How do you pay for a £310 billion infrastructure programme?


        The gopvernment has a long wish list of new infrastructure projects. Some of the items on it are necessary and desirable. A few new power stations and some extra road capacity would be most welcome. Some of the dearest ideas, like HS2, are far more contentious. They have keen supporters, but also many strong critics claiming they are a waste of money.

     As I have written before, it is a strange idea that any item of public spending classified as capital spending is now thought of as good. We are told it must be a good idea, because it creates jobs for the building industry, and offers us the prospect of returns in years to come. The trouble is, some of the public sector capital spending does not offer us future dividends but guarantees future public spending to service the debts and pay the running costs of the new facilities. It is not a good idea to agree to everything with the label of capital spending.  We have to consider future affordability.

         My view is the government’s £310 billion wish list is too big, and includes some projects that are not going to produce a sensible future return. Doubtless it will not all the built in a hurry anyway.It also excludes some other projects that could be good value and are needed.

       The government has to ask itself how does it pay for all this? £310 billion is  a large sum of money. Let’s look at it per head. It runs out at £5000 each for every man, woman and child in the UK.

        We could raise this money in tax if the government decided to take over all the projects, or if private finance was difficult to come by.

       We could borrow it for now, and then get people to pay extra taxes or user charges over a period to pay back the debt. This will be dearer than an immediate tax rise, but spread over a longer period. If the investment broke even people would pay around £10,000 extra tax or charges   if it was borrowed for around 25 years. If the investments lose money or require susbisdy then taxpayers will end up paying a lot more.

         The government could print the money and not aim to raise it through borrowing or taxes.

         The government could borrow it but aim to inflate away some of the real cost of repayment.

          None of these options sounds great. The last thing we need to day is higher taxes. Relying on more money printing or inflation is not a good call. Borrowing more when we have too much debt already has been ruled out by government rhetoric.

          So what should be done?More of the necessary investment, like new energy capacity, and broadband, should be financed in the private sector and subject to a market test. That way we are more likely to get investments that add to our total wealth and income in years ahead, instead of cursing taxpayers with more tax and borrowing bills.

         What new infrastructure do you want, and how should we pay for it?

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  1. matthu
    Posted April 30, 2013 at 6:07 am | Permalink

    Can you please put this amount into perspective by placing it alongside all of the other government expenditure and NGO expenditure (current or deferred) whether raised by taxation, PFI arrangements, borrowing, quantitative easing, forced subsidies (such as renewable obligations), unfunded pension obligations etc.?

    Basically if the government wants to increase expenditure by £310 billion it needs to cut expenditure elsewhere just as any responsible family would need to do. Doing it on the sly is simply theft: get real for a change.

    • A different Simon
      Posted April 30, 2013 at 8:05 am | Permalink

      Matthu ,

      Politicians need to understand that they can’t have everything , no matter how desirable , and must learn to choose .

      At this stage I’d just settle for a reduction in the £310 billion to force them to high grade projects .

      I used to be part of a small organisation which used to give some of it’s money to charitable causes each year . They were almost all worthy causes and consequently people wanted to support them all . To avoid chaos we had to defer to the treasurer and ask him what we could afford .

      I notice this same amateur attitude towards money in Westminster .

    • Disaffected
      Posted April 30, 2013 at 9:16 am | Permalink

      Fantastic article by Peter Lilly in the DT about shale gas. Produce shale gas as he urges to restore the fortunes of industry through cheap energy, reduce household bills allowing people to spend on other things.

      Ed Davey needs booting out of office ASAP. Cameron get a grip, if the economy is your number one priority you need to address this issue ASAP. It might even help election chances (possibly too late). The green charlatans should be exposed for what they are preaching in detriment to the national interest (all political colours accept UKIP).

      • Disaffected
        Posted April 30, 2013 at 9:22 am | Permalink

        Other infrastructure projects should include the capture and distribution of water. Water companies bills still soaring several times above inflation, for 10 years, without good reason. The bills need to come down drastically. A growing population needs basic resources- Cameron should have known this before he continued the mass immigration policy on behalf of the Blair/EU to artificially increase the UK population. The same lack of thought equally applies to energy, housing, hospitals, schools.

        • alan jutson
          Posted May 1, 2013 at 5:45 am | Permalink


          I agree we need basic resorces, but the Government (past and present) want to sell these off to private industry, thus we now have the silly situation of the government (taxpayers)subsidising private industry by spending money on improvements, for those very same industries which were supposed to provide such services at no extra cost to the taxpayer (the very reason why they were sold off).

          No joined up thinking !

          • Disaffected
            Posted May 1, 2013 at 5:18 pm | Permalink

            Alan, I agree. I could have added rail. There is no joined up thinking. However, this is the job of the PM and so called party strategists. The idiocy makes me weep.

            Also when you hear the nonsensical argument by the Lib Dems about whether pensioners should get benefits like the TV licence. Most think that none of us should pay a TV licence, it is a tax for a state propaganda unit. There is no justification for it. Let the BBC find its own way in the world or disappear.

      • Mark
        Posted April 30, 2013 at 1:44 pm | Permalink

        The article is worth a link:

        Lilley lifts the lid on the non-announcement of shale gas reserves, telling us that reserves are 250 times as big as the previously announced 5.3Tcf. That is 1,325Tcf, worth over £8 trillion at today’s UK gas prices. We might even be able to afford our pensions.

        Also of note is the resignation of Jonathan Brearley, the civil servant author in DECC of the Climate Change Act, and currently supposedly in charge of the new electricity market reforms that will bring power cuts by computer and massively expensive electricity if they proceed. Mysterious.

        • uanime5
          Posted May 1, 2013 at 2:07 pm | Permalink

          Unless it’s possible to extract any of the extra shale gas it’s effectively worthless. I guess we’ll have to wait for the analysis from the companies that are planing to extract this shale gas.

          Oddly Lilley omitted that fracking involves several chemical which are harmful to people. He also supports Fracknation even though this film claims that the opponents of fracking are actually Russian agents, who are trying to protect Russia’s gas exports. Perhaps he hasn’t seen it.

      • lifelogic
        Posted April 30, 2013 at 2:45 pm | Permalink

        Indeed but I suspect that David Cameron’s next career move is his number one priority. He has done almost nothing to get the economy going indeed quite the reverse.

    • uanime5
      Posted April 30, 2013 at 12:13 pm | Permalink

      Here’s something to put this investment into perspective. Between 2010 and 2011 the Government raised £522.4 billion in tax revenues and borrowed £120 billion.

      Though I suspect that the £310 billion infrastructure investment will be spread over several years. For example if spread over 20 years it would cost an extra £15.5 billion per year.

      • Edward2
        Posted April 30, 2013 at 6:17 pm | Permalink

        Here is something else to “put it into perspective” Uni.
        We are spending £130 billion more each year than we take in tax.
        We are having to borrow this sum every year, whilst a growing proportion of it goes straight out again in ever increasing interest payments..
        Without QE and money printing to the tune of over £370 billion we would be in serious trouble.
        This is adding to a debt mountain which is close to a trillion and growing each year.
        It would be nice to spend massively on capital projects which “save the world Gordon” should have done, when the sun was shining, but now where is the money coming from without cuts from other budgets?
        Its also a problem Labour who are promising massive extra “investment” in the economy if they came to power, will soon have to answer.

  2. Martin
    Posted April 30, 2013 at 6:25 am | Permalink

    I wouldn’t worry too much about paying for things when there is the matter of planning permission. Heathrow third runway as ever comes to mind.

    • lifelogic
      Posted April 30, 2013 at 7:56 am | Permalink

      Get on with 5 runway hub Heathwick, it may be uncomfortable politically, but it is the right project in the right place and it can fund itself. Just get out of the way of it.

      • David ashton
        Posted April 30, 2013 at 10:10 am | Permalink


        Absolutely, the only high speed train we need is between Heathrow and Gatwick

        • Joshaw
          Posted April 30, 2013 at 1:10 pm | Permalink

          It wouldn’t buy votes in the North though, would it?

          • lifelogic
            Posted April 30, 2013 at 2:46 pm | Permalink

            Nor will HS2 or barmy windfarms.

