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PFI is more akin to getting a mortgage than renting, isn't it?

 

Did you buy your house outright CT?

 

 

No its not, its rental / service agreement

 

With the option to take ownership at the end of the contract? So a hire purchase then if you like. (Nearer to a mortgage than rental though in any event).

 

Not saying its a perfect model btw but I think those arguments have been done to death over the past 10 years or so.

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Heres a nice read on PFI from the Chanel four news economist correspondant, Liam Halligan

 

 

Back in 2004, I received an invitation to the annual dinner of the Public Private Partnership (PPP) Forum. A glitzy, black-tie evening was promised, amidst the mock-Gothic splendour of London's Royal Courts of Justice. As a financial journalist, I am asked to numerous swanky, yet frankly humdrum events. But the mighty PPP Forum is different. It comprises many of the UK's corporate A-list - more than 100 contractors, banks and law firms.

 

PFI, in turn, is a multi-billion pound industry. New Labour has signed hundreds of long-term contracts with the private sector to construct - and then service and maintain - schools, hospitals and other public buildings. The government pays back investors over 30 years or more, after which the buildings revert to the state. Even two years ago, it was clear the government had based the biggest public building programme since the war on a gigantic - and controversial - hire-purchase scheme.

 

Given all that - and noticing the stiff-card dinner invitation implied a cabinet minister would be speaking - I decided to attend. The food wasn't bad and the atmosphere convivial. But the evening left me disturbed. Whenever I politely asked fellow diners an awkward question, I was - politely, for the most part - fobbed off. Back then, as now, I had reservations about PFI. Amid sumptuous surroundings, I questioned the double- and sometimes triple-digit returns being made from projects driven by public money. I protested that commercial confidentiality meant the details of long-term agreements between PFI companies and taxpayers often remained under wraps - even to the head teachers and NHS bosses trying to run the schools and hospitals involved. Because the private sector pays more to borrow than the state, I quizzed the logic of today's politicians building up huge off-balance-sheet liabilities under PFI, to be met by tomorrow's taxpayers. And, while the government claims to use PFI over conventional procurement only after a rigorous value for money test, I suggested this exercise was a sham.

 

After all, as early as 1997, then Health Minister Alan Milburn proclaimed, 'it's PFI or bust'. In other words, if local health chiefs don't agree to PFI, the hospital won't be built. I remember quoting figures to a chap at my table: by the end of 2003, PFI had been used for 90 of the 100 hospitals built or refurbished under New Labour. Similarly - 500 out of 550 new or renovated schools. Surely, the fact that PFI allowed ministers to be regularly photographed opening shiny new buildings - while keeping much of the spending off the government's books - meant the system was likely to be rigged. Gordon Brown, I argued, would continue using PFI, without question, to bolster his claim to be 'a prudent chancellor'. My analysis was met with a wry smile.

 

But what I most vividly recall from that dinner two years ago was a group of cuff-linked PFI professionals noisily toasting Saddam Hussein. 'The Iraq war has really done us a favour,' one well-oiled reveller explained, while slapping my back. 'Since it kicked off, you media types have been so obsessed with foreign policy that PFI has dropped off your radar'. At that point, I resolved to become very interested in PFI. And, over the last six months - with that toast still ringing in my ears - I've made an in-depth TV documentary.

 

So far, much of the analysis into PFI has been party pris. Trade unions, and academics funded by trade unions, have produced a slew of critical studies, which the PPP Forum has rightly dismissed as 'biased'. After all, much of the public sector is allergic to any form of private involvement in state schools and hospitals. The only other source of detailed 'research' has been big City accounting firms, invariably, in favour of PFI. But they're making a killing from what is now a £4bn-a-year industry so have a vested interest.

 

I have no ideological aversion to PFI. My only allegiance is to that ultimate vested interest - taxpayers. And, as my documentary - I hope - makes clear, PFI gives very bad taxpayer value. Some of the facts I've unearthed - on long-term liabilities, on ramped-up maintenance charges, on broken contracts are shocking.

 

New Labour has signed PFI deals worth £43bn. The long-term taxpayer cost - £150bn. The cost of changing a light switch in a leading PFI hospital? A cool £333 and I've got the document which proves it. Locked into a long-term PFI contract, a local authority is currently shelling out tens of thousands of pounds a month for meals and cleaning services in a school which closed last year. And a head teacher at a school which Tony Blair has singled-out as 'evidence PFI works' told me the policy is 'lunacy'. After years of wrangling with contractors, she said: 'I was initially very positive about PFI. But I've ended up hugely frustrated at the waste of public money'.

