Yes - did you read the Financial Times article, Tubby?
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But the main point is that VTEC could get out of the contract because we aren't delivering what we said in the way of trains and infrastructure. Osborne (it's Treasury driven, Grayling isn't trusted with money like this) wanted the biggest number on the contract, even though there were problems delivering our side and he likely knew. So that £2bn never existed.
Plenty to attack in this and Carillion. Why is Corbyn bullshitting?
I've an idea. We're being softened up for Hard Brexit.
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Not for the first time I have no idea what you're on about.
Grayling allowed Virgin Stagecoach to wriggle out of contractual obligations and huge losses. He allowed them to do it in a way that was extremely advantageous to the company. They were on the hook for 2 billion pounds in total- which would have been subject to renegotiation if the promised upgrade were not there in 2019 - by avoiding it now they " may have to cough up no more than a £165m parent guarantee."
as the Financila Times article goes on
hat leaves the unpleasant smell of a “heads I win, tails you lose” arrangement.
Many train operators have sobering cheques to write under the deals they’ve signed with government. No doubt they’d love to swap these bills for one of Mr Grayling’s new “partnerships” on easier terms.
The transport secretary may think he’s been politically clever. At a time when the Labour leader Jeremy Corbyn is loudly banging the drum for renationalisation, he has avoided pushing the East Coast franchise back into public hands for the second time in a decade.
In practice, however, his actions betray a tin ear when it comes to the political dynamics of the privatised railways. By letting private, dividend-paying owners off the hook, he has at a stroke delegitimised future dividends, a feeling that will only grow if further contracts are renegotiated.
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And, as if on cue, here comes John 'the SNP are finished' McTernan, the sage of Edinburgh, to give the message from the inner sanctum of High Blairism. Fucking bellend.
Value for money, you say John?
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I'd thought McTernan had been much more involved with Blair than he in fact was. 2 years as chief of staff (2005-7). The sub that got sent that article must have enjoyed himself. "Outsourcing is a powerful public good". The biggest claim that's ever been made for it before is that it can save money.
I'm actually more sympathetic to PFI than some other kinds of outsourcing. There was a genuine problem with terrible neglect of public buildings (albeit exacerbated by Labour going even more austere than Major till 2001) and it would have been difficult to borrow all that upfront with 7% interest rates. We weren't talking the sort of bargain basement rates that make borrowing directly for infrastructure now a no brainer. But they didn't have the expertise at that time to negotiate the deals properly. I think they did get better at it, just as the SNP did their own PFI in government and have apparently got respectable value from it.
As I understand it, at least some PFIs can be bought out to save money. In Northumberland, the county council had a cash pile and lent the NHS trust money to buy a PFI out and saved a lot of money. Something similar happened in Herefordshire too. I assume that this is what McDonnel means by bringing PFI back in house, and that makes a lot of sense. I expect some of the deals would be put out to tender once bought out, but they needn't be.
Interestingly too I see Stella Creasey is pushing a PFI windfall tax. I don't know if that's a "moderate" attempt to head off McDonnell buying the PFIs out, or something that could be considered in addition. I don't know if it's legally viable.
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There was a genuine problem with terrible neglect of public buildings (albeit exacerbated by Labour going even more austere than Major till 2001) and it would have been difficult to borrow all that upfront with 7% interest rates
As I understand it, at least some PFIs can be bought out to save money. In Northumberland, the county council had a cash pile and lent the NHS trust money to buy a PFI out and saved a lot of money. Something similar happened in Herefordshire too. I assume that this is what McDonnel means by bringing PFI back in house, and that makes a lot of sense.
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The capital investment was borrowed up front by the PFI company not the government. Logically, of course, that's the government borrowing and it's an accounting trick, but equally the PSBR going up much faster much more quickly wouldn't have pleased the Bank of England.
This is the Northumbria PFI buyout.
https://www.ft.com/content/cc4f10b2-...8-00144feab7de
The savings are pretty significant, and I can't see there's anything particularly unusual about the particular PFI.
The cost (over the next 19 years) comes down from £249m to something like £185m.Last edited by Tubby Isaacs; 18-01-2018, 15:49.
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The savings are pretty significant, and I can't see there's anything particularly unusual about the particular PFI.
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Seeing it's being chucked in with Carillion, I repeat the point I've made about Corbyn and VTEC.
“What they’ve done is underbid, made a lot of money out of it and then moved on,” Corbyn said. “When the East Coast mainline was publicly-owned, it paid in a handsome profit to the Treasury and it was well-run.
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I fear we will look back on the last decade of infrastructure and rolling stock investments in the railways as a golden age if the railways get nationalized during anything but the softest of Brexits. I just can’t see the bastards in the Treasury waving much in the way of large scale railway investment through (roads though, probably not a bother).
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Interestingly too I see Stella Creasey is pushing a PFI windfall tax. I don't know if that's a "moderate" attempt to head off McDonnell buying the PFIs out, or something that could be considered in addition. I don't know if it's legally viable.
Feels like a 1997 answer to a 2017 problem, an apt description of the MP who proposed it.
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