  3. lifelogic
    Posted April 30, 2013 at 6:38 am | Permalink

    So much of what the government call “investment” is just paying people to dig pointless holes and fill them in again. Many other projects are even worse, paying people to actively damage or inconvenience the productive economy. HS2 and the green religion PC and wind subsidies are perhaps the most obviously mad government “investments”. History is littered with state sector project that cost many, many times their real value. The Millennium dome, the Olympics, nearly every government/parliament building, the channel tunnel even, many school building, all the wind turbines and the PV bling on houses, most government summit meetings, indeed most government activity in general, the equality by government decree nonsense, most of what the EU does.

    The solution is to leave the circa £20,000 per household with the households themselves they will find far better and quicker ways to invest it. Ways that produce a real and not a contrived/invented return on capital. Perhaps a more efficient car or heating system, training for a new job, repairing the roof or gutters, a computer, a bit of insulation …..they know best what they need and what will pay. It is unlikely to be a tiny share of a silly train, that gets them (nearly) to Birmingham from London a few minutes faster in 10+ years time. Especially if they live in say Blackpool or Newcastle or will be hugely inconvenience by the years of blight and the long build process.

    • Bazman
      Posted April 30, 2013 at 6:18 pm | Permalink

      LOL! Leave 20 k per household. NMW six quid? Not worth going into it anymore than that.

  4. Mike Stallard
    Posted April 30, 2013 at 6:38 am | Permalink

    We simply have to have electricity. Fracking would be nice too. But the EU and the Greens will not allow either to be done in any sensible form. Which means the industry will have to decamp abroad. Bang goes our income.

    The rest?

    When I was in debt, the trouble was that bills kept coming in! Which ones didn’t we have to pay? Which ones were urgent? Electricity fired up the computer with which I went after jobs. So I made sure that was first on the list.

    • lifelogic
      Posted April 30, 2013 at 7:58 am | Permalink

      The government does not take this route they say which on will give us the most PR bang and political benefit for the money and makes money for our mates too if possible – who cares if it makes any sense?

    • cosmic
      Posted April 30, 2013 at 10:25 am | Permalink

      Not quite the same thing.

      Governments are in the business of bribing the electorate with their own money, and they can’t easily go bust, much less have the bailiffs in to bum them.

      Senior politicians also appear to have their own objectives nothing to do with what we might suppose their objectives are. That seems the only explanation for the fixation with alternative energy and foreign aid both of which are completely inappropriate given the mess the country’s energy supply and finances are in.

      It can’t go on forever, but it can continue for a very long time.

    • Richard1
      Posted April 30, 2013 at 10:34 am | Permalink

      fracking is an example of infrastructure which shouldn’t need a penny of govt subsidy. So much of the best capital investment could be done privately. Getting the govt out of the way is good test as to how worthwhile it is.

    • uanime5
      Posted April 30, 2013 at 12:18 pm | Permalink

      The Government has already allowed fracking and the EU hasn’t objected to this. Though the greens are still against it.

  5. Ben Kelly
    Posted April 30, 2013 at 6:43 am | Permalink

    Worthwhile capital expenditure will provide its own returns. Other capital expenditure will not. A cost/tangible benefit exercise will identify which can pay for themselves and therefore be funded by QE (a much more useful end product than raising banks’ liquidity).

    To truly get the construction industry working, save some real money and head off the looming Housing catastrophe for more popular areas government should compulsarily purchase land from idle developers and convert disused commercial property to build affordable housing for the masses.

    Then invest in training our own population to do the jobs we expect migrants to perform now and save some more money. Of course we could close some tax loopholes too. That will bring in a bit of cash to reduce the amount of QE required to get the ball rolling.

    • Mike Wilson
      Posted April 30, 2013 at 8:11 am | Permalink

      How much training do you need to wash cars and work in a pub?

      There is a disconnect in our society now. Anyone employed doing unskilled or semi-skilled work is being paid peanuts – yet housing costs are astronomical.

      Basically, people on average wages cannot afford to live – to house themselves and buy food and energy. More and more young people are living at home – completely priced out of the housing market … something has to give one of these days.

      • Ben Kelly
        Posted April 30, 2013 at 12:34 pm | Permalink

        Apparently our unemployed need to learn how to budget and pay bills (according to universal credit doctrine) therefore I suspect they need to be trained in the responsibilities that come with being an employee. Otherwise why is immigrant labour so attractive over youngsters?

        Housing costs must reduce. If rents can’t be capped then market forces need to be applied. Increased supply where there is demand will reduce prices which in turn will reduce government expenditure, create jobs in the construction industry and put money into the pockets of renters and new buyers which will be spent in the wider economy.

        Build more houses and employ our own people. It’s not too difficult to see, it’s also what is happening in China and the BRICS, seems to work for them.

        • A different Simon
          Posted May 1, 2013 at 8:30 am | Permalink

          Need to start levying a charge for exclusive use of land .

          If someone has to pay the same annual charge for exclusive rights to an empty lot as an adjacent developed lot they might be encouraged to build on it rather than hoard it and deny someone else the opportunity .

          Similarly only allow British Citizens or long term residents to purchase housing in the bottom two quartiles . Other countries reserve housing for their own citizens .

          It seems Germans try to make money the hard , honest way by making things and Britons are only interested in usury and economic rent collection .

          Is it only vested interests which prevent us having a functional accommodation market like Germany or is there some other reason ?

        • uanime5
          Posted May 1, 2013 at 2:15 pm | Permalink

          Housing costs must reduce. If rents can’t be capped then market forces need to be applied. Increased supply where there is demand will reduce prices which in turn will reduce government expenditure, create jobs in the construction industry and put money into the pockets of renters and new buyers which will be spent in the wider economy.

          Your alternative is little more than wishful thinking. Firstly even if the supply is increased by the same level as demand this will just cause the price of houses to stabilise. You need more houses available at below market prices to reduce the price of houses.

          Secondly if these houses cost market rates then this won’t put any money into the pockets of renter or first time buyers because they’ll be paying the same amount (market rate).

          Only a cap on market rates so they decline in real terms will fix this problem.

          • zorro
            Posted May 1, 2013 at 4:31 pm | Permalink

            Do you actually understand how markets work?……’You need more houses available at below market prices to reduce the price of houses.’…….hmmmm………so you would subsidise house prices below a ‘market’ value…….Why not build some and see what happens? I suspect prices might fall if credit is sensibly managed by the banking institutions.


          • Mark
            Posted May 2, 2013 at 9:17 pm | Permalink

            Historically, one thing has always worked to reduce house prices: positive real interest rates (i.e. higher than inflation). The availability of some cheaper houses doesn’t do that, as the sales of council houses over the last decade (nearly twice as many as under Thatcher) shows.

  6. oldtimer
    Posted April 30, 2013 at 6:46 am | Permalink

    The priority should be given to investment financed by the private sector, free of taxpayer subsidies, that the investors believe is able to earn a return. Investments requiring subsidies should be rejected on put on the back burner. It is time for MPs to experience a period of political cold turkey – say until government spending falls below tax receipts and the national debt starts to come down. That sounds like a five to ten year period of self denial.

    • Mike Wilson
      Posted April 30, 2013 at 8:07 am | Permalink

      That’s great if you don’t mind our energy infrastructure disappearing and using candles to read again.

      No organsation run by SANE people is going to borrow massive amounts of money to build a power station without subsidy or guarantees.

      • cosmic
        Posted April 30, 2013 at 10:27 am | Permalink

        You’d need some reassurance it wasn’t going to be closed down or have expensive modifications forced, on a whim.

      • oldtimer
        Posted April 30, 2013 at 3:15 pm | Permalink

        Gas fired power stations could and would be built with private capital provided the government changed its current energy policy – removing the absurdities that currently shackle it. If it does not change its policy and the attendant regulations and restrictions, then indeed the lights will go out for no one will invest unless they are guaranteed a return. This is a consequence of having to set up the “spinning reserve” as back up to renewable energy; at best windfarms work at c25-28% of their nominal capacity and at worst as low as the 2-8% experienced in recent winters when high pressure dominated the UK for days on end.