 

In the face of growing discontent, ministers remain petrified of reining-in the all-powerful PFI industry. Without it, public service delivery would grind to a halt. And, having committed themselves - and us - so deeply, the government can't bear to go back. My invitation to the most recent PPP forum dinner seems to have got lost in the post. The industry will never believe me, but I really wanted PFI to work. The private sector should be heavily involved in delivering our public services. We need to retreat from the dogma of state provision.

 

But as the PFI stench gets worse, opposition is growing, not only among the usual suspects, but among ranks of non-aligned taxpayers too.

 

And that is the tragedy. PFI is giving the private sector a bad name.

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Heres a nice read on PFI from the Chanel four news economist correspondant, Liam Halligan

 

 

Back in 2004, I received an invitation to the annual dinner of the Public Private Partnership (PPP) Forum. A glitzy, black-tie evening was promised, amidst the mock-Gothic splendour of London's Royal Courts of Justice. As a financial journalist, I am asked to numerous swanky, yet frankly humdrum events. But the mighty PPP Forum is different. It comprises many of the UK's corporate A-list - more than 100 contractors, banks and law firms.

 

PFI, in turn, is a multi-billion pound industry. New Labour has signed hundreds of long-term contracts with the private sector to construct - and then service and maintain - schools, hospitals and other public buildings. The government pays back investors over 30 years or more, after which the buildings revert to the state. Even two years ago, it was clear the government had based the biggest public building programme since the war on a gigantic - and controversial - hire-purchase scheme.

 

 

 

CT...you've basically just posted something that demonstrates you didnt have a clue about the previous answer you gave. :angry:

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Heres a nice read on PFI from the Chanel four news economist correspondant, Liam Halligan

 

 

Back in 2004, I received an invitation to the annual dinner of the Public Private Partnership (PPP) Forum. A glitzy, black-tie evening was promised, amidst the mock-Gothic splendour of London's Royal Courts of Justice. As a financial journalist, I am asked to numerous swanky, yet frankly humdrum events. But the mighty PPP Forum is different. It comprises many of the UK's corporate A-list - more than 100 contractors, banks and law firms.

 

PFI, in turn, is a multi-billion pound industry. New Labour has signed hundreds of long-term contracts with the private sector to construct - and then service and maintain - schools, hospitals and other public buildings. The government pays back investors over 30 years or more, after which the buildings revert to the state. Even two years ago, it was clear the government had based the biggest public building programme since the war on a gigantic - and controversial - hire-purchase scheme.

 

 

 

CT...you've basically just posted something that demonstrates you didnt have a clue about the previous answer you gave. <_<

 

 

And you've basically stopped as soon as you got to that bit rather than reading the full article.

 

In theory the government could take them back, however everyone knows that future governments will not want that financial burden and will instead keep paying the minimum payment.

 

£333 to change a light switch ffs :angry:

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Heres a nice read on PFI from the Chanel four news economist correspondant, Liam Halligan

 

 

Back in 2004, I received an invitation to the annual dinner of the Public Private Partnership (PPP) Forum. A glitzy, black-tie evening was promised, amidst the mock-Gothic splendour of London's Royal Courts of Justice. As a financial journalist, I am asked to numerous swanky, yet frankly humdrum events. But the mighty PPP Forum is different. It comprises many of the UK's corporate A-list - more than 100 contractors, banks and law firms.

 

PFI, in turn, is a multi-billion pound industry. New Labour has signed hundreds of long-term contracts with the private sector to construct - and then service and maintain - schools, hospitals and other public buildings. The government pays back investors over 30 years or more, after which the buildings revert to the state. Even two years ago, it was clear the government had based the biggest public building programme since the war on a gigantic - and controversial - hire-purchase scheme.

 

 

 

CT...you've basically just posted something that demonstrates you didnt have a clue about the previous answer you gave. <_<

 

 

And you've basically stopped as soon as you got to that bit rather than reading the full article.

 

In theory the government could take them back, however everyone knows that future governments will not want that financial burden and will instead keep paying the minimum payment.

