tories, but it’s a price to pay to get real conservatives in the future. Big price. But a bigger Labour majority is a safer option than a slim majority or Lib Lab deal. Leaves them less reliant on Left loons (Labour and most LibDems). Hmmm… even making my own gamble seem less appealing now.

          • Jerry
            Posted October 18, 2012 at 2:29 pm | Permalink

            @Disaffected: The last “shower”, meaning the last Labour Government, wasn’t really a Labour Government, it could be said that both Labour and Tories meet in the centre ground (Blair stepped to the right, the Tories eventually stepped to the left) sometime between 2000 and 2007, things might not be so clearly centrist next time, there is still time and union influence for the Labour party to take a step back to the left – this might not be apparent until after UKIP has prevented the Tories from having a majority or being the largest party in a coalition.

            As for the coalition agreement, what do you not understand, no one had a majority, had Mr Cameron not moved as he did then we would either have gone back to the ballot box either immediately or within a very short order of time (which would likely have caused the markets to collapse upon opening on the following Monday morning) or we would have had a Labour lead coalition.

          • APL
            Posted October 18, 2012 at 3:30 pm | Permalink

            Disaffected: ” .. Their cuts are exactly the same as Labour proposed.”

            There have been no cuts. There cannot have been cuts since the deficit continues to increase.

          • forthurst
            Posted October 18, 2012 at 3:33 pm | Permalink

            “Look at the way he negotiated, or capitulated, with the Lib Dems for the coalition agreement.”

            Actually, the coalition agreement was cooked up by Oliver Lewtwin (Cameron’s “mainframe computer” ie brain) and Danny Alexander.

            So, no Tories or Englishmen then.

          • zorro
            Posted October 18, 2012 at 4:06 pm | Permalink

            The only saving grace is that it’s not being tipped the down the PIGIS drain…….Essentially, it will be a form of direct QE (or will end up being that) into the economy in that it’s money which not otherwise be invested in the economy…..

            zorro (trying to be positive…)

          • BobE
            Posted October 18, 2012 at 4:08 pm | Permalink

            Anybody who wants to stop Europe being overun has to vote UKIP. Even if UKIP don’t get power, they might replace the LDs as the third party. (LDs will be destroyed next time, too many broken promises).

    • zorro
      Posted October 18, 2012 at 4:08 pm | Permalink

      Once you start, it’s very difficult to stop, ask the Japanese….

      zorro

  2. lifelogic
    Posted October 18, 2012 at 6:09 am | Permalink

    Indeed you make good points, the history of such arrangement is usually that the government enters a contract that benefits few but the private companies concerned.

    You say “The whole point of the NHS and state schools is they are free to users, so the provider cannot earn a return from customer revenues.” – the side effect of this is that, apart from a few rich people everyone else has no choice but to use these “free” (at the point of use) services. Most competition, from more efficient providers, is thus eliminated. It is clearly very anticompetitive, where is the competition authority? They should insist fair competition? In social housing, banking, pensions, old age care and many other areas the government distorts the market, doing great damage in the process.

    I see reported that Speaker Bercow is up to his usual practice, as he tries to censor details of MPs who rent homes to each other. The voters in Buckingham have much to answer for. Did they, like David Laws, learn nothing from the expenses revelations.

    Reply That is not his plan. Some MPs are worried about the details of where they live being made available.

    • lifelogic
      Posted October 18, 2012 at 7:34 am | Permalink

      Surely the ownership is already public from the land registry, so when the property is owned it is public information anyway?

      • lifelogic
        Posted October 18, 2012 at 4:23 pm | Permalink

        If it is genuinely for security reasons (which seems very implausible) then just publish which MPs are renting from which other MPs and at what rents – without giving the addresses.

        Reply: That is a question for IPSA to decide as the independent body.

    • Disaffected
      Posted October 18, 2012 at 8:15 am | Permalink

      A lot of spin JR, the Kelly report is sitting on the shelf collecting dust. A report we paid for when Cameron, Clegg and others made a lot of spin to convince us they would not tolerate this sort of behaviour from MPs. Clegg was going to shut the gate of Westminster until politics was cleaned up. They now have Laws back in cabinet and Lords who went to jail for fiddling are back in office making more claims- you could not make this up. This would not be tolerated in any other sector of society. Cameron simply does not have any moral standards as we see with the Mitchell affair. Out of touch and hopefully out of office at the next election. Cameron has entered the world of Clegg, you cannot believe a word he says.

    • waramess
      Posted October 18, 2012 at 10:17 am | Permalink

      Lifelogic points out the nonsense of “The whole point of the NHS and state schools is they are free to users, so the provider cannot earn a return from customer revenues.”

      Of greater nonsense is the first part of the statement which is akin to saying when one makes an insurance claim it is “free to users”. and the second part ignores the fact that the providers of the capital are tax payers who do not earn a penny from their capital outlay.

      None of this is anything to be proud of; it is just muddled thinking worthy only of shallow socialist thinkers.

      Oh the joys to belong to a socialist Conservative Party

      Reply: It is not muddled. If something is provided free at the point of use because taxpayers pay the bills there is no normal market test on provision, as the customer does not pay the bill. Nor can there be a taxpayer return on capital for services provided free to users. I am describing the system we have, not asking that we do more of it in other areas!

      • lifelogic
        Posted October 18, 2012 at 4:27 pm | Permalink

        To reply “there is no normal market test on provision, as the customer does not pay the bill”. Indeed that is exactly the problem, the customer has no say in what he gets or does not get from the NHS. Like it or lump it, we have your money anyway mate so tough and after all our taxes you probably cannot afford to go anywhere else can you.

        • Iain Gill
          Posted October 18, 2012 at 6:40 pm | Permalink

          a GP I know has now started refusing and I mean completely refusing to issue precriptions, they will only agree to prescribe what they themselves dispense. no doubt they get paid more for dispensing. but its an absolute disgrace, the patients have no say whatsoever even in these simple things. the sooner the patients in this country have some buying power the better!

          • lifelogic
            Posted October 19, 2012 at 9:08 am | Permalink

            Indeed you get what your given and like it or lump it. They have your money already so tough mate.

        • Bazman
          Posted October 18, 2012 at 6:45 pm | Permalink

          How would anyone pay for their own treatment during a serious illness? By doing more work and stopping lying in bed being feckless. It would not surprise me that you believe this. Competition? see all the other services that have been made ‘competitive’ and get back to us. You do not even use the NHS so don’t tell us from your dubious web sites and right wing opinions on what the standards are.

          • Steven Whitfield
            Posted October 19, 2012 at 7:41 pm | Permalink

            ‘you misrepresented someone’s argument to make it easier to attack’. Stock trade of the left but all politicians are guilty to a degree.

            http://yourlogicalfallacyis.com/strawman
            Not unusal for lefties to use one or more logical fallacy’s when attacking an opponents position.Bazman is very skilled at this.

            http://yourlogicalfallacyis.com/appeal-to-emotion

          • APL
            Posted October 19, 2012 at 11:34 pm | Permalink

            Bazman: “How would anyone pay for their own treatment during a serious illness?”

            Ever heard of insurance?

          • lifelogic
            Posted October 20, 2012 at 12:41 pm | Permalink

            How would they pay – well a loan, from savings, by selling something, insurance or if really desperate the government should provide and bill them with some time to pay.