        Neither the wind farm nor the spinning reserve capacity exist today in the quantity to replace generating capacity now being taken out of commission. Nor is it ever likely to. Unless the government acts promptly and changes its policy on this issue then we shall all face blackouts in a few years time.

        • A different Simon
          Posted May 1, 2013 at 8:43 am | Permalink

          Our battery of coal and nuclear powerstations must surely store sufficient thermal energy in their boilers to cover the minute or two it takes a gas turbine to spin up from cold .

          Is spinning reserve really a necessity now or will it only become a necessity as more and more coal powerstations are closed down ?

          • 0ldtimer
            Posted May 1, 2013 at 5:17 pm | Permalink

            The spinning reserve is required on standby to cover the unreliability of wind and solar power. Breaks in power supply will and do destroy some industrial electric motors as several German businesses have already discovered to their considerable cost. The reserve capacity needs to be available instantly.

            The spinning reserve will be needed to backup the unreliable renewable energy sources, once older coal and nuclear power stations are decommissioned. At the moment renwables only provide a very small percentage of capacity and actual output. To get unreliable renewable capacity up the government has to offer enormous subsidies to the generators – paid for by us the taxpayer through our energy bills. Then the energy companies have to duplicate that capacity to stop the lights going out. That is extremely inefficient both because it means paying for duplicate capacity but also because the backup gas fired power stations will be running inefficiently on standby. The government, as I understand it, has yet to agree the price to be paid for operating this way.The power generators say that because it is less efficient than normal operation they need extra payment for providing this reserve capacity. So we, the consumers, will be paying over the odds once again for the privilege of being able to keep our fridges working and the lights on. Of course these negotiations may fail over the price (subsidy) to be paid – just as the risk applies to new nuclear capacity. This is what happens when chumps are in charge.

          • Mark
            Posted May 2, 2013 at 9:23 pm | Permalink

            It’s not just the spinning reserve requirement, but the fact that wind may produce almost no power at all, so there is the need for full backup capacity which will spin only some of the time, making it expensive to run. Moreover, frequent thermodynamic cycling from cold to hot will age the components rapidly.

    • Roy Grainger
      Posted April 30, 2013 at 10:39 am | Permalink

      Leaving the process entirely to the private sector is simply impossible in the energy area – no private company would build a new nuclear power plant in UK on a purely commercial basis and the government can’t let the lights go out and the price go up due to scarcity to induce them to build new capacity.. A form of PPI funding is inevitable.

      However, interested to see that JR classes broadband service alongside energy – that strikes me as an area where the private sector can be left to get on with it, having a slightly faster way to download pronography is hardly essential.

      • oldtimer
        Posted April 30, 2013 at 3:21 pm | Permalink

        The private sector will invest in gas fired generation provided it is required to service the base load – but not as a “spinning reserve”. It is unlikely to have the resources to finance both the government`s demand for renewables and the duplicate costs of a gas fired back up capacity on stand by. The government`s position is absurd, obtuse and totally wrong-headed. It needs someone in charge of DECC who actually knows what they are doing.

  7. frank salmon
    Posted April 30, 2013 at 7:23 am | Permalink

    Governments invariably invest in the wrong things and end up distorting markets, and moving resources into second best production and consumption.
    However, you do not have to be clever to note that we have a terrible road network which is unsuitable to the needs of a modern, growing economy. Since the vehicle user is already vastly short changed by current tax and spend policies I would suggest we build more roads and get rid of ALL the tolls. That way, the toll roads we have would be more optimally used by traffic and there would be less jams on motorways like the M6……
    Also, any moron can spot that the £50 billion to be spent on HS2, can be better spent elsewhere.

    • Mark
      Posted May 1, 2013 at 9:55 am | Permalink

      At the moment I go around Birmingham South about – M42/M5 to avoid M6 Toll and the M6 roadworks.

  8. Leslie Singleton
    Posted April 30, 2013 at 7:28 am | Permalink

    The daft word infrastructure sounds trendy and sort of tries to imply that it must go ahead. Call it what it is, viz public works, and it doesn’t sound so sexy or immediately necessary at all. And irrespective of whether some or all of it is or is not good or bad there is the question of timing and, to me, now is very much the wrong time. Very soon, the way things are going, there won’t be a future at all: the immediate priority is clear and spending mega billions is not going to reduce the debt as we so desperately need to do. I’m sure this is very non Keynesian at least I hope so.

    • Mike Wilson
      Posted April 30, 2013 at 8:17 am | Permalink

      ‘Infrastructure’ is not a daft word – it is the backbone of our economy. Every day ships and planes bring or take goods to and from the country. Our roads are filled with lorries hauling goods from one end of the country to the other. We all need gas, electricity and water.

      It does make sense to invest in infrastructure – where would we be now if people had not invested in motorways over the last 50 years?

      People often compare countries to families and say it is daft to take on more debt when you are in debt. But, this is simplistic nonsense – of course. Even as a member of a family – if I find myself out of work as the world changes – it can make a lot of sense to invest in myself by borrowing to fund training so I can earn more money.

      • Leslie Singleton
        Posted April 30, 2013 at 3:55 pm | Permalink

        Mike Wilson–Your comments on debt clearly show that you do not understand that some kinds of debt, within reason as to amount and term (equals repayable, to keep it simple) are indeed wonderful in their effects but by the same token debts that are too big and out of control (which BTW stop you making the other kind as I just described) and so long term, or just continually rolled over, so that the total just keeps on increasing, are a different animal entirely and we should strive not to add to that type right now especially not eg mega billions for a slight reduction in getting to Birmingham of all places and even then only if you 1) can start off from (or sensibly get to) London 2) you are happy to go by train and 3) you happen to want to go to Birmingham.

      • A different Simon
        Posted May 1, 2013 at 8:49 am | Permalink

        Mike ,

        The provision of infrastructure establishes a contract between the generations .

        For pensions to function properly , the generation in work needs to provide the next generation with the tools and infrastructure it needs .

        I would argue that if there are to continue to be tax breaks for pensions then it should be required that a proportion is invested in infrastructure – primarily in the UK .

  9. Nick
    Posted April 30, 2013 at 7:41 am | Permalink

    It’s several years down the line.

    How about publishing the past investment projects, and how much money these investments are generating above the cost of the borrowing to fund them? (Or cuts if they were investments to save money)

    After all that’s what an investment is?

    Somehow I suspect that will go the way of the pension’s debts being on the books.

    • A different Simon
      Posted May 1, 2013 at 8:57 am | Permalink

      Nick ,

      I’ll tell you what ISN’T investment .

      Risk averse fund managers buying shares in established blue chips which are maxed out with no room for growth .

      All it does is drive the price of the shares up and so reduce the price earnings ratio for anyone buying at the higher price .

      My contention is that real “investment” creates something which did not exist before and increases activity in the real economy .

  10. Mick Anderson
    Posted April 30, 2013 at 7:43 am | Permalink

    I suspect that any money could be spent for better return by repairing, upgrading and working with the infrastructure that we already have.

    My local council has been progressively (sic) replacing all of the street lights for lower energy ones, funded by PFI. I objected to the change partly on the basis that I didn’t want any (more) money borrowed in my name, partly because you will never recover the cost of the change in energy saving, and partly because I believe that the new whiter lights are less safe for driving by. It would have been far more cost-effective to simply turn the street lights off between midnight and 06:00, when the few people who out and about in this rural area are all in cars.

    They have also spent time and money putting in a pavement that leads out to open countryside and moving some speed restriction signs 200 yards, while ignoring the broken and pot-holed road surface that are beside the changes.

    I keep hearing politicians claim that “nobody goes into politics to spend less money”. There is an underlying assumption that all Public spending is good, and that is a complete fallacy. Some Public spending is good, but as far as I can tell, too small a proportion is.

    • lifelogic
      Posted April 30, 2013 at 11:35 am | Permalink

      Exactly totally loony priorities especially for new high profile projects while doing nothing about basic maintenance and a stitch in time.

      Particularly popular with the government are investment that can be used grab more taxes off the productive. Residents parking schemes, usually empty bus lanes, hatched junctions with cameras etc. And anything they can say is sustainable or saves energy. Even if it saves £100 of energy at a cost of £10M.