 

£333 to change a light switch ffs :angry:

 

You're being massively selective now. I cropped the article because I was drawing attention to the fact that you didnt appear to know the fundemental difference between a rental agreement and a mortgage, despite happily contradicting Renton without a moments thought. I wasn't holding PFI up as some sort of panacea as you well know.

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Heres a nice read on PFI from the Chanel four news economist correspondant, Liam Halligan

 

 

Back in 2004, I received an invitation to the annual dinner of the Public Private Partnership (PPP) Forum. A glitzy, black-tie evening was promised, amidst the mock-Gothic splendour of London's Royal Courts of Justice. As a financial journalist, I am asked to numerous swanky, yet frankly humdrum events. But the mighty PPP Forum is different. It comprises many of the UK's corporate A-list - more than 100 contractors, banks and law firms.

 

PFI, in turn, is a multi-billion pound industry. New Labour has signed hundreds of long-term contracts with the private sector to construct - and then service and maintain - schools, hospitals and other public buildings. The government pays back investors over 30 years or more, after which the buildings revert to the state. Even two years ago, it was clear the government had based the biggest public building programme since the war on a gigantic - and controversial - hire-purchase scheme.

 

 

 

CT...you've basically just posted something that demonstrates you didnt have a clue about the previous answer you gave. <_<

 

 

And you've basically stopped as soon as you got to that bit rather than reading the full article.

 

In theory the government could take them back, however everyone knows that future governments will not want that financial burden and will instead keep paying the minimum payment.

 

£333 to change a light switch ffs :angry:

 

You're being massively selective now. I cropped the article because I was drawing attention to the fact that you didnt appear to know the fundemental difference between a rental agreement and a mortgage, despite happily contradicting Renton without a moments thought. I wasn't holding PFI up as some sort of panacea as you well know.

 

 

And Im sure you also know that a PFI is nothing like a mortgage which is what Renton posted.

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Heres a nice read on PFI from the Chanel four news economist correspondant, Liam Halligan

 

 

Back in 2004, I received an invitation to the annual dinner of the Public Private Partnership (PPP) Forum. A glitzy, black-tie evening was promised, amidst the mock-Gothic splendour of London's Royal Courts of Justice. As a financial journalist, I am asked to numerous swanky, yet frankly humdrum events. But the mighty PPP Forum is different. It comprises many of the UK's corporate A-list - more than 100 contractors, banks and law firms.

 

PFI, in turn, is a multi-billion pound industry. New Labour has signed hundreds of long-term contracts with the private sector to construct - and then service and maintain - schools, hospitals and other public buildings. The government pays back investors over 30 years or more, after which the buildings revert to the state. Even two years ago, it was clear the government had based the biggest public building programme since the war on a gigantic - and controversial - hire-purchase scheme.

 

 

 

CT...you've basically just posted something that demonstrates you didnt have a clue about the previous answer you gave. <_<

 

 

And you've basically stopped as soon as you got to that bit rather than reading the full article.

 

In theory the government could take them back, however everyone knows that future governments will not want that financial burden and will instead keep paying the minimum payment.

 

£333 to change a light switch ffs :angry:

 

You're being massively selective now. I cropped the article because I was drawing attention to the fact that you didnt appear to know the fundemental difference between a rental agreement and a mortgage, despite happily contradicting Renton without a moments thought. I wasn't holding PFI up as some sort of panacea as you well know.

 

 

And Im sure you also know that a PFI is nothing like a mortgage which is what Renton posted.

 

.....no I'm saying that it is more accurately characterised as a mortgage than a rental agreement given the technical construction of the respective terms. Which was the only question Renton posed (purely rhetorically too I suspect).

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I fundamentally disagree with Cameron's overdraft analogy, this is a deliberate attempt to frame the nation's debt position. Long-term government debt is a permanent piece of our national capital structure. It may be high, but it's certainly not all on demand. And yes, the interest on that debt could be used on schools, but a lot of the debt raised WAS used on schools, whereas we all know the Tories would simply cut taxes and tell parents to fuck off and set one up themselves.

 

What bothers me in the light of the obvious fact that the £6bn is a drop in the ocean is that it seems to be pandering to the markets and ensuring they feel as if the right thing is being done rather than actually thinking about the best strategy.

 

One thing that was suggested in the run up to the election by Labour was to shift the balance of the economy back to manufacturing and away from finance and though realising that would be a tough task, it would have the benefit of having more of an ability to stick two fingers up to a sector which has too much power.

