Monday, 28 November 2011

Planning for the collapse of the Euro

The weekend papers carried such a number of articles on a single subject - how the UK is contingency-planning for the collapse of the Euro - that one suspects this was no journalistic coincidence but the result of a quiet piece of Treasury spin. If so, one wonders who it was aimed at - those European Finance Ministries who refuse to recognise the possibility of Euro-collapse, the financial markets, UK business and industry or you and I. But clearly the break up of the Euro is no longer 'unthinkable' in government circles, though it's taken a year of bloggers and commentators united views on the inevitable collapse of the currency to get there. And whichever way you look at it, it will cost the UK something. 


It's the tendency of governments and more importantly of the mandarinate to pursue an economic creed long after its sell-by date that's interesting. Kinnock - in the sole achievement of a lifetime in politics - convinced his party to drop Clause Four on the basis that economic power was no longer about ownership, but about regulation. Only to see the most spectacular failures of regulation in the newly privatised / de-monopolised transport, energy, telecoms, financial and technology sectors. Gordon Brown even took the idea to the point that the nation no longer needed to own Gold, on the basis that it could regulate instead. Don't get me wrong - I never want to see the return of a State telephone service that rations copper lines, and the GDP boost we've enjoyed from the privatisation / liberalisation process has been important - but the wave of popular benefits doesn't include better pension provision or a lower national debt. 


Now of course there's not much left to privatise except one huge gleaming asset - the road network. London's already demonstrated that road pricing can be lucrative; a capital investment of £160m produces a net annual profit of £90m (excluding the massive capital premium a private firm would pay for say a 25 year right to charge). Private Toll roads have a long history in the UK, being nationalised only in 1888. Perhaps it's time to flog off the Motorways? 

15 comments:

Curmudgeon said...

Er, it was Blair who dropped Clause Four, not Kinnock. Kinnock's sole achievement was to face down Militant.

talwin said...

Surely Kinnock's finest achievement (for him!) was to amass a shed-load of cash in the absence of any noticeable skill or ability.

In one of ex-MP Chris Mullin's diaries he says that Tony Benn described Kinnock as "a vacuum surrounded by charisma". I reckon that pretty much nails it.

Sean said...

I think the mandarins have got that one handily placed on top of the "when shit hits fan" pile

http://www.dailymail.co.uk/news/article-1280656/Will-motorway-network-sale-pay-national-debt.html

right_writes said...

I think there is another asset that could be privatised (largely)… The government and its underlying bureaucracy…

I reckon that the Thatcher period would have been much more successful had it started there.

Of course there are some decisions which just cannot be deliberated on and then chosen by the sovereign individual, but most of those can be managed at the most local community level… e.g. funding through a local sales tax. Only the national defence makes any sense at the highest national level.

Even the word which Raedwald uses (mandarin) is derived from the Chinese bureaucracy, which held that country in stasis for 100's of years, is applied to our bureaucracy in a loving way… Like "aunty" for the BBC.

We hold up private education, private health services (as examples) on a pedestal, as either something to be desired, or something to be hated, depending on one's ideology… However, on almost any level, these services are more efficient, more successful, with better outcomes…

An example would be the Catholic schooling system in New York, administered by six people, educating ten percent of the the population of that city, whilst the public education system employs more than six thousand, which manages the system for the other ninety percent with a much lower standard of outcome.

Ed P said...

I'm quite happy to pay the tolls on French, etc., roads, as they are well-maintained and usually there are no traffic jams. But the UK's roads are mostly in a terrible state and much too busy.

Woodsy42 said...

If toll roads were such a barrier to trade in 1888 why on earth does it sound like a good idea now? The economic essentials are still the same.
French tolls do work, but there is almost always a good, usually unconjested, non-motorway route available for local journeys and people who don't mind taking longer over the journey. Not so clever for people living on the older 'A' road though!

Dave_G said...

The announcement by the Government to 'finance' infrastructure projects - notably the road network improvements - is worrisome as the guvmint talk about much of the finance coming from 'pensions' (fer christ sake....).
New roads would, therefore, HAVE to be toll roads as how would anyone get a return on the investment?
Nice of the guvmint to place our meagre remaining pensions at the forefront of 'their' feeble attempts at recovering the economy.

Tw@ts

Pat said...

Other state assets that could be privatised:-
Schools. It may well be right (I think it is) that parents should recieve government money to enable them to afford education. I fail to see why the state should dictate either the exact content of this education or the method of its delivery. and I'm damn sure a typical private school wastes a lot less money than a typical state school.
Along with this, the LEAs and the department of education could be privatised as educational consultants- they provide schools with advice when asked, and charge accordingly. I'm sure teachers really value their input, but if I'm wrong the country stops wasting money on them.
Hospitals. Again I see a benefit in state funding to patients- but who thinks that a large bureuocracy will be an efficient provider.
The department of health can also be privatised as a consultancy.
Much of the work of the treasury could be outsourced to firms of accountants- selected by competitive tender.
Do that and you've privatised a significant chunk of the economy.

Anonymous said...

Car Fuel & Excise duty (not including VAT) raises £31bn p.a. Money spent on building and maintaining roads was £10bn. I think we have paid for these roads several times over!

Blue Eyes said...

Flog of the existing trunk roads by all means, but won't people clamour for a corresponding cut in road tax and fuel duty?

The problem with George's plan to get new things built with private money is the nobody has ever made any money out of transport infrastructure. The benefits accrue to the wider economy but never to the operator. The railways never earned a cent. The canals neither. The M6 Toll operates at a loss.

Gordon the Fence Post Tortoise said...

In the UK on a motorway at 70mph you're probably paying about £7.50 per hour in tax alone to use the motorway....

Just a thought.

Anonymous said...

It's not theirs to sell. Its ours; we paid for it. Governments don't own motorways in the same way that you cannot say "government money". Governments don't have money, they only collect money from the taxpayer.

The motorway system (and indeed all roads) belongs to generations of taxpayers.

Coney Island

Weekend Yachtsman said...

"The railways never earned a cent. The canals neither."

Is this actually true?

The GWR never made a profit?

Curmudgeon said...

I think you'll find that quite a lot of railway - and canal - companies made very healthy profits during the periods when their respective modes were the dominant forms of transport. This especially applies to those who were able to construct their routes before the speculative manias in the two industries - canals in the 1790s and railways in the 1840s.

Greg Tingey said...

Railways were making quite healthy profits right up to 1914, if properly managed ....
Some continued to do so until 1939
In both wars, OF COURSE, the guvmint took the railways overe, ran them down, and din't pay for restitution afterwards - and THEN claimed they were useless!

Actually, privatising the roads on the "Railtrack" model would be VERY interesting in the Chinese sense.
Please think this through.