    • alan jutson
      Posted May 1, 2013 at 5:54 am | Permalink



      The simple solutions get no thought, or those who are supposed to think of solutions can only seem to think the more complicated the better.

      A reality check is needed.

  11. Nick
    Posted April 30, 2013 at 7:43 am | Permalink

    The government could borrow it but aim to inflate away some of the real cost of repayment.


    It might, but the problem at the moment is that no one is lending to you.

    Deficit = quantitative easing. There are no lenders.

    If you inflate, you have 222 bn of Inflation linked gilts. You have 5,300 billion of inflation linked pension debts. You have 400 bn of PFI with convertibility into inflation linked bonds.

    To sum it up, you have screwed us.

    • lifelogic
      Posted April 30, 2013 at 8:01 am | Permalink

      Clearly they will default on the inflation linked pensions. A state sector/private secotor pension equalisation tax on state pensions in needed. 80% over £20K PA perhaps?

    • Mike Wilson
      Posted April 30, 2013 at 8:06 am | Permalink

      Or, more precisely, ‘they’ have screwed future generations. They will be paying back OUR debts to provide US with public services we cannot afford for the next 100 years. It is, in fact, a bloody scandal.

      One day the next generation will wake up and realise what we have done.

    • Jerry
      Posted April 30, 2013 at 8:37 am | Permalink

      @Nick: “To sum it up, you [politicains] have screwed us.

      No, we the people screwed our-selves, we all wanted credit, most used credit cards to fund what people should have saved “cash” up for, we all wanted to buy our house rather than rent, own an expensive car rather than a cheaper or SH one etc, yes governments should not have used so much credit but the 2007/8 crash was born in the banks and Main street, not in either Westminster or Capitol Hill.

      • frank salmon
        Posted April 30, 2013 at 10:17 am | Permalink

        Stop beating yourself up. We borrowed because it made sense and buying was still cheaper than renting. The governments of Washington and London did not tell you they were raiding the larder for excessive government borrowing, creating artificial growth rates and ignoring inflationary trends. They were buying votes. That is why they are to blame. The banks were the nice candy men, giving up taxes in return for less regulation and nice sounding Zombie titles.

        • Jerry
          Posted April 30, 2013 at 1:30 pm | Permalink

          @Frank Salmon: I’m, not beating myself up at all, just being honest…

        • Jerry
          Posted May 2, 2013 at 8:44 am | Permalink

          @Frank Salmon: “buying was still cheaper than renting

          Of course people will always pay more if they rent/hire but all this is not about (total) cost, it is about affordability, will the person taking out the loan (mortgage) actually be able to pay it back having been locked into loan that they can’t get out of should the value of their income and/or asset fall in value.

          Another collapsing pyramid has been exposed today, interest only mortgages, great idea if the lender and customer have been brain-washed into believing that there is only an upward direction for house values, but now property values have flat-lined or worse these deals are not looking so good for either side. Another bailout anyone?…

    • margaret brandreth-j
      Posted April 30, 2013 at 7:30 pm | Permalink

      Yes Nick, and how many years have we seen it coming :we knew we were getting nearer to beachy head ,but I will keep saying no to too much spending for capital projects for which there is no return.

  12. David cee
    Posted April 30, 2013 at 7:47 am | Permalink

    John, priority 1. Potholes.
    Thee would be a significant economic benefit if roads were upgraded from their current 3rd world status. Actually that is a little unfair to 3rd world countries in some instances. How about a national programme of renewal? And on the motorways how about proper lighting throughout instead of localised lights at the whim of each council?

    These are the things that can make a difference to the lives of us ordinary folk.

    What do you think about this John?

    • Mike Wilson
      Posted April 30, 2013 at 8:04 am | Permalink

      How would mending a few holes in the road provide an economic benefit? They just make me drive (even) more carefully.

      • lifelogic
        Posted April 30, 2013 at 2:50 pm | Permalink

        Saves fuel going at steady speeds, saves damage to cars/tyres, cheaper to repair early when a small hole rather than wait until they are huge, saves acidents ……….

    • NickW
      Posted April 30, 2013 at 8:12 am | Permalink

      Road and motorway lighting uses huge amounts of expensive electricity.

      We need to do some research to establish the safest and most economical way to light roads and motorways to give the greatest benefit at the lowest cost.

      e.g. LED lighting to delineate the sides of the motorway might safely replace huge overhead lights in many places

      We have low energy bulbs in our homes; is their scope for putting low energy bulbs in our streetlamps?

      • cosmic
        Posted April 30, 2013 at 10:33 am | Permalink

        They mainly use sodium and mercury vapour lamps in street lighting. Very efficient and long lived, even though the colour of the light isn’t pleasant. The cost of changing the bulbs is significant which is another reason why they are used.

        I wouldn’t expect CFLs to have any application in street lighting.

        LEDs are promising and getting better. They have been used in traffic signals for years, however, they are a long way from being useful for street lighting.

        • lifelogic
          Posted April 30, 2013 at 2:54 pm | Permalink

          The are usually low energy. Often the orange low pressure sodium lamps, very efficient but rather an unpleasant light.

      • Mark
        Posted April 30, 2013 at 10:33 am | Permalink

        I looked at LED streetlighting when I researched the programme of street light replacement currently going on in Surrey. It is funded by a £148.4m PFI credits grant from dotty DoT, and will replace every streetlight in the county, regardless of age. The PFI grant covers all of the costs associated with the equipment (the columns and lights) and its installation (the ground works, connection of the new lights to the electricity mains, removal of the old columns, re-instating the pavements etc). The investment locks in one particular technology, which because of the lead times involved in such a project ignored the rapid pace of development in LED. The lights they use actually have a lower illumination per watt than the most efficient sodium lights being replaced: claims of reducing carbon emissions through the replacement rely on the fact that the lights are radio controlled.

        LED lighting is very energy efficient, and offers great maintenance savings because the lights last decades (the optics that spread the light will need replacement sooner as they degrade faster). The problem has been with high capital cost, but that has been coming down rapidly as manufacturing technology improves. The decision to go ahead before that cost curve had started to flatten out seems very short sighted to me.

        To some extent there was a previous replacement surge, but that was motivated by the energy saving technology of sodium lighting, and so was properly self financing. Putting all the eggs in one basket has turned a steady programme of refurbishment and renewal with the latest technology into a once off splurge, that will create a similar replacement bulge in the future. People in Surrey would prefer that the money was spent on potholes.

        • lifelogic
          Posted April 30, 2013 at 2:57 pm | Permalink

          Indeed potholes, law and order, defence, cheaper energy and a far better and cheaper legal system please.

        • A different Simon
          Posted April 30, 2013 at 6:35 pm | Permalink

          It’s like the premature adoption of immature photovoltaic cells .

          Also the urgency to commit to an energy policy based on the assumption of ever increasing fuel prices rather than hang fire for a while until the situation with regards to fuel prices becomes more certain .

          Once the state has made a decision the plans seem to lack flexibility , not be subject to ongoing review and allow no room for new information or developments which were not foreseen at the outset .

      • Roy Grainger
        Posted April 30, 2013 at 10:45 am | Permalink

        “We have low energy bulbs in our homes; is their scope for putting low energy bulbs in our streetlamps?”

        There is scope but unless you haven’t noticed the capital cost of LED lights is ab out 20 times higher than conventional lights and it takes many years of savings in running costs to pay that back EVEN IF the LED lights don’t fail long before their stated life is reached (which they do). So, your idea would require borrowing to fund light purchase to be immediately increased 20 fold.

        • Mark
          Posted April 30, 2013 at 3:39 pm | Permalink

          Last year LED streetlights were about a 7 year payback in the US where power prices are rather lower, which is a criterion I would use to define viable investment. This year, payback is 25% less, and no sign of the cost reductions ending.

          From an article last June:

          Seattle City Light had initially explored the installation of LED streetlights in Seattle back in 2007, but the price of the systems, at $900 per solid-state streetlight (excluding the post and other hardware), did not justify the investment, says Smalley. When prices dropped to $350 per streetlight in 2009, the city took the plunge. “At that amount, we figured on a nine-year payback, given an expected 40 percent annual reduction in energy costs,” he adds.