          • lifelogic
            Posted October 20, 2012 at 12:42 pm | Permalink

            They would, in my system, be paying far less tax and thus have more income with which to pay too.

          • Bazman
            Posted October 22, 2012 at 6:28 pm | Permalink

            Intellectualising an argument will not get you off the hook and how can anyone on about a grand a month as millions are have their tax cut allowing them to pay for their own and their families healthcare? Not to mention anything else that you believe they should pay for like road tolls and all other living costs. Fantasy.

      • waramess
        Posted October 19, 2012 at 10:44 am | Permalink

        JR, I am aware you were describing the system we have;I was commenting on the nonsense of it. Taxpayers are the users amd those users that are not taxpayers should be helped through the benefit system.

        Taxpayers (and users of course) should not be forced into the system, they should be offered a choice and if such competition were allowed rather than the present system of those requiring private health having to pay twice, this in itself would encourage competion for the NHS.

        A return on capital employed for taxpayers who pay into the State system? Why not go the whole hog and encourage a sensible economic model for the NHS and make payments into the system include a sensible return for services provided?

        Hardly radical but never to my knowledge even considered by the Conservatives who generally pay lip service to the Socialist state service.

    • Posted October 18, 2012 at 10:19 am | Permalink

      It is reported that Rolls Royce (aerospace) is having to lend to its suppliers due to lack of bank lending. The incentives on the banks not to lend at the moment are hugely damaging. You simply cannot borrow sensibly even if you have a good record, good security and a good plan at the moment, RBS/Natwest are the worst of the lot in my experience calling loans in all over and they belong to the government. Can the government not do something to sort this out. It is shooting the economy in the foot as government picks up the bills for the lack of jobs and extra benefits that directly result.

      • Jerry
        Posted October 18, 2012 at 11:04 am | Permalink

        Well I suppose the Government could always nationalise the banks properly this time…

      • Mark W
        Posted October 18, 2012 at 1:41 pm | Permalink

        Have a temporary change in the capital ratios that banks must abide by. Not a great idea long term, but it may a help at present.

    • Jerry
      Posted October 18, 2012 at 10:53 am | Permalink

      What total rubbish Lifelogic regarding the NHS, Free at the point of Use doesn’t exclude competition at all, it just stops people profiting directly from peoples miss-fortune or illness, there is plenty of competition in the supply side – sometimes, such as in the case of contract cleaners, to much competition and penny pinching…

      • lifelogic
        Posted October 18, 2012 at 11:02 am | Permalink

        Of course it restricts competition if I wanted to set up a hospital who is going to come to mine at say £20,000 when they can go round the corner for nothing. Only a few rich and insured who want a private room and other small advantages.

        • lifelogic
          Posted October 18, 2012 at 11:09 am | Permalink

          After all they have already been forced to pay for the “free” one in taxes so they are paying twice to go private.

          • Captain Crunch
            Posted October 18, 2012 at 1:59 pm | Permalink

            Thy do it with Schools.

        • Jerry
          Posted October 18, 2012 at 12:01 pm | Permalink

          There are many a private hospital in the UK, there is nothing what so ever from you cashing in on peoples illness and miss fortune, it’s just that they chose to allow you to profit from their miss fortune. What makes you think you should have the right to profit from, health anyway, you would charge to chop someone unfortunate persons leg off to save their life?!

          Sorry but I might believe in a small state and free market for 96% of the time but where defence, emergency services, health & (elements of) welfare are concerned were I’m more than prepared to be called ‘Socialist’ by the unthinking right and if it makes me a “Socialist” in your opinion lifelogic then I’m guilty as charged and proud…

          • Posted October 18, 2012 at 1:29 pm | Permalink

            For defence and law and order I tend to agree, but there is no advantage in a “free at the point of use” NHS or a free education system. Perhaps a safety net for the few in real financial difficulties is all that is needed.

            Anyway nurses doctors, consultants, health administrators, maintenance people, financiers and hospital builders all “profit”from the NHS already, what do you think wages are?

            The trouble with the NHS is they profit most by rationing and delaying treatments, even when they are needed urgently. This as they have your money already and you have to take what they offer regardless of quality.

          • forthurst
            Posted October 18, 2012 at 4:00 pm | Permalink

            The NHS is both a monopoly and a monopsony. There are plenty of private hospitals, yes. Do private hospitals generally offer a full range of services for all conditions? No. Do private hospitals offer a recognised career path for the recruitment and training of medical staff up to senior consultant level? No. They are the same people, moonlighting from the NHS.

            Whether you believe that free medical care should be available for suitably insured persons is not an argument for that service to be organised(?) or funded like the NHS, which is also equally available to anyone in the world who can afford the airfare to here; it’s there human right, you see. The NHS is neither copied nor, with knowledge, admired elsewhere.

          • Jerry
            Posted October 18, 2012 at 8:14 pm | Permalink

            @forthurst: Better a state monopoly in health than a private cartel…

            Anyway, there is no NHS monopoly or monopsony, there is private health care and private hospitals in the UK thus people have a choice and sup[pliers have other markets (considering that many NHS suppliers are either multinational, multi-market (they sell not only to civilian health care but also to military and veterinary sectors etc. or are general non specialist suppliers.

          • waramess
            Posted October 20, 2012 at 12:26 pm | Permalink

            All PFI hospitals are owned by the private sector who also provide basic services, all equipment is provided by the private sector, all drugs are provided by the private sector, nurses and doctors don’t do it for free as Lifelogic points out, so what is provided by the public sector?

            The answer of course is no more than the management of resources and therin lies the problem. The NHS is incapable of managing their resources so why on earth is there such a political fuss whenever anybody mentions privatisation or real competition?

            Maybe it is because the NHS was conceived by the Socialists and they aren’t willing to see it go.

            Take heed Conservatives when next you pay lip service to this failed institution, much as you might have taken heed when Osborne was pledging to match Browns spending plans.

        • Bazman
          Posted October 18, 2012 at 6:51 pm | Permalink

          Who has 20 k spare and what happens when there is complications and/or the money runs out? Thats right. Bailed out by the state. Dying is to big. Your simplistic views on the NHS work very well with takeaways and even they need regulations to stop them from poisoning the population. Are we supposed to move to checking the funds to pay before the patient. The health tourism is a difficult one though, but why stop there? Why don’t we make sure only deserving people, The ‘right’ ones get treatment?

          • lifelogic
            Posted October 19, 2012 at 9:11 am | Permalink

            It is not usually good for business for restaurants to poison their customers – regardless of regulations.

          • Bazman
            Posted October 19, 2012 at 5:51 pm | Permalink

            Don’t make us laugh the list of bad restaurants failing to meet the minimum standards every year is a mile long. Minimum standards? A rat not eating some of my pizza before me? I would say that is a minimum.

          • lifelogic
            Posted October 20, 2012 at 12:45 pm | Permalink

            They might be more likely to have the £20K if taxes were are sensible levels and they knew it was their duty to provide for themselves.

    • nicol sinclair
      Posted October 18, 2012 at 3:11 pm | Permalink

      Reply to reply. Mr Redwood, if you believe that, then I am persuaded that you also believe in fairies…

      Frankly, apart from a few nutters that the the Plod should be able to take of before NAAFI break, who the hell is interested in MPs’ addresses apart from the Daily Telegraph, which will be sniffing at their heels to publicise wrong doing. Have we already forgotten the expenses scandal? I haven’t…

      Reply: I am reporting to you the official position. I am not planning to give opinions on any of it or tell you my beliefs on it, as the facts should all be known by the independent body who set the rules and adjudicate the claims. I have no knowledge of them.

