Sunday 20 July 2008

Outbreak of commonsense

In among all the others lies obfuscation and large gummint dross in this morning's Andrew Marr interview, Dave The Chameleon showed a small glimmer of intelligence with his idea that it was silly to have prisons in inner cities where property values are high - these should be sold off and the money could be used to build a much larger prison out of town. Transcript here.

In other words, although the Prison Service might not pay rent for such buildings, a serious cost accountant resets the clock and asks "If the Prison Service had £x millions in the bank, would it buy or rent in an expensive area or a cheap area?" And if the Prison Service chooses to use valuable buildings, that should be treated as notional income and expenditure.

Having grasped the concept of notional costs, we should extend this to ALL government buildings, including council estates and offices in Whitehall, which leads to all sorts of interesting conclusions.

Funnily enough, the gummint kicked off the idea of Asset Management Plans, whereby all local authorities were supposed to value their properties and work out notional rents, but it was never really followed through - which is why there are so still many government offices in the centre of London which are worth billions.

8 comments:

Anonymous said...

"out of town"? They should be on bloody Mull. Or we could rent a bit of Guyana.

Mark Wadsworth said...

Taken to its logical conclusion, yes.

Anonymous said...

If we sent them to India we could call the jail a Cell Centre.

Mark Wadsworth said...

Deporting foreign crim's is a no-brainer.

Combining a prison with a call centre is a stroke of genius.

Anonymous said...

Brown has already sold some of them. Problem is he rented tham back.

Anonymous said...

Would a LVT apply to all government departments as well? This could encourage them to optimise their property portfolio by moving to cheaper locations.

Combining a prison with a call centre is a stroke of genius.

Really? Or are you being sarcastic? I don't think it is a good idea - I doubt many people would be happy to discuss their bank account or home insurance details with criminals.

BTW: I think this has already been done in the US and elsewhere, e.g. see this.

"Companies flinch at the prospect of a public-relations backlash should news leak out that they employ hardened criminals."

So companies and the state are being dishonest with the public by not telling them.

"Union representatives, meanwhile, call the hiring of prisoners a flagrant violation of minimum-wage laws and unfair competition to free workers."

I recommend watching The Shawshank Redemption for further info on this. (I recommend watching it anyway).

"A call center for the DMV is run out of an all-female prison in Oregon."

Great. I can just imagine some Home Office minister deciding to save money on the new ID cards by getting the residents in Belmarsh to run the help desk.

Mark Wadsworth said...

Ed, re your first question, the purists say that govt departments should pay LVT as well. But as that would be the govt paying tax to itself it seems a bit daft - it would go in as income and expense.

Surely it makes far more sense to include the full notional rent/cost of capital as income and expense (to show true cost of all The State).

Seeing as the total rental value will by its very definition include the notional LVT bill, doing as separate line for notional LVT income and expense would be double-counting.

As to 'cell centres', tongue, cheek.

Snafu said...

Prisons should be built next to airports or sewage works.