          Prices for LED lights have dropped another 25 percent over the past year, which means Seattle now expects an even faster return on its investment, closer to eight years.

          Cree the lighting maker announced a further 25% improvement just a month ago.

    • Jerry
      Posted April 30, 2013 at 8:31 am | Permalink

      @David cee: Why do you need lighting on motorways, other than on slip roads (and the non-motorway access roundabouts), don’t you have headlights, tail-lights or a rear view mirror on your car?!… Oh and yes, I am being serious.

      • David Cee
        Posted April 30, 2013 at 1:22 pm | Permalink

        Hi Jerry

        Yes, of course I have lights on my car.

        Perhaps you have never driven up/down the M1 at night. It is interesting to experience how there are fully lit sections and then……darkness as you move through the county boundaries.

        The experience of driving through the fully lit areas is infinitely more pleasurable. It feels like being in the modern world. I am sure if we could reallocate a bit of money (eg. from trident) to pay for a few more lights and bring our motorways up to scratch.

        • Jerry
          Posted April 30, 2013 at 1:43 pm | Permalink

          @Davd Cee: Yes I have, and most of the other M-ways and A-roads in the UK (plus a good proportion of B-roads too), being an ex professional driver and all that, and yes it is stupid that drivers go from lit sections to dark on M-ways, but in my opinion surely the correct answer is to turn off the lighting that does exist as I personally far preferred the unlit sections… That is not to say that some very specific locations do need lighting, most usually due to complicated junctions and lanes/slip roads.

        • Mark W
          Posted April 30, 2013 at 9:08 pm | Permalink

          I agree. Lighting roads helps makes driving at night a more pleasent experience and surely safer.

    • Mark W
      Posted April 30, 2013 at 9:15 pm | Permalink

      I do think potholes should be dealt with but our roads are not as bad as the USA, outside of Florida. Their roads are dilapidated compared to ours.

  13. Mike Wilson
    Posted April 30, 2013 at 8:03 am | Permalink

    Ask 1000 people (assuming half a brain is present) – ‘who should be responsible for providing energy to heat and light your homes?’ and 1000 will answer ‘the government’.

    It is ABSURD to leave it to the private sector. What if no-one can raise the money to build new power stations? What if they just can’t be bothered? If you have a couple of hundred million quid to invest – why on earth would you engage with the planning system and an ad-hoc energy distribution system – and the green mentalists – etc. and build a power station? You could get a lot better return doing other things.

    No. It was always mad to privatise water, gas, electricity and our communications infrastructure (BT) and these should be re-nationalised only, this time, they should be run properly with proper relationships with the unions and no-strike agreements etc.

    • Mark
      Posted April 30, 2013 at 10:43 am | Permalink

      It isn’t difficult to raise money for power stations that use economically sensible technology in a properly competitive market. It is difficult to raise money for projects that depend on government imposed subsidies and taxing the competition. Those are the projects the government wants to invest in – the ones that will double your power cost. Nothing could be worse for your energy bill than nationalisation.

      The government is proposing to guarantee investment returns to unprofitable power generation in g gd plated nuclear, wind and tidal systems while taxing economically viable gas and coal generation and sending you the bill using the Big 6 as their agents.

    • Anthem
      Posted April 30, 2013 at 11:31 am | Permalink

      It is ABSURD to leave it to the private sector. What if no-one can raise the money to build new power stations? What if they just can’t be bothered? If you have a couple of hundred million quid to invest – why on earth would you engage with the planning system and an ad-hoc energy distribution system – and the green mentalists – etc. and build a power station? You could get a lot better return doing other things.

      What if indeed. Look at the obstacles you have put forward and consider who is responsible for them. Yet you want these people to be involved to an even greater degree?

      When people in the business of making money “can’t be bothered” because of bureaucratic hassle, it is perhaps time to take a pair of scissors to some of the rule books and recognise that you’re more of a hindrance than a help.

  14. Brian Tomkinson
    Posted April 30, 2013 at 8:15 am | Permalink

    I should be interested to know just what constitutes a capital spending programme amounting to £310 billion. I know about the vanity HS2 project which I think should be scrapped. I see those wretched inefficient windfarms which are becoming ubiquitous and achieving next to nothing but making some people rich at our expense. I see road works which narrow the roads and cause conjestion and then hear politicians who are making things worse tell me that we should use our cars less and use public transport. I see schools and hospitals that have been built (and in some cases, I understand alread, closed) with PFI schemes which have exorbitant ongoing costs to taxpayers. In short I am struggling to think of anything that I would want the state to “invest” in as it seems to be generally useless at most things it does.

  15. Jerry
    Posted April 30, 2013 at 8:20 am | Permalink

    So what should be done? More of the necessary investment, like new energy capacity, and broadband, should be financed in the private sector and subject to a market test.

    Actually those are the two infrastructures that should not be subject to the “market test”. Both are essential for both socail and business reasons, big ticket items like HS2 should by law be prevented from being funded by government come what may, in the same way as the Treaties and Acts that allowed the CT to be built expressly prohibited state funding – let the markets decide if this and other similar glitzy schemes are a necessity or governmental vanity project…

    The market will seek to only invest in what earns the best return, not in what the nation actually needs, for example power companies will likely seek out subsidies that reduce their own costs or risk and thus technology might be used that will not and can not actually deliver (such as wind-turbines), whilst the “market test” within the telecoms sector could very easily leave many rural (and perhaps some low income) areas without any high speed broadband service or (in the case of the rural areas) a service that costs far more than elsewhere – which is not good news for the many rural businesses or farmers who are being expected to do more and more on-line.

    • Mark
      Posted April 30, 2013 at 11:55 am | Permalink

      The state has become so used to investing in loss making ways that it has extended this to requiring loss making investments of its choosing in the private sector – which is what is happening in energy. The corporate sector has learned that it can demand lavish subsidy from the state for such investments, whether they be PFIs or wind farms and that competitive innovation is unnecessary, while an ability to obfuscate is highly profitable.

      That applies too to broadband. Innovators are capable of delivering gigabit fibre broadband to rural locations at costs way below those of the established licensed telecoms operators. I’ve been keeping an eye on what B4RN are achieving in Lancashire:

      Now, clearly they get some funding from grants (about £1m out of £3m cost for 3200 properties passed and very high take-up rates according to their latest business plan), but I suspect that their costs are so low that the value added to the properties they (potentially) serve would far outweigh them, never mind any other benefits such as generating local employment, reducing the cost of services etc. – which of course would generate taxes and reduce welfare payments, rapidly repaying the grant.

      • Jerry
        Posted April 30, 2013 at 2:07 pm | Permalink

        @Mark: I don’t have time for a full reply but please do remember that the private sector has also invested in loss making or worse schemes (for example technology that simple doesn’t and never will work) that then need the tax payer to bail them out either directly or via subsidies (often at vastly hight costs due to others making their own buck, either from the original customer or the state later), thus it would have been cheaper for state to financed it to start with.

        • Mark
          Posted May 1, 2013 at 10:09 am | Permalink

          Of course there are failures in the private sector (Sinclair C5 for example), but they’re usually made worse by state “support” (British Leyland…). Failing early is cheap by comparison.

  16. Richard1
    Posted April 30, 2013 at 8:24 am | Permalink

    There’s a big difference between the govt ‘investing’ in capital projects to generate future returns as against a private individual or organisation doing so: the govt isn’t spending its own money. So its very easy for the govt to convince itself – also due to loud pressure from interested parties – that a project is economic when it isnt necessarily so. The best way to finance infrastructure therefore is to introduce market discipline. If the returns will justify the investment, then in normal circumstances, private capital will be available and willing to pay for it. This is surely true of new road schemes – look at the French motorways. Great suspicioni should attach to projects such as HS2 where private capital wouldn’t go near it, because the estimated returns have been cooked in order for the govt to justify making the investment.

  17. a-tracy
    Posted April 30, 2013 at 8:25 am | Permalink

    Where is the new private sector NEST pension savings being invested, I would hope it would be in future high return investments like energy plants, that a) gives investors a safer return and a higher return than silly projects like building empty offices in an area with loads of spare office capacity and b) would give a better, safer return than high risk rail projects.