    • APL
      Posted October 18, 2012 at 3:34 pm | Permalink

      JR: “That is not his plan. Some MPs are worried about the details of where they live being made available. ”

      Stifles snigger.

      Which MPs are those then Mr Redwood? The most corrupt or just those that are, you know, just dipping their toes into the water? So to speak.

    • zorro
      Posted October 18, 2012 at 4:21 pm | Permalink

      Reply to reply – The reason given by the MPs does not bear scrutiny. I could probably find out any MP’s address within half an hour using open source materials along with a lot of other details. So, if any one did bear ill will to an MP, the MP should not rely on that risk assessment. It is right and proper that an MP should live their life reasonably openly like their constituents. I’m afraid that it appears that too many MPs are still reticent about murky details being accessible and whatever the latest scam might be – rent swapping or whatever…..

      zorro

    • Max Dunbar
      Posted October 18, 2012 at 9:40 pm | Permalink

      To have stood as candidates in the first place they would have had to give their addresses.

  3. ian wragg
    Posted October 18, 2012 at 6:47 am | Permalink

    If M.P’s started to rule for the benefit of the indigenous population instead of wasting our money on stupid green subsidies, overseas aid and the EUSSR, they wouldn’t need to worry if we knew where they lived.
    Anyway what makes you all so special.

    • Posted October 18, 2012 at 10:12 am | Permalink

      Indeed everyone knows, or can find out, where they live anyway if they wanted to.

    • Jerry
      Posted October 18, 2012 at 11:09 am | Permalink

      @ian wragg: “Anyway what makes you [MP’s] all so special.

      Ask someone like Airey Neave, oh hang on….

      • APL
        Posted October 18, 2012 at 3:44 pm | Permalink

        Jerry: “Ask someone like Airey Neave, oh hang on….”

        Well, we really have had to scrape the bottom of the barrel.

        Since Airey Neave was murdered in the precincts of the Palace of Westminster.

        By your logic, I suppose the government should forbid publication of the address of the House of Commons.

        • Jerry
          Posted October 18, 2012 at 4:21 pm | Permalink

          Well yes, in hindsight perhaps I should have also mentioned the 1971 attack on the home of Employment Secretary Robert Carr, or the 1974 (failed) attack on home/car of Denis Howell -his wife would have been killed, but even so how do you think the people who killed Airey Neave probably knew what registration his car had [1]. Your comment “APL” is what scraped the barrel, well I say comment but it was more like an ill-informed rant of little facts but high on rhetoric. 🙁

          [1] were the attack was carried out merely made sure that, unlike in 1974, the terrorist would get their target and not someone else

          • APL
            Posted October 18, 2012 at 5:06 pm | Permalink

            Jerry: “but even so how do you think the people who killed Airey Neave probably knew what registration his car had [1].”

            Who knows? Perhaps they had an insider at dvlc. We all know how careful the government is with our private personal details.

            Jerry: “but it was more like an ill-informed rant of little facts but high on rhetoric.”

            Oh dear!

            Fact: Airey Neave wasn’t murdered at his home.

            Do you think we should hide the addresses of an MPs constituency
            office too?

          • Posted October 18, 2012 at 9:33 pm | Permalink

            Or the demonstrators outside Nick Clegg’s home recently? If HIS address isn’t withheld, what hope for the residents at Number 10 [redacted] St, or Buckingham [redacted]?

            Real targets have security – and it’s clear those who really want to can already find MP’s homes already; it doesn’t seem unduly cynical to suspect this is an excuse for hiding expenses yet again.

            Of course, if they want it private they could always pay the rent out of private taxed income like the rest of us…

        • zorro
          Posted October 18, 2012 at 4:26 pm | Permalink

          Exactly, Airey Neave was supposedly killed by the INLA when he drove out of the Housef Commons. Apparently, the INLA are supposed to have entered the HoC precincts and attached a magnetic bomb with a ball bearing tilt switch to his car….Enoch Powell thought otherwise.

          zorro

          Reply: The authorities thought the bomb was placed at his home

          • zorro
            Posted October 18, 2012 at 5:05 pm | Permalink

            It is correct that the authorities thought that this was the case at the time. This goes to show that if they want to kill you they can find out where you live….However, the INLA statement in ‘The Starry Plough’ said the following….

            “…..Airey Neave, got a taste of his own medicine when an INLA unit pulled off the operation of the decade and blew him to bits inside the ‘impregnable’ Palace of Westminster…..”. Why would they say that if they had planted the bomb when the car was outside his house?

            I am not casting aspersions but there was a lot going on then…..

            zorro

            zorro

          • APL
            Posted October 18, 2012 at 5:07 pm | Permalink

            JR: “The authorities thought the bomb was placed at his home”

            The tilt switch couldn’t have worked very well on the way to the House of Commons then?

            Reply: I expressed the authorities view and did not myself comment on its wisdom. Following the bomb security was intensified on vehicles coming into the Commons.

          • Jerry
            Posted October 19, 2012 at 7:32 am | Permalink

            @APL: Stop showing your utter ignorance all the time, tilt switched are orientation critical, they can also be degrees of tilt critical.

          • APL
            Posted October 19, 2012 at 7:43 am | Permalink

            zorro: “Why would they say that if they had planted the bomb when the car was outside his house?”

            Agreed. By the way, in those days the HOC wasn’t the fortress it is today.

            So we have a tilt switch that doesn’t respond to ‘motion’ on the drive to the House of Commons, then we have a Statement by the ILNA, (May they and their affiliates and sympathizers in the Northern Ireland assembly rot in hell ) saying the bomb was deliberately detonated at the House of Commons.

            Jerry: “1971 attack on the home of Employment Secretary Robert Carr, or the 1974 (failed) attack on home/car of Denis Howell -his wife would have been killed”

            Both were terrorist organized operations, and nothing to do with the general public. The incident I cited of the attack on
            Stephen Timms by Roshonara Choudhary, was far more apposite to the discussion at hand, since it was an attack by a member of the public which was conducted at the constituency office, not his home address.

            The fact is, being an MP in a democracy means you have to be prepared to deal with members of the public, some of them are mean, some of them are bad, and a few are desperate, one or two are plain mad. Being attacked is a risk of the job*, if an MP doesn’t like the risk, he or she should get another job.

            *Those odds seem pretty good at the moment, therefor MPs don’t need any additional security measures: QED, the idea to hide their home addresses is simply a feint to disguise their nefarious expense claims.

            Reply: I do not believe that was the Speaker’s intention, and it clearly has not hidden the issue in today’s papers!

          • APL
            Posted October 19, 2012 at 8:17 am | Permalink

            Jerry: “tilt switched are orientation critical,”

            Of course they are … except this was described as a ‘ball bearing tilt switch’, we are not talking about anything sophisticated here!

            He drove all the way to the House of Commons, accelerating and decelerating, braking as you would in the normal course of driving, then down the ramp into the parking area, yet the ball bearing in the tilt switch didn’t roll onto the contact.

