The question has been asked, time and again, as to People’s Quantitative Easing could provide on the sums invested. One way to determine that is to look at estimates of the GDP generated per £1 invested. I have not needed to do this: Savings & Poor (a rating agency) have already done so in a report published in January this year.
Recall, Ritchie’s idea is that the Local Authorities, or the government, do all this investing. Because, you know, democracy and all that, no bankers should profit.
S&P say, in that very report:
Some governments, notably in the U.K. and Australia, have extensive experience using public-private partnerships
(P3s) to finance infrastructure projects. Private-sector participation can allow governments to tap into design and
engineering expertise, better manage construction timelines, reduce costs, and improve the delivery of services to the
public. The track records for the U.K. and Australia suggest P3 projects generally suffer fewer construction delays and
smaller cost overruns. However, these results can vary, and savings may not accrue to smaller projects where
economies of scale can’t be achieved. Nonetheless, we see P3s as an appealing alternative to relying solely on public
spending.
Hmmm.
“Savings & Poor”
He’s never even heard of Standard and Poor’s?”
Apparently the ratings agencies can’t be trusted. According to this reputable source, anyway:
http://www.t*xresearch.org.uk/Blog/2010/04/23/senate-inquiry-faults-ratings-agencies/
So Ritchie’s argument is:
– S&P’s report suggests that some PFI deals offer good value
– PQE is cheaper than PFI (because Ritchir says so)
– therefore S&P believe that PQE offers even better value
I’m guessing he’s never had any logic training.
Don’t ask him how People’s Pension Funds fit into all of this.
Let’s look at a recent project supervised by the State.
Ladies and Gentlemen, I give you the Scottish Parliament buildings. Eventually.
Initial budget: July 1997 £10m to 40m
Initial completion date: 2001
Final cost: £414m
Completion date: October 2005
Note that the final costs were determined 2 years after “completion”.
Yes, indeed, someone did make a lot of money out of that, didn’t they?
“savings may not accrue to smaller projects”
How many of his ‘shovel ready’ projects do we think that covers?
My experience of state involvement is crieria changed after work has begun, plans changed and then a decision is made by politicians that a different site is to be used after digging for foundations has begun.
They just cannot leave well enough alone once agreement is in place.
If S&P thinks that the multiplier on govt investment really is 2.5, that would have major implications for its credit ratings. At that level investment would be more than self-financing I think (depends on what 2.5 means, one off or in perpetuity, I haven’t read to check) and S&P ratings should penalise austerity (in the sense of cutting planned govt investment) and reward largesse.
@Gareth Parker: demanding correct names is just a neoliberal trick to confuse the masses. The meaning is obvious. Any more deliberate trolling and you will be deleted.
Note that the final costs were determined 2 years after “completion”.
That’s actually pretty good. Most major projects never really get the final costs determined.
The report also says, unless I’m reading it wrong, that the benefits Mr Murphy outlines would only accrue to the UK after a coordinated increase in spending of 1% of GDP across the entire EU.. So the measure of 250% is not a return on PQE, but a return on PQE plus the benefits to the UK of all the other increases across the continent. Not quite the same thing, is it?
Happy to be corrected if I’m reading it wrong.
Is Ritchie shovel ready yet?
At least he’s not suggesting more govt IT projects and Corbyn would never spend it on defence. Have to be thankful for some small mercies
Peoples Quantitative Erasing.
john miller – “Let’s look at a recent project supervised by the State.”
Of the ten most expensive buildings in the world, two are hospitals. Both of them are in Australia.
I am willing to bet the Australian government did not use a PPI.