  18. Anthem
    Posted April 30, 2013 at 8:39 am | Permalink

    If there is a genuine demand for something and it represents a profitable opportunity, someone, somewhere in the private sector will provide it (assuming there are no laws from Brussels preventing it – but that’s another story).

    The government has more than enough on its plate trying to balance the books on the projects it has already made itself responsible for and the current budget deficit hardly inspires confidence that they would be capable of handling more.

    No. Leave the money in the pockets of those entrepreneurial souls with a track record of creating wealth and, if you want to assist then do so by lowering taxation, cutting employment bureaucracy and just stay out of the way.

    • waramess
      Posted April 30, 2013 at 10:06 am | Permalink

      Well said. We are now in the madhouse and the discussion is now how much more can the government spend rather than how much can they cut.

      Circular insanity rules, OK?

    • Richard1
      Posted April 30, 2013 at 10:36 am | Permalink

      Good post

    • Mark W
      Posted April 30, 2013 at 8:42 pm | Permalink

      Here here

    • uanime5
      Posted May 1, 2013 at 2:28 pm | Permalink

      Leave the money in the pockets of those entrepreneurial souls with a track record of creating wealth and, if you want to assist then do so by lowering taxation, cutting employment bureaucracy and just stay out of the way.

      You mean people like Fred Godwin who made huge amounts of money until RBS needed a bailout.

      • Edward2
        Posted May 2, 2013 at 3:23 pm | Permalink

        No Uni, plainly he doesn’t mean failures like this because in his post he says, and you have quoted him, “those….with a track record of creating wealth”
        Pedantic and incorrect as usual.

  19. English Pensioner
    Posted April 30, 2013 at 9:09 am | Permalink

    You can’t consider infrastructure without considering the population, and in particular immigration.
    If the population wasn’t growing at such a rate, we wouldn’t need extra schools or hospitals. Nor would we need extra generating capacity, and without increasing numbers of cars, just a few minor road improvements would be necessary.
    We also need to try to look at the future; will a high-speed railway to Birmingham and the north actually be wanted by the time it is built? Will all the business travellers at whom it is aimed still be travelling or using video phones or video conferencing. (My daughter’s American employer has cut transatlantic travel by around 75% using such technology, much to her disgust!) The really wealthy are already using helicopters, perhaps more will do so, leaving HS2 as a high speed unused white elephant.
    Whilst not infrastructure, you only have to look at the MoD’s military secure communications system, designed to MoD’s specification to be operational to the 2020’s. Technology available to everyone in smart phones and the like is now far superior to the MoD kit for a fraction of the price. This is what happens to far too many government projects, by the time they are built, they are obsolete.
    So decide what population we are to cater for and try to look into the future before starting any infrastructure project that takes more than two or three years to complete.

    • Mark W
      Posted April 30, 2013 at 8:40 pm | Permalink

      Sound thinking on all points.

  20. Acorn
    Posted April 30, 2013 at 9:23 am | Permalink

    We could ask Apple; China Mobile; Microsoft; Cisco Systems and Google to pay for it. Together those five companies have just about enough cash / near cash in their balance sheets to cover it.

    The BoE created £375 billion to buy a third of the Treasury IOUs. Whats wrong with buying another third?

  21. NickW
    Posted April 30, 2013 at 9:32 am | Permalink

    Sell off most of the BBC, which should be in the private sector anyway.

    The majority of the media see the BBC as an unfair competitor, so the opposition to this would be entirely manageable.

    If the Government didn’t have the BBC; would it spend the money necessary to set it up and finance it in its present form?

  22. Max dunbar
    Posted April 30, 2013 at 9:48 am | Permalink

    Improving infrastructure is a very good idea. However, the justification for these projects must be purely practical and not driven by the need for immediate job creation.
    At council level we can see how much money is wasted on worse than useless traffic lights, signage and roundabouts while the actual roads are not maintained to a high enough standard. It appears that councils prefer to spend money on employing a workforce rather than creating a useful result for those who pay for it. Does the same principle apply to large public projects? Does job creation trump tax payer value for money and the common good?

  23. Richard1
    Posted April 30, 2013 at 10:27 am | Permalink

    I’ve got an idea. The best thing to have happened to developing countries and the world’s poor over the last 30 years is the collapse of communism in the Soviet union and around the world and of socialism as an intellectual idea as a consequence. 3 billion people have been lifted out of poverty as a result. The key to this was the decision of Thatcher and Reagan to face down the soviet union rather than to appease them. Let’s therefore reclassify Trident as ‘Overseas Aid’ and so save a few billion extra which would otherwise be wasted propping up corrupt governments. Could this work? Could we squeeze it by the LibDems in return for allowing a few extra wind farms?

    • uanime5
      Posted May 1, 2013 at 2:31 pm | Permalink

      Socialism still exists in countries such as Sweden and Germany. Odd that you forget them in you anti-communism rant.

      By the 1980’s the Soviet Union already had major problems and would have collapsed regardless of what Reagan and Thatcher did. Also who was appeasing the Soviet Union?

      • Richard1
        Posted May 1, 2013 at 6:06 pm | Permalink

        Neither Sweden nor Germany can be described on any reasonable definition as socialist. There are remnants of social democracy in both – as there are here. But a large part of the reason for the success of both economies is the market based reforms in the 90s and 2000s. You clearly have no first hand knowledge of either country.

        It is a speculation that the soviet union would have fallen in any event. Had we had jimmy carter again in the US and Michael Foot as PM here, the outlook would have been very different from the Kremlin and the old Lennist policy of subversion and conquest might have continued. Amongst appeasers who could have sold us into the slavery of socialism/communism I would identify people such as supporters of CND in the 80s.

  24. Peter Davies
    Posted April 30, 2013 at 11:05 am | Permalink

    Top of the list has to be N Power stations but using private money. The Japan example shows you cannot fix an economy through large capital projects, so we need to remove all the stuff preventing business (we know its got EU in front of it) and stick to doing the basics of sound economic management by govt right.

  25. behindthefrogs
    Posted April 30, 2013 at 11:18 am | Permalink

    The first question is whether these projects really cost £310b. Most of that money is spent either directly or indirectly on labour. The result is that a large number of people will be taken off benefits. Around 30% will be recovered in various forms of tax including NI.

    The level at which projects become cost effective is thus much lower than may appear at first sight. The longer term earnings from some of these projects have similar tax returns etc.

    We need to see much more true lifetime costing and fewer panics about apparant initial costs

    • Mark
      Posted April 30, 2013 at 4:04 pm | Permalink

      It’s the lifetime costings that are horrendous. Things like PFI hide that away by “saving” the up front investment cost from the budget, but charging an arm and a leg for it later on.

    • Anthem
      Posted April 30, 2013 at 5:04 pm | Permalink

      The first question is whether these projects really cost £310b.

      No, that’s the price to the government. To a private sector concern, it would probably be half that amount!

      • uanime5
        Posted May 1, 2013 at 2:32 pm | Permalink

        Given that these infrastructure projects are carried out by the private sector your claim that the private sector would be cheaper is incorrect.

  26. JimS
    Posted April 30, 2013 at 12:12 pm | Permalink

    I don’t understand why government is investing in electricity generation, don’t we have 100% privately-owned operators?

    Invest in Broadband? How about taxing the providers before they put the new systems in service? We could call it a Four-Gee Auction!

  27. uanime5
    Posted April 30, 2013 at 12:31 pm | Permalink

    It may prove beneficial to determine which roads are the most congested, and where possible either widen them or build relief roads. Alternatively the Government introduce a law that forces train and bus companies to invest 90% of their profits back into the company, so that public transport will be more effective.

    Given that there’ll be a 240,000 shortfall in primary school places by 2014 I’d also recommend building more primary schools.

    In other news I feel that Chris Grayling’s plan to force prisoners to earn their privileges is likely to go badly wrong. The current prison system means that prisoners often spend long periods of time in their cells doing nothing, so if you remove their main form of entertainment (TV) they’ll probably spend their time planning how to riot or break out of prison because they’ll have nothing else to do.

    • Mark
      Posted April 30, 2013 at 2:57 pm | Permalink

      Perhaps prisoners could be entertained catching up on failed education. You might even teach Huhne something about the realities of the science behind climate, rather than his apocryphal beliefs. Even those with PPE degrees can learn something.