            It’s far more likely the thing was put in place at the Palace of Westminster and detonated on the way up the ramp. In those days the PoW wasn’t the fortress it is today, so that would have been the simplest and easily the most feasible explanation.

            None of the security agencies would like to admit that a terrorist was able to walk into the Houses of Parliament, plant a bomb and walk away unchallenged.

          • Jerry
            Posted October 19, 2012 at 9:36 am | Permalink

            @last reply by JR: Indeed Mr Redwood, there are ways of dealing with this that doesn’t involve putting MP’s and their families at any greater risk, even public servants deserve their privacy -what ever the hyaenas think.

          • Jerry
            Posted October 19, 2012 at 7:37 pm | Permalink

            @APL: Many tilt switches are not much more than a “Ball Bearing” type of device, the most basic were the Mercury switches, it would be other elements within the switch -quite probably destroyed in the case in question- that would have governed the behaviour of the switch (such as inertia and tilt angle etc).

            But it is your last comment that really gets to the nub of the issue under discussion, times have indeed moved on since 1980, indeed they have moved on since 2001, which actually make home addresses more of a target! 🙁

        • Mark W
          Posted October 18, 2012 at 7:19 pm | Permalink

          Scrape the bottom of the barrel?

          Hmmm, I not sure that is an accurate discription of highlighting a relevant factual event to illustrate a point.

          • APL
            Posted October 19, 2012 at 8:02 am | Permalink

            Mark W: “I not sure that is an accurate discription of highlighting a relevant factual event to illustrate a point.”

            1. It was a terrorist instigated murder. A fairly infrequent event.
            2. This murder was carried out at a completely other location to the victims home address.

            (Yes, yes, the bomb was supposedly attached to the vehicle at his home address, but the motion sensor didn’t activate on the drive to the House of Commons nor while Neave was at the House of Commons for how long??? So it wasn’t a timed device, but suddenly did kick in on the ramp out of the HOC underground parking.)

            So, citing this murder in the context of the supposed threat to MPs at their home address was irrelevant, the murder didn’t take place at his home address, being a terrorist murder it could hardly be described as having been conducted by your average member of the public.

  4. Pete the Bike
    Posted October 18, 2012 at 6:56 am | Permalink

    So what happened to “conservative” thinking then? Dave and his cronies are absolutely indistinguishable from Labour.
    Tax, borrow, spend, regulate, interfere and support the EU. This country is a mirror of the USA where the two party system is entirely a myth to make voters believe they have a choice.
    Here Dave, Nick and Ed are all elitist, public school types that believe in big government and Keynesian economics. Not one of them has ever had a real job or lived in the world that I do. The real world where if you spend too much and borrow to cover it you will eventually be bankrupt. The real world where small business is made extremely difficult due to tax and regulation.
    Now we have another round of spending money we haven’t got and pledging even more. What will it take for these fools to see what they’re doing?

    • Lord Blagger
      Posted October 18, 2012 at 8:44 am | Permalink

      The question is what do about it as an individual.

      1. Save. They won’t pay out their debts, so saving protects yourself from destitution.

      Ideally save where they can’t steal it.

      2. The more difficult part. How to save where people like John can’t steal it for the public good. It’s quite simple. Even John will resort to it, when they can’t pay the pensions/welfare and 80 year olds are on the street.

      It will work like this.

      1. Property tax (a small about, but you have to borrow it. Year after year it adds up and they end up with all your assets. The lib dem plan)

      2. Pensions. Take the lot, and replace it with a ‘promise to pay’ [Fingers crossed behind your back so you have a get out]

      It’s happened in Hungary, so its legal in the EU.

      The redistribute, then renege on the pay out.

      All for the public good.

    • Jerry
      Posted October 18, 2012 at 11:20 am | Permalink

      So what happened to “conservative” thinking then? Dave and his cronies are absolutely indistinguishable from Labour.

      That might have something to do with being part of a coalition were the other party is (on some issues) far more to the left or pro-EU than Labour are, unfortunately I’m now starting to think that we will never know how “conservative” the Tories might be under the leadership of Mr Cameron if the supporters of UKIP get their wish (and thus allow a Labour lead majority) in 2015…

      • scottspeig
        Posted October 18, 2012 at 12:06 pm | Permalink

        Cameron made his bed and must lie in it. There were plenty of people saying a coalition was bad – he didn’t listen to the right people.

        It wouldn’t be too bad if he looked uncomfortable with the lib-dems. But he looks rather happy to be in bed with them. Shame really, as some Conservatives are actually conservative. How they follow Cameron is beyond me. Talks good but is lousy with follow through and tends to be easily led astray from conservative principles. AKA: A poor leader.

        • Jerry
          Posted October 18, 2012 at 2:53 pm | Permalink

          @scottspeig: Cameron made the bed the only way possible, it was that or sleeping on the hard rock of election defeat (with political scorpions all around) – and what implications would that have had for the country and markets. How long would have a minority government lasted, to secure even short term survival the same sort of deals would have had to be made (without the security of a formal coalition agreement…) with the LibDems, I suspect that we would have been back to the ballot box within twelve months, probably within six.

          Cameron has a reason to look happy, he is in government, obviously some on this blog would prefer that he and our host were in opposition (or worse, the markets to have crashed through the floor on the Monday after the election)…

          • zorro
            Posted October 18, 2012 at 4:28 pm | Permalink

            He might have won a majority six to twelve months down the line…..

            zorro

          • Jerry
            Posted October 18, 2012 at 8:33 pm | Permalink

            Yes Zorro, but he might not, by then the electors would be voting on the Tory record, not Labour’s…

            Had there not been a coalition then it might have been better to have formed a National Government for a fixed period, at least that way voters would have to vote on the issues and not on a short record (which would have almost certainly have been all ‘hurt’).

          • David Price
            Posted October 19, 2012 at 6:21 am | Permalink

            The choice for coalition may have been driven by the need of the country for drastic repair of the economy but that hasn’t really happened has it? Instead, the administration has demonstrated a complete lack of leadership, resolve and basic experience in key areas. There appears to be no sense of priorites whatsoever and practical loyalty to the country is minimal.

            I admit to great disappointment in this team and their handling of our affairs, I am struggling to decide what to do about it as an individual – before the ineviable “UKIP is the answer to everything” quip is made that not an automatic option for me.

            My disappointment with the administration however, is nothing compared to the utter contempt and disgust I have for Labour who purposely destroyed our economy and our freedoms of action when they saw their game was up. However, a desire to see that party kept out of government for generations does not solve our problems.

            You say the coalition was necessary yet the subsequent actions of those people negates that view, they have not dealt with the real problems faced by the country rather they have been focused inwards on the needs and desires of politicians.

      • Mark W
        Posted October 18, 2012 at 1:15 pm | Permalink

        Jerry,

        Mr Cameron reneged on his “Cast Iron” guarantee before the coaltion was in place.

        I regret that the actions of myself and others like minded, voting for the hopeless UKIP, will put Labour back in power. But the move to the left of the Tory party is not going to be reversed by winning a majority in 2015. Cameron would crow that it is the move to the centre “wot won it”.

        If UKIP win about 5,000,000 or more votes it will send a message. It’ll be ignored, but I’ll be content with it.

