DfT budget cut by £545m

[pemma]

No information on how a £545m 'saving' can be made by DfT other than it says "incl. King’s Cross property" which is apparently the sale of property around Kings Cross for an estimated £345m, so that leaves £200m of unspecified savings.

https://www.gov.uk/government/news/chancellor-announces-4-billion-of-measures-to-bring-down-debt

 

[matt_world2004]

Wouldn't it be better to keep kings cross and renting facilities out in it?

 

[Xenophon PCDGS]

Wouldn't it be better to keep kings cross and renting facilities out in it?

How many years would it take for the annual total rentals, less any maintenance costs, take to reach the level of an outright sale?

 

[swt_passenger]

Wouldn't it be better to keep kings cross and renting facilities out in it?

They almost certainly aren't referring to the station, but the surrounding large scale property development area owned by LCR.

 

[Wolfie]

No information on how a £545m 'saving' can be made by DfT other than it says "incl. King’s Cross property" which is apparently the sale of property around Kings Cross for an estimated £345m, so that leaves £200m of unspecified savings.

https://www.gov.uk/government/news/chancellor-announces-4-billion-of-measures-to-bring-down-debt

That £545M is in-year (ie for this Financial year)... and DfT's baseline budget for future years (before any future savings) will be reduced by at least the £200M going forward...

That's why I've been saying don't count your chickens over things like Pacer replacement...

 

[pemma]

That's why I've been saying don't count your chickens over things like Pacer replacement...

It would be foolish of Patrick McLoughlin to reconfirm the government's commitment to Pacer replacement and implementing the Northern Hub this week if the reduced budget didn't allow for it.

There's rumours circulating that certain CP5 infrastructure schemes will follow North TPE electrification in being pushed back to CP6.

 

[Xenophon PCDGS]

That's why I've been saying don't count your chickens over things like Pacer replacement...

Are you expecting a very large U-turn by Angel Trains with regard to the Class 142 Pacer fleet from the previous statements made by that company.

What powers over Angel Trains do the DfT have?

 

[chorleyjeff]

How many years would it take for the annual total rentals, less any maintenance costs, take to reach the level of an outright sale?

About twenty.
But it all depends on rental yield.
And there is risk which should not be taken on by a publicly funded organisation - although some can not resist.

 

[pemma]

Are you expecting a very large U-turn by Angel Trains with regard to the Class 142 Pacer fleet from the previous statements made by that company.

What powers over Angel Trains do the DfT have?

As I already posted Patrick McLoughlin has reconfirmed the government's commitment to Pacer withdrawal this week so it's unlikely to happen.

However, if Angel don't want to make the 142s accessible it's possible for another party to buy them for scrap value and do them up. Remember Island Line bought the ex-LU stock for £1 from HSBC Rail.

 

[matt_world2004]

How many years would it take for the annual total rentals, less any maintenance costs, take to reach the level of an outright sale?

However. Long term it would net more money

 

[Xenophon PCDGS]

However. Long term it would net more money

Admittedly possible, but the current need seems to be able to realise those assets as soon as possible noting the immediacy of the said savings requirements.

 

[route:oxford]

No information on how a £545m 'saving' can be made by DfT other than it says "incl. King’s Cross property" which is apparently the sale of property around Kings Cross for an estimated £345m, so that leaves £200m of unspecified savings.

https://www.gov.uk/government/news/chancellor-announces-4-billion-of-measures-to-bring-down-debt

LCR are also working on a development on the old sidings at Oxpens in Oxford, that may well make up a good proportion of the remaining £200M

 

[matt_world2004]

Admittedly possible, but the current need seems to be able to realise those assets as soon as possible noting the immediacy of the said savings requirements.

Except there is no immediacy government debt s are a long term thing and short termist behaviour like this one would not pay down the deficit.

 

[yorksrob]

Admittedly possible, but the current need seems to be able to realise those assets as soon as possible noting the immediacy of the said savings requirements.

As always, a short term fire sale of British assets so the City boys can clean up with a long term income stream. Britain is so depressingly predictable.

 

[Xenophon PCDGS]

Except there is no immediacy government debts are a long term thing and short termist behaviour like this one would not pay down the deficit.

Are you now saying that the £545 million pound DfT saving requirement that was stated in the original posting of this thread are not a matter of short term but of long term savings.

I am now totally confused as to when these expected DfT savings are scheduled to be made.....

 

[6Gman]

However. Long term it would net more money

Maybe. Maybe not. Depends on the specifics. To which we are not party.
--- old post above --- --- new post below ---

Except there is no immediacy government debt s are a long term thing and short termist behaviour like this one would not pay down the deficit.

Are you sure you have a full understanding of "debt" and "deficit" in this context?

Selling an asset in order to pay down debt in turn reduces the deficit by cutting annual interest payments.

If government debt is attracting an interest rate of - say - 4.5% then an asset sale raising £500M would result in a reduction of £22.5M pa in the deficit.

 

[DarloRich]

As always, a short term fire sale of British assets so the City boys can clean up with a long term income stream. Britain is so depressingly predictable.

Next you will be telling me the government want to sell off Lloyds shares for less than they are worth to their chums in the city. Oh hang on!

With a Tory majority anything that isn't nailed down will be sold to their chums pronto.