      • Lindsay McDougall
        Posted May 1, 2013 at 1:29 pm | Permalink

        Especially those with PPE degrees can learn something. For example:
        – Politics should be about policy, not a gimmick per day
        – Philosophy is up market pub gossip
        – Economics is a subject on which two people hold three opinions

      • uanime5
        Posted May 1, 2013 at 2:36 pm | Permalink

        Educating prisoners, all of whom have different education levels, would require huge amounts of money to hire a range of teachers and require high levels of security. So it will be more expensive than letting them watch TV all day.

        Also it doesn’t resolve the problem of what do the prisoners do when not being educated.

        • Mark
          Posted May 2, 2013 at 10:38 am | Permalink

          Educating prisoners stands a far better chance of reforming them than letting them watch TV. They might be able to hold down a job, instead of relying on burglary to supplement benefits. They might learn the art of persuasion as an alternative to violence. They might catch up on the failures of the education system that didn’t equip them to be good members of society.

    • Mark
      Posted April 30, 2013 at 7:23 pm | Permalink

      On schools, you’re right that large scale immigration means more primary places are needed. However, much more efficient use of our education assets might mean this need not echo through the rest of the education system. If we educate efficiently to the higher standards that used to prevail, less time would be needed in school and tertiary education, freeing up space and teaching resources. Moreover, if we stopped providing many loss making places to overseas students we would again have more resource to devote to educating our own people.

    • Mark W
      Posted April 30, 2013 at 7:58 pm | Permalink

      So let me get this right. People who invest in bus an rail companies forced to reinvest at the expense of dividends. And convicted criminals not expected to behave to earn privilege.

      I guess in your perverse world we should hang the middle class from lamp posts and arm criminals to fight for their right…

      Rail franchises take huge resources from rail operators. Large PLC bus operators like stagecoach invest massively in staff training and vehicles. Small independent operators don’t make profits as such. Like independent lorry firms, they keep their heads above water and survive. If you investigated the subject you’d understand that airlines and shipping pay no tax on their fuel. Railways pay a reduced rate and buses, not renown as carriers of the well heeled pay the greatest proportion of fuel tax of UK public transport.

      If you wanted to see investment in buses maybe having a minister that didn’t dream up stupid ideas like expensive to maintain bus stop announcing devices it would help. They annoy passengers and are absurd in rural areas. But London based politicians never grasp this.

      • uanime5
        Posted May 1, 2013 at 2:41 pm | Permalink

        No the company can only declare 10% of their profits as profit to ensure that they focus on providing a service, rather than making money (though dividends will be reduced by 90%). The fact that a company doesn’t make much profit is irrelevant as all of this money will go back to the company.

        You also deliberately misrepresented my position on criminals. I said that leaving prisoners with nothing to do all day would lead to increased bad behaviour out of boredom.

  28. Monty
    Posted April 30, 2013 at 12:49 pm | Permalink

    It is just so dispiriting to watch this government repeatedly digging holes for itself, and the country.
    What part of “There’s no money left” don’t they understand?

  29. Tad Davison
    Posted April 30, 2013 at 12:57 pm | Permalink

    There’s one infrastructure project that could save the tax-payer an absolute fortune, whilst improving the standard of living of every decent law-abiding person in the country, and would it would be well worth doing. That is the creation of a penal colony on an uninhabited Scottish island, where the conditions are so severe, not only would no lag ever want to go back there, the chavvy hard-cases who presently strut around with impunity would never want to go there in the first place.

    And this would bring dividends right across the board. Corporate fraud could be dealt with just as severely. The problem is, at the moment, we have lost control of the criminal justice system to those who create laws for the lawyers to feed off the gravy train, whilst the rest of us have to suffer the consequences.

    Crime might be falling, and that is welcome, but it is still far too high, and the mamby-pamby liberal precept that has been created by stealth over decades, is still the most expensive, least effective option. The BBC documentary series on prisons proves such institutions to be a joke, when lags are just not bothered about going back there time and time again, and we simply cannot afford such a system any longer, especially in these times of austerity.

    We must look to other countries where crime is low, and emulate the best parts of their systems.

    Nobody makes a person break the law, it is a life choice, so we owe them nothing. When it comes to priorities, criminals should come well down the list. There are far more deserving cases in society to receive public money than those who feed upon others for their own selfish and perverted gratification.

    The savings from the deterrent effects of a truly draconian and punitive criminal justice system could be massive, but I expect the criminal-loving do-gooders who have wormed their way into so many of society’s most influential positions, would fight such a proposal, as is their nature to give away other people’s money for their own fanciful reasons.

    Tad Davison


    • Anthem
      Posted April 30, 2013 at 6:57 pm | Permalink

      I’m sure we tried this once before and it came back to haunt us in the form of Kylie Minogue.

      • Tad Davison
        Posted April 30, 2013 at 10:23 pm | Permalink

        Anthem, at least the Auzzies know how to control their borders! They have no truck with unwanted undesirables. If only we could learn from them and stop those who would blow us up from ever getting here in the first place.


    • Mark W
      Posted April 30, 2013 at 8:36 pm | Permalink

      I totally like the idea of remote penal colony. Prison should be something to fear. Other inmates shouldn’t be feared tho.

      Oddly enough I would have expected in your location that the A14 between Huntingdon and Cambridge, being a link from the midlands and northwest with east London and Anglian ports was long overdue an upgrade. Especially with both coalition parties have constituencies with an interest. LibDem – Cambridge and Tory – Peterborough, Corby, Kettering and both Northamptons. None of them safe seats.

      • Tad Davison
        Posted April 30, 2013 at 10:20 pm | Permalink

        You’re right Mark, it is, that road is a death trap as well as an impediment to the fluidity of business. My lad uses the A14 regularly to commute to work, and only a few days ago, it took him two hours to do a journey that would otherwise have taken twenty minutes. That is by no means uncommon, and John is quite right in his leader to this thread, but the green lobby don’t like new roads. I often think they’d like to take us back to the stone age.


    • Max Dunbar
      Posted April 30, 2013 at 9:08 pm | Permalink

      There is no substitute for the actual experience of being behind bars yourself. Its not just the confinement, but the uncertainty and being completely at the mercy of the state.

    • uanime5
      Posted May 1, 2013 at 2:56 pm | Permalink

      That is the creation of a penal colony on an uninhabited Scottish island, where the conditions are so severe, not only would no lag ever want to go back there, the chavvy hard-cases who presently strut around with impunity would never want to go there in the first place.

      While harsh prisons may appeal to right wing crackpots they are completely useless as a deterrent and give criminals more motivation to violently resist arrest. So your plan will make the UK less safe, not more safe.

      the mamby-pamby liberal precept that has been created by stealth over decades, is still the most expensive, least effective option.

      Actually prison is the most expensive and least effective option with community options being cheaper and more effective.

      We must look to other countries where crime is low, and emulate the best parts of their systems.

      Well these are countries such as Sweden and Denmark; where economic disparity is low (so you can have a good quality of life working in a low paid job), some drugs are provided by the state to addicts, prison sentence are short, and prisons are even more “namby-pamby” than the UK. By contrast countries such as the USA have harsh prisons, high economic disparity, high prison populations, and high crime levels.

      When it comes to priorities, criminals should come well down the list. There are far more deserving cases in society to receive public money than those who feed upon others for their own selfish and perverted gratification.

      You really don’t have a clue do you. If you treat prisoners inhumanly by denying them their legal rights then criminals will act more violently resist arrest. You cannot have a brutal justice system and low crime.

      The savings from the deterrent effects of a truly draconian and punitive criminal justice system could be massive, but I expect the criminal-loving do-gooders who have wormed their way into so many of society’s most influential positions, would fight such a proposal, as is their nature to give away other people’s money for their own fanciful reasons.

      There won’t be any saving because what you’re proposing doesn’t work and never will. Perhaps you should try looking at what works rather than spewing your anti-prisoner bile.