        Our friend Bazman on a previous thread suggests that a referendum might dissappoint people like me. Indeed I think he may be correct, but not for the reasons he states. The media, main parties and some big business will slaughter the “Out” campaign. I dare say the BBC will show rolling coverage of idiots like Nick Griffen putting his grubby party in the “out” camp. UKIP may be a shambles but they are clean, and a decent receptical for people like me who wish the Tories would be conservative. They are a usefull stick to beat the Tories with. The Tories must surely be fearful of the seats they’ll lose due to the UKIP vote splitting the right. (See Coventry SE in 1992 when the Tories took a Labour stronghold when David Nellist stood against his own party).

        • Jerry
          Posted October 18, 2012 at 3:05 pm | Permalink

          @MarkW: I’m not going to comment on regurgitated rants against anyone and everyone who doesn’t use “UKIP speak”, that said your lie about Mr Cameron can’t go unchallenged, his “Cast Iron guarantee” was bloody pointless after the Lisbon treaty was ratified, what utter point would there have been in having a referendum asking if to ratify a treaty when the treaty in question has already been ratified, it wasn’t so much that he reneged on something but the fact that time and history had moved on. Stop the world I want to get off!…

          • lifelogic
            Posted October 18, 2012 at 4:44 pm | Permalink

            Clearly he reneged on the agreement. He should have made it clear that he did not accept the ratification and would withdraw from the treaty should the people not agree it in a referendum post the election.

            It was blatant electoral deception by him, even though he did renege before the vote. Had he not done so we probably he would not have had the Libdems strangling all these sensible policies now.

          • Mark W
            Posted October 18, 2012 at 7:54 pm | Permalink

            Steady on, “lie” is a little strong. I believe, although as I can’t say where, when or by whom, it has to remain open to challenge, that Cameron was challenged in an interview about what he’d do if it was, as was likely, already ratified. He evaded answering.

            So, as ratification was highly likely, why did he make such a big deal out of his cast iron guarantee. Disingenuous at best. I’m very sorry that you cling to the ideal that the Tory party will be like Mr Redwood. (Correct me if that is an error on my part), but Cameron set himself up as heir to Blair. The Tory high command has shifted too far left. There are many people in this country with no main party that reflects their instincts. Why should we act as a life support to a Tory party that has certainly given up on us?

          • JimF
            Posted October 18, 2012 at 8:45 pm | Permalink

            No mention of Mr Clegg’s promise to let the people decide in the only realistic way – an In Out referendum?
            But of course, he has so little influence over Mr Cameron who of course only promised a Lisbon referendum, so neither could possibly happen, could it?
            I think that’s the true meaning of a referendum lock (out)

          • Jerry
            Posted October 19, 2012 at 9:45 am | Permalink

            @MarkW: If your point is that Mr Cameron made the wrong pledge then many will agree!… But to suggest that Mr Cameron reneged on his pledge is wrong, and people repeating it doesn’t make it any more correct, there was nothing to renege on once the Lisbon Treaty was ratified.

          • lifelogic
            Posted October 20, 2012 at 1:00 pm | Permalink

            Cameron said in the Sun:- Today, I will give this cast-iron guarantee: If I become PM a Conservative government will hold a referendum on any EU “treaty that emerges” from these negotiations.

            It is thus a very, very, very clear renege on a cast iron guarantee given to the people – it was, admittedly, done in advance of the election but a clear renege it was. Probably one of the main reasons he lost the election. Together with giving equal billing to Clegg and his silly fake green, socialist, hug a hoody or husky agenda.

  5. Richard1
    Posted October 18, 2012 at 6:57 am | Permalink

    This is dangerous stuff. Anyone who gets a guaranteee or indemnity doesnt have to consider the real costs and benefits of a project. Its a recipe for bad investment – ie investment which would not have been made but for the guarantee. Just like loans in Greece, Spain etc which would never had been made but for artificial Eurozone interest rates. Also, the fact that something is a guarantee not a straight loan doesnt stop it being a liability – its more debt for the future just the same, even if the Govt doesnt recognise it as such. I assume this is the influence of Cable & Co. I hope Conservative ministers at least understand all this (or do they?)

    • Leslie Singleton
      Posted October 18, 2012 at 10:17 am | Permalink

      I note the terms guarantee and indemnity being used interchangeably. Wouldn’t surprise me if the government didn’t know the difference. Why should the government take primary liability (as with an indemnity) on such a wide range of activity?

  6. Acorn
    Posted October 18, 2012 at 7:15 am | Permalink

    It’s “fiscal stimulus” Jim, but not as we know it. How much deficit spending increase will actually be incurred, is not clear. Perhaps only some of it will be insurance policies or CDS (credit default swaps).

    This government is starting to look like a bunch of headless chickens. There are “shoot from the lip” initiatives, (excellent R5 phrase this morning); popping up like moles in the lawn. The problem with a PM who loses his cool with the oppositions chief wo***er; (you can easily understand why he would), is you can accidentally change your energy policy in ways that surprise and embarrass your apparatchics.

    So with my energy company mandated to offer me the lowest tariff, what price my shares in those energy switching web sites? Electricity and natural gas, only come in one size and colour; the material it is made of is very tightly specified in industry standards, regardless of what sort of machine makes it. Hence you have to find lots of complex and confusing ways of selling it to the mug punters, to make super-normal profits.

    At the rate we are going, we will be getting back to near nationalisation conditions, with a single universal tariff, set by OFGEM overnight. Just like the banks do with LIBOR …….. stop laughing you lot.

    Politicians; forgive them Lord for they know not what they do. OFGEM; I wonder what they do all day?

    • Acorn
      Posted October 18, 2012 at 9:33 am | Permalink

      JR, please can I impose on you this link; the first two lecture videos from the “Modern Money and Public Purpose”; click “Materials” then “Archives” then seminar 1 through 2. Most of the facts are not disputed but they do explain how it is not possible for a sovereign currency government to run out of money; and, government debt and deficit are the phantom menace to frighten the plebs into submission.
      http://www.modernmoneyandpublicpurpose.com/seminar-1.html .

      • zorro
        Posted October 18, 2012 at 4:34 pm | Permalink

        Particularly, if the government issues the currency debt free. This is what was happening in the American colonies in the mid 18th century…..

        zorro

  7. Brian Tomkinson
    Posted October 18, 2012 at 7:52 am | Permalink

    JR: ” They did not examine most of the operational detail of the proposals. Time was very limited”
    How revealing. More evidence of just how useless MPs are. Authorise £50billion of spending without even finding out how it will be used. Having taken the easy option of cutting capital spending instead of current spending, the policy is now, at least in one aspect, being reversed. Never mind, spending more money we haven’t got is bound to be good isn’t it? Our friendly Governor will always electronically produce more cash anyway and the favourite to succeed him will just write it off anyway. The wonder is that these lemmings didn’t ask for £100billion; surely the sky’s the limit.

    • APL
      Posted October 18, 2012 at 3:51 pm | Permalink

      Brian Tomkinson: “How revealing. More evidence of just how useless MPs are.”

      Yep, we have had nearly three years of this administration, what about reversing some of the Blair procedural innovations of the House of Commons?

      • outsider
        Posted October 18, 2012 at 4:59 pm | Permalink

        As Mr Redwood said in his perceptive and excellent speech, MPs would have been more interested in the Bill if it had been about £500 million than £5 billion. It looks like a classic case of Parkinson’s Law of Committees, namely:
        “The time spent on any item on the agenda will be in inverse proportion to the sum involved”.