 

 

Honestly, if that was possible it would have done already. It simply is basic economics that we cant make stuff as cheap as third world countries.

 

My view is that "The Markets" are simply looking back to the 80's and remembering the Tories took the hard decisions and got the public finances back under control. They know they are prepared to do it again.

 

There will be very few winners, only losers unfortunately.

 

 

I think they took the easy way out in "allowing" the finance sector to boom while not giving a shit about manufacturing (That's Labour as well as Tories) but I don't agree with a defeatist "China will build it all" mentality - I think there is a place for stuff like renewable energy technology and even "local" goods to be made here if it makes economic sense. By the latter I mean in terms of the related benefits of the jobs on the whole economy as I mentioned in relation to mining before.

 

As for the Markets they act on very short term bases and I'm sure they don't really understand what the cuts will mean - they just look back on a shallow level and think "Hmm Thatcher sorted it so it then so it's bound to work now" without any idea about how the world has changed. As I said before theres not that much left in places like the NE that they can cut any more.

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Its funny because the lastest Keynesian models predict that the most effective expansionary policy, when interest rates are effectively zero, is increased government spending. Arguably the situation we are in now. The deficit hawks say to cut spending and encourage the banks to lend. The banks still arent lending but they are cutting anyway. The new Keynesians say

 

http://economistsview.typepad.com/economis...zero-bound.html

 

Its the recession that caused the deficit anyway CT, so the solution is an economic recovery. We shrank by 6%, so we need to grow by 3% for 2 years to be nearly back to where we were on tax revenues (with a debt built up whilst returning to even).

 

http://www.independent.co.uk/news/business...ce-1904129.html

 

Depressed earnings in the financial sector and the general weakness of the economy conspired to push receipts down by 9 per cent overall compared with last year; income tax takings slumped by 20 per cent, and corporation gains tax revenues fell by 6 per cent. VAT payments were up a little, after the 17.5 per cent rate was restored on 1 January. On the other side of the ledger, public spending is still showing double digit increases: 15 per cent up in January, driven higher by the rise in benefits to the unemployed.

 

The solution proposed across the G20 is to cut spending. This could give us a second recession which would further push down tax receipts and increase benefits.

 

The recession didnt cause the defecit only make it worse.

 

It was a well known policy to hope that growth will shrink the defecit but you can not just wait and hope while the oustanding debt continues to increase. You get to a tipping point where the interest payments along are such a huge burden that you can no longer do all the good things that governments should be doing with that money (as is the case now).

 

Labour predicted 3% growth for next year prior to the election however it now looks that those figures where way to optimistic so once again the debt rises.

 

The other problem to this plan is that you hope during the good years when the defecit is good, governments would use that money to reduce the overall debt. But what happens, tax cuts and massive public spending.

 

The recession caused the deficit to affect long term lending rates from the bond market. Which is why its an issue. The recession is the issue which is why i quoted the data in the Independent article from february.

 

A deficit is an indicator of the viability of the governments overall debt. It is not an endpoint in itself, thats the debt. The deficit is a marker for the lenders to understand the price they need to charge to allow governments to raise more capital since it is a marker for risk.

 

My point, which you either didn't get or ignored, is that there is a growing body of evidence to suggest that expansionary public spending has a much higher than normal multiplier effect when the real interest rate is near the zero bound.

 

Our only hope is that Clegg's presence will temper the instincts of the tories.

Edited by ChezGiven

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I fundamentally disagree with Cameron's overdraft analogy, this is a deliberate attempt to frame the nation's debt position. Long-term government debt is a permanent piece of our national capital structure. It may be high, but it's certainly not all on demand. And yes, the interest on that debt could be used on schools, but a lot of the debt raised WAS used on schools, whereas we all know the Tories would simply cut taxes and tell parents to fuck off and set one up themselves.

 

What bothers me in the light of the obvious fact that the £6bn is a drop in the ocean is that it seems to be pandering to the markets and ensuring they feel as if the right thing is being done rather than actually thinking about the best strategy.

 

One thing that was suggested in the run up to the election by Labour was to shift the balance of the economy back to manufacturing and away from finance and though realising that would be a tough task, it would have the benefit of having more of an ability to stick two fingers up to a sector which has too much power.

