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Aha, Aha, Aha

This was always one of the goals of People’s QE, which was one of the core pillars of Corbynomics. Two years ago this was at the centre of Corbyn’s appeal when he became party leader. As its author I am delighted to see that it still survives. And I wholeheartedly support this use of it.

When saying so I also note that the Nuffield Trust that said the cost of doing this would be the gross revenues of the contracts is talking utter nonsense: the compensation due is at most for the discounted value of the contracts taking into account the inherent risks within that income stream.

Oh, so net present value, discounting, does in fact work then? The value of a company is the NPV, the value of a contract is the NPV…..gosh, what stump thinking!

From the newspaper:

In response to claims the plan would be prohibitively expensive, a Labour spokesman said: “Shareholders will be compensated in the form of government bonds, exchanged for shares. Parliament will assess the appropriate level of compensation at the point at which contracts are brought back in house”.

So the PFI contracts will be brought back right to where they should be, on the national debt then? Isn’t that going to be wondrous, rather constraining future actions I think, no?

13 thoughts on “Aha, Aha, Aha”

  1. Bloke no Longer in Austria

    I listened to some of McDonnell’s speech on the wireless.
    These guys seem to live in a weird parallel universe where the period between 1997-2010 never happened. His rant about PFI was particularly bizarre and like you I was left wondering how this was going to look on the balance sheet.

    I had to switch off and check old calendars to see whether those years actually existed.

  2. You could train a chimp to pick up one of 78 cards with a phrase on it.

    That’s all it would have to do, not know anything about the funny marks on it, just pick it up.

    And if you wanted to run a Turing test on the chimp and it’s phrases it would score the same as Spud.

    I can’t read a whole quote anymore, because I have a memory. He contradicts himself every time he says something.

    He blocks someone from his blog then the next day argues passionately in favour of the blockees’ view.

  3. are there any foreign pfi investors….. are we going to get the fun of arbitration to determine the correct compensation when nationalised?

  4. PFI was a dumb scam.

    But I can’t see how these ZaNu fuckwits gain by arsing around with it now.

    Esp as they cock up everything they touch.

  5. There’s a whole industry of investment trusts built around buying streams of income from PPI schemes, not just in the UK but all around the world and one of the rationales for them being attractive to investors is that they offer yields higher than government debt while still being notionally backed by the government. So, it’s only really going to be possible if the UK crashes out of the single market – an issue that Corbyn and co are desperately trying to be ambiguous about.

  6. The greatest risk is in the build phase which is why once the asset is complete and successfully operational the revenue stream trends to be sold to a pension fund who wants reliable income and little risk. I think he may find there is little risk discount for any PFI outside of its early stages.

  7. Slati,

    “He contradicts himself every time he says something.”

    He contradicts himself every time before he says something.

  8. Andy H – on the other hand, one of the consequences that probably has not been thought through or even acknowledged is that there is a substantial industry in managing these PPI contracts – doing the maintenance, arranging the cleaning and repairs etc – which has been contracted out to 3rd parties such as the French outsourcer Vinci. Bringing all this activity onto the government’s books will do wonders for the state’s pension liabilities amongst other things. Maybe the state will manage to achieve economies that are beyond the scope of such companies.

    I wonder if Corbyn and co realise just how pervasive it is.

  9. Robert Colville’s piece at CapX on this policy initiative/Socialist Christmas list is very good, and I thoroughly recommend it.

    Anything I could say would either be rendered unimportant by that article, or directly cribbed from it, so go read it there.

  10. I wasn’t convinced until today, but now I want to stay in the Single Market just to put a barrier up against the fuckwittery of a Corbyn inspired government ( for Corbs will surely be dead before he can touch the tiller but his acolytes will stick around ).
    I think being out of the EU and CU is still desirable, and unilateral free trade would still be possible with the RoW under such a system.

  11. Bloke in North Dorset

    In the unlikely event that there are any cost savings to be made they won’t last long. Unison is positively salivating over the news, presumably it’s payback for funding Corbyn, and this has got producer capture written all over it.

  12. Isn’t always the case that Murphy claims credit for everything. He portrays himself as the font of anything Labour, EU and OECD say. Here he says “As its author I am delighted …”. Does he even know what being an author means? We call Adam Smith, Pareto, Friedman, Hayek, Darwin, Schumpeter and even Marx authors because they had something original to offer. They also acknowledged debt to others in helping them to develop their ideas. What exactly has Murphy offered? Certainly no humility.

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