        Simon Hughes also made a very telling speech pointing out how government guarantees are used to tke businesses offshore, load them with debt and avoid paying any corporation tax.

        • outsider
          Posted October 18, 2012 at 5:01 pm | Permalink

          Yes , I meant £50 billion but that was a typo, not ignoring the nought. .

  8. Martyn
    Posted October 18, 2012 at 8:22 am | Permalink

    “The nature of the spending no longer has to be just capital works. It can include “acquisition, design, construction, conversion, improvement, operation and repair” – in other words just about any kind of revenue as well as capital spending”. In other words, an open chequebook for all sorts of scams to waste yet more money on any daft green or other project whether or not they represent value for money or actually help the economy. Surely this scheme needs rigid, careful scrutiny by Parliament with common sense foremost in mind before it goes any further?

    Surely, common sense alone indicates that these changes are fraught with the potential to pass our (artificially created) money into the hands of both honest and crooked folk alike? Funding new or improving infrastructure schemes is clearly a good idea; what you describe, John, is equally clearly not a good idea and I would hope that our MPs and Parliament rejects it at an early stage.

    If it goes through I suppose that a new department will be formed to manage the scheme, needing accommodation (expensive), new IT systems and software (expensive consultants employed to advise on each), the creation of a complicated consultation and application scheme (expensive consultants employed to set it up) thereby spending a lot of money before the first application hits their desks. Naturally, the guidelines and checklists to be followed by the team when considering each application will focus on green and strictly politically correct issues rather than by how much granting the money to an applicant will aid the economy or create employment. The question is who was it that so broadened the plan – I doubt that it was a Minister or any MP, so it was presumably some civil service mandarin seeing an opportunity to expand their empire. Is it true, as has been reported, that Ministers can no longer actually control their departments when their own mandarins ignore their instructions, or change a policy on their own volition? Obviously there are exceptions but it does seem that our elected politicians no longer have the authority to direct events as they once had.

    Reply The Bill passed all its Common stages on Monday with the opposition in agreement with it, subject to a couple of cavils over minor matters

  9. Lord Blagger
    Posted October 18, 2012 at 8:40 am | Permalink

    And the insurance contracts will be hidden off the books.

    As they are now.

  10. Posted October 18, 2012 at 8:55 am | Permalink

    Congratulations to JR for asking some searching questions.

    This entire “government guarantee” business is just more Gordon Brown Enron type book cooking. It has ONLY ONE purpose: to hide the full extent of government spending and borrowing. Governments, Tory and Labour, might just as well pay for ALL GOVERNMENT SPENDING out of tax.

    There is actually a paper by a Swiss academic which argues that it does not even make sense for governments to borrow even for investment projects. I.e. they might as well pay for everything out of tax. See:

    http://www.sciencedirect.com/science/article/pii/S0176268006000462

    The latter version of the paper is behind a paywall.

    • zorro
      Posted October 18, 2012 at 4:37 pm | Permalink

      One thing we can be sure about is that it will not be efficient or good value, and private companies will take advantage like they have done on PFI……

      zorro

      • Bazman
        Posted October 18, 2012 at 6:58 pm | Permalink

        If the company is entirely funded by the state with a dubious money trail to backers in the government then why is this a private company? Like many of the private companies trading in Britain and paying little or no tax they are scroungers and parasites on Britain. Not all of them are claiming benifits and are work shy. Ram it.

        • sm
          Posted October 20, 2012 at 11:53 am | Permalink

          Indeed Bazman and it is not just our banking and related industry.

          Unitary taxation? A wide, robust and general anti-avoidance rule?
          And importantly for fair competition, a level playing field.

          Its usually smaller domestic business which are suffering and i understand they are the companies which employ most people.

          Perhaps we need a Fair Tax label as well as a Fair Trade label?

  11. Captain Crunch
    Posted October 18, 2012 at 9:02 am | Permalink

    “The Opposition did not oppose the £50 billion authorised spend, nor the broad thrust of the programme. They did not examine most of the operational detail of the proposals. ”

    Who do you blame for the quality of this legislation? The Coalition Government or Her Majesty’s Opposition?

  12. Nina Andreeva
    Posted October 18, 2012 at 9:32 am | Permalink

    Why do MPs want it to be a secret where they actually live? Perhaps this self imposed separation from the people that they are supposed to represent is one of the reasons why they are held in such a low regard?

    Reply Some MPs wish it to be a secret because they fear they could be the subject of terrorist attack etc.

    • Mark W
      Posted October 18, 2012 at 1:01 pm | Permalink

      MPs are entitled to a private life. They would be prime targets for any nutter banging on their door. Not just terrorists.

      In the age of the internet we are all free to be as rude as we wish to MPs, you can still turn up to a surgery too. On the internet we can abuse behind false or obscured names. But they do deserve freedom to go home at night free of interference.

      That said, this issue needs scrutiny in terms of abuse of expenses.

      • Nina Andreeva
        Posted October 18, 2012 at 1:57 pm | Permalink

        I am with LL on this one. If you really want to find out where someone lives it is not too hard. After all the blueprints for Blair’s house were available for sale from Sedgefield council http://news.bbc.co.uk/1/hi/uk/politics/71175.stm. However any terrorist would probably end up playing a sort of “peanut under the shell” game. As for some strange reason lots of MPs (especially Labour ones who are supposed to be against this sort of thing) have quite large property portfolios. So it would be quite hard to find out which house the target was staying in at anyone point in time

        • Jerry
          Posted October 18, 2012 at 3:22 pm | Permalink

          Nina (and LL), don’t expect others to do as you might not wish to do yourself. Now for dusting off that draft Bill that would force people to either post their true names and addressees when using a UK based Internet provider (including work based access) or do without internet conductivity… All in the name of clarity, tackling internet trolling and anti-terrorism you understand! Not to mention the fact that the ability for the mere Plebs to be removed from phone book listings, electoral registers, or be removed from spam lists (postal, email, phone) etc. could also quietly disappear.

          “MarkW” is correct, as long as this information is scrutinised by independant and outside inspection then I don’t see any reason why people are getting into a tis-was, other than a wish to ‘bash an MP’ once again. 🙁

          • APL
            Posted October 18, 2012 at 5:14 pm | Permalink

            Jerry: “force people to either post their true names and addressees when using a UK based Internet provider (including work based access) or do without internet conductivity ..”

            Almost no one who uses the internet knows how trivially easy it is to locate the individual posting on any given forum regardless of his or her ‘nom de plume’.

          • Jerry
            Posted October 19, 2012 at 7:49 pm | Permalink

            @APL: That would be why you post under a ‘nom de plume’ yourself then, after all if it’s so easy for someone to ‘unmask you’ why do you bother…

        • zorro
          Posted October 18, 2012 at 4:40 pm | Permalink

          Perhaps that’s why MPs like to own quite a few properties so that they can never be tied down……This is ridiculous, if a terrorist organisation wanted to kill an MP they could tail them from the Commons or their surgery.

          zorro

          • Jerry
            Posted October 19, 2012 at 8:01 am | Permalink

            Yes indeed Zorro, but why make it so much easier for such people?