 

 

Honestly, if that was possible it would have done already. It simply is basic economics that we cant make stuff as cheap as third world countries.

 

My view is that "The Markets" are simply looking back to the 80's and remembering the Tories took the hard decisions and got the public finances back under control. They know they are prepared to do it again.

 

There will be very few winners, only losers unfortunately.

 

 

I think they took the easy way out in "allowing" the finance sector to boom while not giving a shit about manufacturing (That's Labour as well as Tories) but I don't agree with a defeatist "China will build it all" mentality - I think there is a place for stuff like renewable energy technology and even "local" goods to be made here if it makes economic sense. By the latter I mean in terms of the related benefits of the jobs on the whole economy as I mentioned in relation to mining before.

 

As for the Markets they act on very short term bases and I'm sure they don't really understand what the cuts will mean - they just look back on a shallow level and think "Hmm Thatcher sorted it so it then so it's bound to work now" without any idea about how the world has changed. As I said before theres not that much left in places like the NE that they can cut any more.

 

 

I think the finance boom was the last big hurrah and kept the economy going longer until the crash. I struggle to see what will come next.

 

Sure renewables might be a talking post in the north but as the job market goes it will be a tiny spec.

 

I can only see the benefit bill rising and taxes reducing.

 

Not sure what this will lead to other than declining public services and an inevitable privatising of things like the NHS.

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Its funny because the lastest Keynesian models predict that the most effective expansionary policy, when interest rates are effectively zero, is increased government spending. Arguably the situation we are in now. The deficit hawks say to cut spending and encourage the banks to lend. The banks still arent lending but they are cutting anyway. The new Keynesians say

 

http://economistsview.typepad.com/economis...zero-bound.html

 

Its the recession that caused the deficit anyway CT, so the solution is an economic recovery. We shrank by 6%, so we need to grow by 3% for 2 years to be nearly back to where we were on tax revenues (with a debt built up whilst returning to even).

 

http://www.independent.co.uk/news/business...ce-1904129.html

 

Depressed earnings in the financial sector and the general weakness of the economy conspired to push receipts down by 9 per cent overall compared with last year; income tax takings slumped by 20 per cent, and corporation gains tax revenues fell by 6 per cent. VAT payments were up a little, after the 17.5 per cent rate was restored on 1 January. On the other side of the ledger, public spending is still showing double digit increases: 15 per cent up in January, driven higher by the rise in benefits to the unemployed.

 

The solution proposed across the G20 is to cut spending. This could give us a second recession which would further push down tax receipts and increase benefits.

 

The recession didnt cause the defecit only make it worse.

 

It was a well known policy to hope that growth will shrink the defecit but you can not just wait and hope while the oustanding debt continues to increase. You get to a tipping point where the interest payments along are such a huge burden that you can no longer do all the good things that governments should be doing with that money (as is the case now).

 

Labour predicted 3% growth for next year prior to the election however it now looks that those figures where way to optimistic so once again the debt rises.

 

The other problem to this plan is that you hope during the good years when the defecit is good, governments would use that money to reduce the overall debt. But what happens, tax cuts and massive public spending.

 

The recession caused the deficit to affect long term lending rates from the bond market. Which is why its an issue. The recession is the issue which is why i quoted the data in the Independent article from february.

 

A deficit is an indicator of the viability of the governments overall debt. It is not an endpoint in itself, thats the debt. The deficit is a marker for the lenders to understand the price they need to charge to allow governments to raise more capital since it is a marker for risk.

 

My point, which you either didn't get or ignored, is that there is a growing body of evidence to suggest that expansionary public spending has a much higher than normal multiplier effect when the real interest rate is near the zero bound.

 

Our only hope is that Clegg's presence will temper the instincts of the tories.

 

Certainly not ignored <_< and I'll not pretend to understand the rest of that sentence either :angry:

 

But I may google it. ;)

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Its funny because the lastest Keynesian models predict that the most effective expansionary policy, when interest rates are effectively zero, is increased government spending. Arguably the situation we are in now. The deficit hawks say to cut spending and encourage the banks to lend. The banks still arent lending but they are cutting anyway. The new Keynesians say

 

http://economistsview.typepad.com/economis...zero-bound.html

 

Its the recession that caused the deficit anyway CT, so the solution is an economic recovery. We shrank by 6%, so we need to grow by 3% for 2 years to be nearly back to where we were on tax revenues (with a debt built up whilst returning to even).