      • Lindsay McDougall
        Posted May 3, 2013 at 5:32 pm | Permalink

        Let’s start with the beneficial idea that prison should always be about rehabilitation, with the prisons providing both space and training opportunities. Then you have to say that prison sentences have to be longer than under a brutal regime, in order to exact an adequate degree of retribution. And the authorities should have the right to profit from selling the fruits of the prisoner’s labour.

        However, what if the crime was so heinous that a just sentence would be longer than the remaining lifetime of the prisoner? There would be no point in rehabilitating him, so chopping his head off would seem to be the only solution.

        Oh, dear. That’s how we used to arrange things.

  30. David Cee
    Posted April 30, 2013 at 1:28 pm | Permalink

    I mentioned potholes and motorway lighting earlier (which resulted in some interesting comments). These would be the small scale items.

    As for bigger ticket items: firstly cancel HS2 – as someone said, it will be a white elephant.

    What is needed is a Boris Island airport – with top class connecting infrastructure into London and the periphery. Model it on Hong Kong/Asian airports. Part private funded this would make the biggest difference to our country in 20 years time. (In my very humble opinion).

  31. Barbara
    Posted April 30, 2013 at 1:33 pm | Permalink

    Well Mr R you’ve asked what we do want, how about what we don’t want?
    I for one don’t approve of H2, the money should be spent upgrading the whole of the rail net work, and government should have more shares in the private rail companies as they appear to be the ones investing in them. As directors seem to award themselves massive rises and raising fares, no wonder investment is limited. Rises should be limited while money is needed to upgrade, and taxpayers money at that.
    Secondly, roads, which are in a tidy state with large potholes on many, its no good filling in they need resurfacing properly, again private companies could do this, how will we pay for it, via the taxpayers purse or upping road tax for those who use it most. Lorries cause more damage than most so they should pay the most. Especially foreign lorries whe use our roads without charge where our industry pay when on the continant.
    Then we come to repairs of public buildings, these should go out to public tender for compitition and to get the right price, with proper scrutiny on all who are successful to stop fraud. Not the old boys network where jobs go to them, open compitition.
    Housing, a programme of repairs to many homes which are substandad, we saw recently homes sold for a £1, these could have been repaired by the government and sold off and while being repaired they could have employed apprentiships to train, carpenters, brick layers, and electrians, plaster’s, all trades we need in this country while we’ve lacked investment in these areas. Meanwhile providing homes that are badly needed, its been a lost opportunity. It could have been done via a private enterprise with government and the private sector operating together.
    Even farming is lacking skills and workers, we have enough unemployed of our own without thinking about immigrants, its these we should be concentrating on. Getting them back into employment and paying taxes. It seems we are lacking and lagging behind Germany in the idea stakes, perhaps it’s time to redress the situation before its to late.

  32. Mark
    Posted April 30, 2013 at 4:15 pm | Permalink

    New reservoir capacity would be a good idea.

    • Mark
      Posted April 30, 2013 at 7:19 pm | Permalink

      It would of course be self financing, because it would allow increased water sales. The attendant water management might even help to reduce flood risk, and therefore attract a contribution from protected property/insurers.

  33. zorro
    Posted April 30, 2013 at 4:15 pm | Permalink

    If they wish to undertake some sensible long term investment in productive capacity…..broadband….airports……roads……fuel resources etc……and they can’t get sensible private input, the least worst option is to QE. Let’s face it they are almost at £400 billion anyway on regular government spending. It would have been more sensible to QE for investment projects before now before making prudent decisions on existing government spending.


  34. The PrangWizard
    Posted April 30, 2013 at 6:09 pm | Permalink

    I can’t answer your question in any meaningful way. I think the nation has wasted a fortune on ‘green’ issues such as windfarms and on the associated issues, which we will never see back. It has been a brainwashing exercise too, many institutions have bought into the whole global warming/climate change theory and have fed us a lot of dangerous tosh about it. I have noticed they have gone a bit quiet lately however, I wonder why? So we should cut out that waste and stop any more being built.

    The same green nonsense is holding back shale gas extraction, far too much notice is given to the objectors. We should let that go ahead urgently.

    Whether a third runway at Heathrow will be regarded by some as wasteful, I don’t know, but we are said to be at capacity there and losing business, so that I think should go ahead quickly.

    Improvements are being made to large parts of the rail system and it is said many more people are using the railways so that makes sense. It was said we nearly ran out of gas in early April, and there was a shortage apparently of heating oil. Presumably that means we are short of capacity, so spend on these too.

    And, no I don’t know where the money will come from. I suppose a good deal of it could be raised privately.

  35. JohnMcEvoy
    Posted April 30, 2013 at 8:09 pm | Permalink

    The new infrastructure I would like is a set of proper roads. It would be paid for by 1) sacking 2/3 rds of all public employees 2) reducing every public pension by 30%.

  36. Lindsay McDougall
    Posted May 1, 2013 at 1:55 pm | Permalink

    We can’t afford HS2 and Trident; one perhaps but not both. The economic case for HS2 will get better (i.e. just about OK) if we wait several years until rail passenger demand builds up. However, the real reason might be to slow down the growth in air travel.

    With Trident, the decision has to be made early in the next parliament, so we should use the next two years to plan and think (1) Can a strategic weapon bought from and maintained by America be used for any strategy except an American / NATO strategy? (2) Would a cheaper Anglo-French nuclear deterrent be practical? (3) How do nations that do not have a nuclear deterrent plan their defence?

    Roads: Motorway widening and junction improvements – yes please, a bargain. Use tolls for the former where possible – and let the Concessionnaire set the tolls.

    Transport infrastructue in general: users of the infrastructure and the services that run on it should pay. Whatever the mechanism, keep taxpayer subsidies to a minimum.

    On the more general question of pensioner concessions, we should treat them as taxable income in kind where practical, and scrap those where this would be adminstratively impossible. This government is unfortunately determined to apply an egaltarian policy towards pensioners and deprive them of the opportunity to make their own decisions.

    • Mark
      Posted May 2, 2013 at 11:25 pm | Permalink

      I think that shadow tolling works much better that actual tolling. That means the contractor is paid in accordance with measured improved traffic flows. We have seen how perverse incentives damage traffic flows on the M6 Toll – where tolls are calculated to dissuade truck traffic that leads to higher road maintenance bills, and also to limit ordinary traffic to the few rich enough to afford the high fee. The 54 year contract might normally cover perhaps 2-3 major carriageway rebuilds at high traffic levels with a good proportion of trucks. The company seems to hope to get away with perhaps just one, or even none. It probably plans to set tolls to maximise revenue and leave a clapped out road towards the end of its franchise. If you’ve been over the original Severn Bridge lately you might recognise the last symptom.

      • Lindsay McDougall
        Posted May 3, 2013 at 5:18 pm | Permalink

        Some contracts work on the lane availablility principle. The Concessionaire gets paid for the number of (lanes x days) that the motorway is open to traffic. As a result, the Concessionaire does his maintenance as speedily as possible and is content if the road collapses on the first day after the end of the Concession period. Under this system, the government receives the toll revenue and carries the traffic and revenue risk. It’s not as daft as it sounds. If the Concessionaire carries the traffic and revenue risk, he needs to hire a suitable consultant to do the central forecast and the ‘what if’ testing. For the consultant, it’s great fun but very, very stressful, especially when bankers are involved. The Concessionaire gets ‘his’ consultant to produce a Sponsor’s Case, based on an optimistic forecast, and the banker gets ‘his’ consultant to pore cold water on it in an audit and specify downside forecasts under pessimistic assumptions.

        Shadow tolling simplifies operations but it doesn’t raise revenue from motorists.

        I’m a little puzzled as to why M6 toll rates are not slightly lower. It would cost little in lost revenue and increase the flow transferring from the untolled M6. Perhaps a Government objective is to make both M6 options less attractive than rail travel.

  37. Grindelow
    Posted May 3, 2013 at 1:33 pm | Permalink

    It’s said that the UK now borrows at effectively negative interest rates allowing for inflation. However that extra money would need to get to the private sector and be invested in such projects as new power stations to create economic growth. There is no way the money would ever get that far and most likely would finish trapped in banks who are required to increase their capital/lending ratios considerably.
    HS2 is a part of the EU high speed trail network so you can’t expect it to deliver value for money – ever.

  • 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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