    • nicol sinclair
      Posted October 18, 2012 at 3:17 pm | Permalink

      As I have said above. Give them protection and give us the information as to where they live so that we can see (and understand) what they are claiming and why…

  13. oldtimer
    Posted October 18, 2012 at 10:07 am | Permalink

    Another slippery slope to disaster, by the sound of it. The failure to scrutinise the detail reminds me of Mr Peter Lilley`s criticism of the way the Climate Change Act was approved with total disregard of the financial consequences. And they were available to MPs at the time. I suppose the present lot content themselves with the thought that £50 billion only counts as small change these days.

  14. waramess
    Posted October 18, 2012 at 10:21 am | Permalink

    I hope JR maks a point of reading through these truly excellent comments. They would seem to sum up the mood towards this administration nicely

  15. Neil Craig
    Posted October 18, 2012 at 10:30 am | Permalink

    The elephant in the room is that infr5astructure projects in Britain cost at least 8 times what they shoudl pthe new Forth Bridge at £2.3 bn when the previous one cost £19.5m = £320m in today’s money; Crossrail’s 110 km of tunnels at £34bn when the Norwegians are cutting tunnels at £4m per km; the Dome costing £46 million to actually build but £675 million whne the paperwork was done; new nuclear plants at £5bn when the Westinghouse AP1000 is on sale internationally at £800m].

    Nobody is willing to give any explanation for this. The closest I have got, through an FoI is that “government projects have increased 4% more than the RPI” for over 50 years (which does indeed compund to 8 fold growth) & that the only explanation for this the civil service have is that “oil prices went up 10 years ago”.

    Massive fraud would be one explanation. Massive bureaucratic parasitism too. Clearly the oil price rise, applying for only a few years and also applying to the RPI cannot be a remotely truthful answer.

    We are told that we are going to need £500 infrastructure spending over the next 8 years. If the government ended this parasitism andallowed costs to fall to what they should be & are in much of the rest of the world that would be no more than £63bn.

    I don’t think there would be any need for government guarantees in that case. The free market would provide all the new infrastructure needed or even wanted.

    • APL
      Posted October 18, 2012 at 3:55 pm | Permalink

      Neil Craig: “Massive fraud would be one explanation. Massive bureaucratic parasitism too.”

      Bingo!

      • Posted October 18, 2012 at 4:21 pm | Permalink

        Coincidentally I just ran across this saying that corruption in China costs 3-4% of GDP
        http://nextbigfuture.com/2012/10/china-completes-more-high-speed-rail.html

        “Middlemen expected cuts of between one and six per cent. “If a project is four and a half billion, the middleman is taking home two hundred million,” Wang said. “And, of course, nobody says a word.”

        We should be so lucky. In Britain it would cost £40 billion (like HS2) and of course nobody says a word.

        Puting HS2 in a doubled Norwegian tunnel (700 km x 2 at £4 million) the entire way would make it cost £11.5bn.

        • Neil Craig
          Posted October 18, 2012 at 4:23 pm | Permalink

          Sorry that should have been £5.75 billion.

        • uanime5
          Posted October 18, 2012 at 6:01 pm | Permalink

          Well the Chinese could instantly reduce corruption to 0% if the middlemen referred to their cut as a referral fee or included it as part of their overhead costs.

          Also just because the Norwegians can cut a tunnel for one price doesn’t mean that those in the UK can do it for the same price. The hardness of rock you’re trying to cut and the terrain (how easy is it to get large machinery to the rocks) have a major impact on the cost of such projects.

          • APL
            Posted October 19, 2012 at 8:31 am | Permalink

            uanime5: “Well the Chinese could instantly reduce corruption to 0% .. ”

            Actually, the Chinese government, being a totalitarian government which permits no scrutiny of its activities is probably one of the most corrupt in the World.

            As we watch its economy disintegrate over the next few years, we will have an object lesson in why a command economy, in the modern parlance, is not sustainable.

          • Posted October 19, 2012 at 9:54 am | Permalink

            No0rway is quite a large country & asonishingly enough has quite a lot of different types of rock – Britain too. Also rather more of Norway is isolated anmd thus allegedly more difficult to get machinery too.

            Thus if Unmimeg is accidentally making a point it is that tunnels in Britain should be marginally cheaper than those in Norway.

          • uanime5
            Posted October 19, 2012 at 7:51 pm | Permalink

            @Neil Craig

            Just because Norway is large and has a variety of different rocks doesn’t mean that a tunnel cut in one part of Norway should cost the same as a different tunnel cut in the UK. Your inability to understand why different tunnels cut in different countries, in different circumstances, and of different length would cost a different amount of money don’t mean that there’s large scale fraud in the UK.

    • uanime5
      Posted October 18, 2012 at 5:58 pm | Permalink

      If you want to know why the costs keep increasing you should examine the what happens during construction.

      Firstly any construction company can get an extension of time if the project is delayed for various reasons; such as prolonged heavy rain or the ground containing rocks that are harder to dig through than anticipated. So the longer it takes the more it will cost.

      Secondly if there’s any variation from the original design then the contractor will charge extra for any new materials and the additional time. For example if you hire someone to build a 4 story building then decide you want it to be 5 stories expect the project to cost more (time, materials, architects remaking the plans).

      Thirdly if inflation means that it costs the contractor more money to build something then the additional cost gets passed on and the total cost of the project increases. This happens a lot on contracts that are over a long period of time.

      In conclusion it’s very rare for major projects to be completed on time or budget in both the private and public sectors because some many things can go wrong. This isn’t due to fraud but the normal risk when engaging in these projects.

      • Posted October 19, 2012 at 9:57 am | Permalink

        But not rare in so many other countries – where rocks, bad weather and inflation are presumably unknown.

        • uanime5
          Posted October 19, 2012 at 7:47 pm | Permalink

          Care to name any country where all construction projects are on time and not over budget.

          • Neil Craig
            Posted October 20, 2012 at 10:28 am | Permalink

            If you mean under the budget set by that country you are obviously disingenously comparing different things.

            If you mean can I name any country which routinely brings in projects faster and under the budget we would set then you know perfectly well that I have already done so & are thus being disingenuous.

            Your claim that by comparing the cost per km of Norwegian tunnels with the cost per km of British ones (up to hundreds of times more expensive) I am comparing different lengths means one of 2 things. Either you have firm evidence that a km is far longer in Norway or you are not merely wholly and completely dishonest but are happy to make it obvious. Which is it?

      • Mark W
        Posted October 19, 2012 at 10:02 am | Permalink

        This is all perfectly normal and reasonable.

        For example on long projects technology developes and then it is quite rational to have these developements included. Ethernet is one off the top of my head that I didn’t include in a plan, but had it in the end. A few years later would have opted for wireless but hey ho.

  16. M.A.N
    Posted October 18, 2012 at 10:53 am | Permalink

    They don’t actually know or care, the whole government is paralysed, the old school mandarins in Whitehall who checked everything have probably retired, so it’s just endless streams of money mostly borrowed trying to find a home. How benign the late 80’s to early 90’s seems now. It all just sort of well, worked?

  17. Lindsay McDougall
    Posted October 18, 2012 at 11:08 am | Permalink

    It is clear that the original purpose has been undermined. It is important to find out by whom – by Ministers or the Civil Service. If it’s the latter, then Labour Party supporters have probably had something to do with it.

  18. sm
    Posted October 18, 2012 at 12:12 pm | Permalink

    And you realize that with a little will and just some of the QE money, simplification could have been achieved.