 

http://www.independent.co.uk/news/business...ce-1904129.html

 

Depressed earnings in the financial sector and the general weakness of the economy conspired to push receipts down by 9 per cent overall compared with last year; income tax takings slumped by 20 per cent, and corporation gains tax revenues fell by 6 per cent. VAT payments were up a little, after the 17.5 per cent rate was restored on 1 January. On the other side of the ledger, public spending is still showing double digit increases: 15 per cent up in January, driven higher by the rise in benefits to the unemployed.

 

The solution proposed across the G20 is to cut spending. This could give us a second recession which would further push down tax receipts and increase benefits.

 

The recession didnt cause the defecit only make it worse.

 

It was a well known policy to hope that growth will shrink the defecit but you can not just wait and hope while the oustanding debt continues to increase. You get to a tipping point where the interest payments along are such a huge burden that you can no longer do all the good things that governments should be doing with that money (as is the case now).

 

Labour predicted 3% growth for next year prior to the election however it now looks that those figures where way to optimistic so once again the debt rises.

 

The other problem to this plan is that you hope during the good years when the defecit is good, governments would use that money to reduce the overall debt. But what happens, tax cuts and massive public spending.

 

The recession caused the deficit to affect long term lending rates from the bond market. Which is why its an issue. The recession is the issue which is why i quoted the data in the Independent article from february.

 

A deficit is an indicator of the viability of the governments overall debt. It is not an endpoint in itself, thats the debt. The deficit is a marker for the lenders to understand the price they need to charge to allow governments to raise more capital since it is a marker for risk.

 

My point, which you either didn't get or ignored, is that there is a growing body of evidence to suggest that expansionary public spending has a much higher than normal multiplier effect when the real interest rate is near the zero bound.

 

Our only hope is that Clegg's presence will temper the instincts of the tories.

 

Certainly not ignored <_< and I'll not pretend to understand the rest of that sentence either :angry:

 

But I may google it. ;)

 

Start here.

 

http://krugman.blogs.nytimes.com/2010/05/24/oy-macro/

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PFI is more akin to getting a mortgage than renting, isn't it?

 

Did you buy your house outright CT?

 

 

No its not, its rental / service agreement

 

With the option to take ownership at the end of the contract? So a hire purchase then if you like. (Nearer to a mortgage than rental though in any event).

 

Not saying its a perfect model btw but I think those arguments have been done to death over the past 10 years or so.

 

Spot on Samuel :angry:

 

And working for a company who has a great deal of its order book in the PFI sector, I kind of have an inkling as to how it works. CT, I can't see how or why you're trying to argue against this one...

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PFI is more akin to getting a mortgage than renting, isn't it?

 

Did you buy your house outright CT?

 

 

No its not, its rental / service agreement

 

With the option to take ownership at the end of the contract? So a hire purchase then if you like. (Nearer to a mortgage than rental though in any event).

 

Not saying its a perfect model btw but I think those arguments have been done to death over the past 10 years or so.

 

Spot on Samuel :angry:

 

And working for a company who has a great deal of its order book in the PFI sector, I kind of have an inkling as to how it works. CT, I can't see how or why you're trying to argue against this one...

 

 

Im not sure which point your making Craig.

 

A pfi for a new hospital or school is more akin to a never ending rental agreement than a mortgage.

 

Nobody seriously expects that after a 25 year pfi agreement has ran out, that the government of the day is then going to take on the costs associated with that hospital or school, they are simply going to renew the agreement which will no doubt include a big refurbishment. Then when the next agreement runs out it will be a whole new school again.

 

If you think its different to this then you will have to be more detailed in your response.

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Its funny because the lastest Keynesian models predict that the most effective expansionary policy, when interest rates are effectively zero, is increased government spending. Arguably the situation we are in now. The deficit hawks say to cut spending and encourage the banks to lend. The banks still arent lending but they are cutting anyway. The new Keynesians say

 

http://economistsview.typepad.com/economis...zero-bound.html

 

Its the recession that caused the deficit anyway CT, so the solution is an economic recovery. We shrank by 6%, so we need to grow by 3% for 2 years to be nearly back to where we were on tax revenues (with a debt built up whilst returning to even).

