Friday, 9 August 2013

Cutting in the middlemen

Emailed in by BobE, from Inside Housing:

Two of the sector's largest banks are offering cheaper loans to housing associations after benefiting from gov­ernment initiatives to boost lending.

Lloyds and Royal Bank of Scotland have both taken up the Treasury's funding for lending scheme and passed on cheaper borrowing costs to the sector to offer more competitively priced finance...


OK, stop right there.

i) The government is the government.

ii) Lloyds and RBS were given massive bail outs by the government, which now effectively underwrites and controls them.

iii) Housing Associations are set up, financed and controlled by the government, either directly or via legislation telling them what they can or can't do and what tax breaks they get. They are not charities or truly private organisations.

So instead of the government just building housing itself - or allowing local councils to do so, using borrowed money or otherwise - it is using taxpayers' money to lend to "banks" to lend back to "housing associations" to do the building for them.

We then need overpaid civil servants at HM Treasury to monitor the lending to banks, overpaid regulators to oversee the banks, overpaid civil servants to oversee the Housing Associations and overpaid quangocrats to run the Housing Associations, who then outsource the building work to large corporates with their high paid Chief Executive Officers, who in turn sub-contract it all back out to Joe The Local Builder.

Because, for some reason, this is seen as preferable to allowing councils to just get on with asking Joe The Local Builder directly.

6 comments:

paulc156 said...

Ironic isn't it.Such is the ideology of the main parties that they can't contemplate anything that even hints at plain vanilla direct finance and build by government, whether state or local. Prejudice trumps arithmetic every time.

thethoughtgang said...

Hey, leave those overpaid people alone. They went to school with the politicians are are, therefore, just as entitled to their unearned share of the taxpayer pot as everyone else who is better than you.

Bayard said...

"Because, for some reason, this is seen as preferable to allowing councils to just get on with asking Joe The Local Builder directly."

Well, of course: think of all the private-sector-that-is-really-public-sector jobs it creates on the way. Isn't creating employment supposed to be a Good Thing?

adamcollyer said...

Absolutely hilarious and quite made my day. Reminds me of Fagin... "I think I'd better think it out again"!

The government borrowing money to lend to itself to avoid the need for it to borrow money from moneylenders. Same principle as QE I guess but this scheme is heroic in the elegance of its inefficiency and waste. We should give Mr Osborne the Nobel Prize for economics.

Mark Wadsworth said...

PC, housebuilding (whether public or private sector) doesn't actually need borrowing or lending, the rent pays off the interest, it pays for itself.

TTG, yes, that's me told.

B, proven fact that every extra taxpayer-funded job above and beyond coppers, bin men* etc, costs 1.5 private sector jobs.

AC, thanks, but it wasn't supposed to be funny.

* The full list is a lot longer than that, but you get the gist.

Bayard said...

"B, proven fact that every extra taxpayer-funded job above and beyond coppers, bin men* etc, costs 1.5 private sector jobs."

But public sector jobs are so much easier to create and it does get the unemployment figures down.