    So i guess we must move to full reserve banking (to control the ponzi scheme that is the privatized money supply) and ensure we have some proper checks and safeguards on all this spending to ensure its actually productive,useful and efficient.

    I think its now dawned on them they need to bypass the banks, unfortunately giving money to the public to paydown debt (per steve keen) is not deemed worthy.

    Why not? Who else needs it more?

    With some of that we could
    1) Cancel National Insurance.
    2) Increase tax free allowances
    3) Reform means tested benefits, with a view to restoring some benefit subject to an overall cap on ‘actual’ or realistic income assessments.
    4) A negative income tax or citizens income with a flat tax.

    5) Build 10-20 nuclear powerstations or even renewables, they are at least productive if not currently the most cost efficient at present.

    We will certainly pay for all of this in terms of purchasing power, especially if it is squandered to hide and save and pay for prior bad decisions.

    Perhaps we should have a bill to outlaw all indexing of government salaries above 1.5 times the benefit cap!

  19. Mark W
    Posted October 18, 2012 at 12:54 pm | Permalink

    I’m sorry to go off topic, but I’d rather hoped you’d pick up the issue of expenses and the “MPs renting to each other” scandal that looks likely to break.

    Firstly, I’m not inclined to believe that MPs should do the job for an orange and piece of string. I think they are not paid enough for the job they do.

    Why do expenses annoy me so much then?

    MPs set tax rates by accepting the budget. If the MPs find living a little tight then maybe they should consider others that earn around £65,000 a year too. Many on £65,000 a year don’t have the option of having a back door increase of cash in their pockets by pulling a rental stunt. MPs should consider this.

    The loop hole should be closed and they should raise the 40% threshold up to about £70,000 and let the extra cash in their pockets be enjoyed by others on similar incomes.

    Reply: I do not rent a flat myself. I have no knowledge of one MP renting from another. Parliament appointed an independent body (IPSA) to set the rules and enforce them, so I expect they will tell us one day if there is something wrong. It is not my job to provide a running commentary on what IPSA do, and I do not have the information to do so.

    • Mark W
      Posted October 18, 2012 at 1:35 pm | Permalink

      Fair enough. Whether this is journalistic mischief or genuine will hopefully be made public. If it is true, I just hope the tax angle gets played.

      The Jimmi Carr fiasco was a missed opportunity, and he got away with a position he should have defended himself in or apologised properly for by returning the tax. He did neither and the lazy press skulked away.

    • Captain Crunch
      Posted October 18, 2012 at 2:03 pm | Permalink

      Why does it matter if they are renting from each other? So long as they are paying a reasonable market rate (or less!) so that the taxpayer is not being conned.

      • Mark W
        Posted October 18, 2012 at 3:40 pm | Permalink

        I rent you my house and claim. You rent me your house and claim. Little bit naughty. This seems to be the thrust of the story coming out.

        • Jerry
          Posted October 18, 2012 at 4:37 pm | Permalink

          I wonder how many buy-to-let landlords are letting their properties to a relatives on housing benefit, or has that (legitimate) “round-robin” been stopped, if not then I suspect that there may well be a few such landlords wishing for the boat not to be rocked to hard…

      • Leslie Singleton
        Posted October 18, 2012 at 4:23 pm | Permalink

        If I rent to you and you rent to me does that increase (an economist’s) GDP? That is how it works at any rate, best I understand (which is not much), if I, say, cut your hair and in consideration you cut mine. What about if I cut my own hair? Perhaps this is meaningful in a way slightly beyond me especially given the uber importance given to GDP, but do we not need some sort of consolidated GDP, maybe in addition, vis- a- vis the rest of the world? Just asking.

        • JimF
          Posted October 18, 2012 at 8:58 pm | Permalink

          Is the hairdresser/barber who cuts their own hair due to pay tax on the displaced income? At which point it would add to GDP I guess.

      • lifelogic
        Posted October 18, 2012 at 4:51 pm | Permalink

        Well they probably will be paying the highest rent allowed on expenses won’t they – if it is going to a friend or is a reciprocal agreement.

    • Alan Wheatley
      Posted October 19, 2012 at 8:50 am | Permalink

      All that is needed is for MPs to be treated the same as everyone else as regards expenses, allowances and taxation.

      I continue to be amazed at how inept MPs (as a group) are at arguing their own case!

  20. Robert K
    Posted October 18, 2012 at 1:53 pm | Permalink

    This “spending on investment” malarky is just another way for the state to make it easy to carry on spending on the never-never, which is so much easier than taking tough decisions on making real cutbacks. When are the grown-ups going to take control?

  21. BobE
    Posted October 18, 2012 at 4:23 pm | Permalink

    I rent you my house and claim. You rent me your house and claim. We can now use the rent money to repay our mortgages. (The repayment of mortgages is not allowed by using claimed expenses). So the rent fiddle circumvents that rule.
    BobE

    • lifelogic
      Posted October 18, 2012 at 4:51 pm | Permalink

      Indeed it does.

  22. forthurst
    Posted October 18, 2012 at 5:02 pm | Permalink

    “I look forward to finding out what the government does intend.”

    It sounds a bit PFIish. On the other hand, perhaps it is simply an acknowlegement that without guarantees, businesses cannot borrow from the banks at rates which would offer any payback.

  23. outsider
    Posted October 18, 2012 at 5:17 pm | Permalink

    Dear Mr Redwood,

    The more one looks at this Bill the more potentially disastrous it looks for taxpayers.

    Just imagine what would have happened if this had been used to build the Channel Tunnel. Thanks to the taxpayer indemnity, there would have been no need to raise so much risk capital from the public. The project would quickly have failed, possibly even before its delayed completion. The incentive for the banks would be to foreclose as soon as the loans became non-performing or covenants were breached. That would have left the taxpayer fully exposed without having any right to the assets. So what would have happened? The Government would judge that it was better to shore it up with more taxpayer grants and subsidies than to lose everything.

    Almost by definition, the projects applying for this indemnity will be marginal. There is a strong incentive in a marginal project for construction companies to form special purpose consortium companies with a thin capitalisation, which the banks will not mind and which, as the Virgin Trains fiasco has just shown, is not fully understood in Whitehall.

    If projects succeed, the taxpayer gets nothing. If they fail, the taxpayer foots almost the entire bill. This is PFI gone mad.

    And, if the Major and Brown governments are anything to go by, the Treasury will sign off a raft of the more financially dubious projects just before the general election, either to entrench some political policy, such as free schools, or to provide barrels of pork in marginal seats.

    This smells.

  24. Jon
    Posted October 18, 2012 at 5:58 pm | Permalink

    Good point to raise, dare say no other MP raised it. It may be for good reasons but needs clarifying. No doubt none of Labour bothered to read what they were voting on.

  25. uanime5
    Posted October 18, 2012 at 6:04 pm | Permalink

    I suspect the definition was widened because someone is going to cut the budget for Government spending on public sector infrastructure, so the Government needs another way to fund these projects.

  26. Mike Stallard
    Posted October 18, 2012 at 8:29 pm | Permalink

    Two years after YEAR ZERO I remember Mr Blair brilliantly offering that our schools’n’trains’n”ospitals would be -like WOW!
    In fact all the money went on building up the bureaucracy and the result was a massive debt created out of a good bank balance.
    But this time……

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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