 

http://www.independent.co.uk/news/business...ce-1904129.html

 

Depressed earnings in the financial sector and the general weakness of the economy conspired to push receipts down by 9 per cent overall compared with last year; income tax takings slumped by 20 per cent, and corporation gains tax revenues fell by 6 per cent. VAT payments were up a little, after the 17.5 per cent rate was restored on 1 January. On the other side of the ledger, public spending is still showing double digit increases: 15 per cent up in January, driven higher by the rise in benefits to the unemployed.

 

The solution proposed across the G20 is to cut spending. This could give us a second recession which would further push down tax receipts and increase benefits.

 

The recession didnt cause the defecit only make it worse.

 

It was a well known policy to hope that growth will shrink the defecit but you can not just wait and hope while the oustanding debt continues to increase. You get to a tipping point where the interest payments along are such a huge burden that you can no longer do all the good things that governments should be doing with that money (as is the case now).

 

Labour predicted 3% growth for next year prior to the election however it now looks that those figures where way to optimistic so once again the debt rises.

 

The other problem to this plan is that you hope during the good years when the defecit is good, governments would use that money to reduce the overall debt. But what happens, tax cuts and massive public spending.

 

The recession caused the deficit to affect long term lending rates from the bond market. Which is why its an issue. The recession is the issue which is why i quoted the data in the Independent article from february.

 

A deficit is an indicator of the viability of the governments overall debt. It is not an endpoint in itself, thats the debt. The deficit is a marker for the lenders to understand the price they need to charge to allow governments to raise more capital since it is a marker for risk.

 

My point, which you either didn't get or ignored, is that there is a growing body of evidence to suggest that expansionary public spending has a much higher than normal multiplier effect when the real interest rate is near the zero bound.

 

Our only hope is that Clegg's presence will temper the instincts of the tories.

 

Certainly not ignored ;) and I'll not pretend to understand the rest of that sentence either <_<

 

But I may google it. ;)

 

Which honestly seems to be the extent of your capabiliites in just about any discussion you've been involved with on here.

 

Good luck 'googling' enough information to counter Chez's acquired academic and practical knowledge over the last decade and more Mr Tree. :angry:

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PFI is more akin to getting a mortgage than renting, isn't it?

 

Did you buy your house outright CT?

 

 

No its not, its rental / service agreement

 

With the option to take ownership at the end of the contract? So a hire purchase then if you like. (Nearer to a mortgage than rental though in any event).

 

Not saying its a perfect model btw but I think those arguments have been done to death over the past 10 years or so.

 

Spot on Samuel :angry:

 

And working for a company who has a great deal of its order book in the PFI sector, I kind of have an inkling as to how it works. CT, I can't see how or why you're trying to argue against this one...

 

 

Im not sure which point your making Craig.

 

A pfi for a new hospital or school is more akin to a never ending rental agreement than a mortgage.

 

Nobody seriously expects that after a 25 year pfi agreement has ran out, that the government of the day is then going to take on the costs associated with that hospital or school, they are simply going to renew the agreement which will no doubt include a big refurbishment. Then when the next agreement runs out it will be a whole new school again.

 

If you think its different to this then you will have to be more detailed in your response.

 

Depends upon the contract you're talking about. From what you've posted it appears that you're talking about the FM side of things rather than the specific building costs. We've signed lots of PFI contracts to build and facilitate but the two do not have to go hand in hand - the FM contract can be awarded to anyone - not specifically the building contractor.

 

When the FM contracts expire they are simply re-negotiated as with any maintenance contract. The cost of the structure of the construction of the facility is not dependant solely on the FM contract though.

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I'm just browsing in this thread to be honest and I get the impression that's all you should be doing.

 

It seems without the aid of the google and wiki you wouldn't be able to hold a conversion about half the stuff you are arguing about.

 

:angry:

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Its funny because the lastest Keynesian models predict that the most effective expansionary policy, when interest rates are effectively zero, is increased government spending. Arguably the situation we are in now. The deficit hawks say to cut spending and encourage the banks to lend. The banks still arent lending but they are cutting anyway. The new Keynesians say

 

http://economistsview.typepad.com/economis...zero-bound.html

 

Its the recession that caused the deficit anyway CT, so the solution is an economic recovery. We shrank by 6%, so we need to grow by 3% for 2 years to be nearly back to where we were on tax revenues (with a debt built up whilst returning to even).