 

[edwin_m]

As suggested above, I imagine this is the new development including the UK HQ of Google etc rather than operational railway property. In which case it seems quite reasonable to carry out a commercial sale - certainly far better than some of the cuts that might be considered to raise the same amount quickly. The Government probably isn't the best body to have a long-term involvement in commerical development in any case.

 

[BantamMenace]

As always, a short term fire sale of British assets so the City boys can clean up with a long term income stream. Britain is so depressingly predictable.

...and pay tax on said income streams.

 

[yorksrob]

The Government probably isn't the best body to have a long-term involvement in commerical development in any case.

Well, that's the orthodoxy.

It's strange that the public sector is always berated for being a subsidy sink, yet as soon as it gets near to anything that might turn a profit, it gets sold off.
--- old post above --- --- new post below ---

...and pay tax on said income streams.

To go towards the cost of running the railway. Only with a large cut taken out, unlike if the railway had kept hold of the income stream.

 

[Moonshot]

...and pay tax on said income streams.

A fact that is often lost on those screaming for re nationalisation of former state industries

 

[BantamMenace]

To go towards the cost of running the railway. Only with a large cut taken out, unlike if the railway had kept hold of the income stream.

Just like if the railway kept the income stream for itself and paid tax on it back to central government. Little in it either way so why not disperse of the risk?

All this about money leeching out of the privatised railway but for every hand it passes through tax is paid on it to go back round the system.

 

[Manchester77]

It's rather ridiculous that we're seeing this cut to departmental budgets overall especially when this very week the OECD has come out and said that austerity hampers economic growth; the fetishisation the Tories have with cuts is deeply harmful.

While there is the talk of most of this cut coming from asset sales we have the spending review coming up so I suspect we'll see some further cuts to the DfT budget, where they'll come from is another matter

 

[Bantamzen]

Just like if the railway kept the income stream for itself and paid tax on it back to central government. Little in it either way so why not disperse of the risk?

All this about money leeching out of the privatised railway but for every hand it passes through tax is paid on it to go back round the system.

That all depends on the companies concerned. Now I'll confess to not knowing just how Britains's TOCs are financially structured, but if you look across at another privatised industry, in this case energy, you'll see that at least some companies who are based overseas a lot of that money they make doesn't get back into our economy, but instead finds it's way into the economy of the country they are based in. For example in recent years there's been a lot of discussion about EDF Energy, whose parent company is Électricité de France which is largely owned by the French Government. As with many complex company structures, profits generally tend to move back to the parent in time, so in EDF's case the accusation is that we are effectively helping to subsidise the French energy infrastructure by having sold part of ours to EDF. So what's to say that something similar isn't happening in the rail franchises, especially given the growing involvement of ooverseas companies?

 

[sarahj]

...and pay tax on said income streams.

Oh thats so funny. It will be bought by an 'offshore' company and any tax paid will be the minimum possible, if any, after 'losses' are taken into account.

 

[WatcherZero]

Guardian has detailed the cuts.

£345m from selling land around Kings Cross
£124m cut to contingency funds
£31m cut to the London General Grant (A £1bn annual block grant towards London Underground, effectively a 0.7% cut for TfL)
£16m cut to regional airlinks subsidy through not expanding the program beyond Newquay and Dundee airports
£23m cut to Cycling Cities fund (fund had given grants totalling £114m over next three years so a 20% cut to promised cycling investment)
£5m cut to station improvement fund (budget was £60m and only announced 3 months ago)
£1m cut to Sheffield Tram-Train

 

[yorksrob]

Just like if the railway kept the income stream for itself and paid tax on it back to central government. Little in it either way so why not disperse of the risk?

All this about money leeching out of the privatised railway but for every hand it passes through tax is paid on it to go back round the system.

There is a material difference between investing an income stream in your asset and giving that income stream away and spending a small slither of that income stream that may come back through taxation (and even that depends on whatever taxation regime the purchasing company chooses to adhere to).

 

[Camden]

£23m cut to Cycling Cities fund (fund had given grants totalling £114m over next three years so a 20% cut to promised cycling investment)

Just singling this one out because it seems to me to be a clear cut example of what I am about to say:

Give that this was an initiative put in place by the government in the last period, with funding amounts allocated by the government in the last period, where is the sense in them announcing initiatives with £xm, and letting councils and other bodies get busy in how they are going to spend that money, only to turn around a few years later and say "oh we know we said and announced that but actually it will only be £ym".

It seems to me that it makes these awards precarious, unreliable, and potentially nothing much more than temporary moments of publicity. Rather like you winning a prize and the company running the promotion turning up at your doorstep for the Cheque Presentation, waiting for the PR to come good, and then cancelling the cheque before you have time to cash it.

I will be interested to see where the money is actually deducted from, and might keep an eye on this fund in particular given the way the money was handed out in the first place.

 

[DarloRich]

It seems to me that it makes these awards precarious, unreliable, and potentially nothing much more than temporary moments of publicity.

Welcome to the world of politics

 

[WatcherZero]

Its easy to see politicking, to give a fictionalised example of a regular occurence, instead of announcing an annual fund say £200m that would pay out each year they instead announce 4 smaller one off funds varying in size from £20-£80m doing the same and councils have to compete against each other making individual bids for each of these funds, then the Government will turn around and say since the fund is oversubscribed heres another £50m, you all to have to bid again though. And so two announcements (start of competition and winners) becomes 10 announcements for the same money and five times the paperwork.