 

http://www.independent.co.uk/news/business...ce-1904129.html

 

Depressed earnings in the financial sector and the general weakness of the economy conspired to push receipts down by 9 per cent overall compared with last year; income tax takings slumped by 20 per cent, and corporation gains tax revenues fell by 6 per cent. VAT payments were up a little, after the 17.5 per cent rate was restored on 1 January. On the other side of the ledger, public spending is still showing double digit increases: 15 per cent up in January, driven higher by the rise in benefits to the unemployed.

 

The solution proposed across the G20 is to cut spending. This could give us a second recession which would further push down tax receipts and increase benefits.

 

The recession didnt cause the defecit only make it worse.

 

It was a well known policy to hope that growth will shrink the defecit but you can not just wait and hope while the oustanding debt continues to increase. You get to a tipping point where the interest payments along are such a huge burden that you can no longer do all the good things that governments should be doing with that money (as is the case now).

 

Labour predicted 3% growth for next year prior to the election however it now looks that those figures where way to optimistic so once again the debt rises.

 

The other problem to this plan is that you hope during the good years when the defecit is good, governments would use that money to reduce the overall debt. But what happens, tax cuts and massive public spending.

 

The recession caused the deficit to affect long term lending rates from the bond market. Which is why its an issue. The recession is the issue which is why i quoted the data in the Independent article from february.

 

A deficit is an indicator of the viability of the governments overall debt. It is not an endpoint in itself, thats the debt. The deficit is a marker for the lenders to understand the price they need to charge to allow governments to raise more capital since it is a marker for risk.

 

My point, which you either didn't get or ignored, is that there is a growing body of evidence to suggest that expansionary public spending has a much higher than normal multiplier effect when the real interest rate is near the zero bound.

 

Our only hope is that Clegg's presence will temper the instincts of the tories.

 

Certainly not ignored ;) and I'll not pretend to understand the rest of that sentence either ;)

 

But I may google it. :rolleyes:

 

Which honestly seems to be the extent of your capabiliites in just about any discussion you've been involved with on here.

 

Good luck 'googling' enough information to counter Chez's acquired academic and practical knowledge over the last decade and more Mr Tree. :angry:

 

 

Pot kettle.... :icon_lol:<_<

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CT is so out of his depth.

 

A great pretender.

 

To be fair to CT, being in opposition is easy. Its easy to knock holes in all aspects of policy, which is why belief in politicians is so important.

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PFI is more akin to getting a mortgage than renting, isn't it?

 

Did you buy your house outright CT?

 

 

No its not, its rental / service agreement

 

With the option to take ownership at the end of the contract? So a hire purchase then if you like. (Nearer to a mortgage than rental though in any event).

 

Not saying its a perfect model btw but I think those arguments have been done to death over the past 10 years or so.

 

Spot on Samuel <_<

 

And working for a company who has a great deal of its order book in the PFI sector, I kind of have an inkling as to how it works. CT, I can't see how or why you're trying to argue against this one...

 

 

Im not sure which point your making Craig.

 

A pfi for a new hospital or school is more akin to a never ending rental agreement than a mortgage.

 

Nobody seriously expects that after a 25 year pfi agreement has ran out, that the government of the day is then going to take on the costs associated with that hospital or school, they are simply going to renew the agreement which will no doubt include a big refurbishment. Then when the next agreement runs out it will be a whole new school again.

 

If you think its different to this then you will have to be more detailed in your response.

 

Depends upon the contract you're talking about. From what you've posted it appears that you're talking about the FM side of things rather than the specific building costs. We've signed lots of PFI contracts to build and facilitate but the two do not have to go hand in hand - the FM contract can be awarded to anyone - not specifically the building contractor.

 

When the FM contracts expire they are simply re-negotiated as with any maintenance contract. The cost of the structure of the construction of the facility is not dependant solely on the FM contract though.

 

 

We were talking about Matts comments that a lot of the National Debt was due to Labour building new schools and hospitals. Which it isnt because the vast majority of them are pfi projects.

 

Keep up with the thread lad. :angry:

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So why on earth are you arguing the toss that they're rental agreements? That's what I'm replying about... :angry:

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I'm just browsing in this thread to be honest and I get the impression that's all you should be doing.

 

It seems without the aid of the google and wiki you wouldn't be able to hold a conversion about half the stuff you are arguing about.

 

<_<

 

 

Thought as much. :angry:

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