"Taxpayer lost £2.2bn from 'rushed’ sale of Eurostar"

Emailed in by MBK from The Times:

The taxpayer lost more than £2.2 billion from the sale of the government’s stake in Eurostar after the auction was rushed through before the general election, the National Audit Office said.

While the spending watchdog said that the sale of the 40 per cent stake was well run and provided value for money, it fell well short of the £3 billion that the government invested during the past two decades.

So we didn't lose £2.2 bn from the sale, that loss already existed, that money was already spent or misspent. But the sale was at undervalue as well...

The sale raised more than £757 million and the final price was 90 per cent higher than earlier valuations, a report by the office said.The sale raised more than £757 million and the final price was 90 per cent higher than earlier valuations, a report by the National Audit Office said.

Meg Hillier, Labour chairman of the Commons public accounts committee, said that the government’s focus on Eurostar appeared to have been on short-term cash rather than on long-term value for taxpayers.

“Once sold, the family silver can’t be bought back. Had it kept its share, the government was forecast to pay off over £500 million of national debt over the next ten years using dividends from its 40 per cent share in Eurostar, and receive a further £243 million in dividends from its preference share.”

Local council incompetence reaches rage-inducing levels.

From the BBC:

A pre-fabricated property dubbed a "shed" in south-east London has been auctioned off for just under £1m. The 1950s bungalow situated on 0.6 acres of land in Peckham contains three rooms, a kitchen and unfitted bathroom.

Described as "dilapidated", Southwark Council said it was "extremely pleased" it sold for £950,000. The money raised for the property, which is not thought to have been lived in since 2002, will be ploughed back into the council's housing programme.

FFS. They did not sell "a shed", they sold land which will be worth at least £3 million* if it had appropriate planning consents, planning consents which the very same local council will now be granting to the lucky new owner.

* Call it four terraced/town houses similar to the ones on the left of the picture along the front of plot, plus another four along the back, sell them for £600,000 each (according to the article) = £4.8 million, knock off 8 x £100,000 build costs = £4 million, round it down to £3 million for margin of error.

Er Liam .. about that

"We're fundamentally different to this bunch of horrible, nasty, benefit grabbing, benefit removing, forced labour and illegal sanctions bastards" um, stance..."

Forgive me for saying so, but it doesn't quite square with your Party backing them on a emergency vote to approve retrospective legislation to avoid having to "compensate" people they've been er less than honest to by using legislative powers that didn't exist to apply illegal sanctions does it .. or maybe it does, I never can quite get my head around the intricate complexities of politics...

Or maybe the G have been hearing noises via "crossed grapevines" - which if it was the case I would have expected someone on "your side" - say the shadow Work and Pensions secretary, to be hurriedly at least tweeting "The G story is rubbish, no way would we" ... but so far nothing from you since your web-site posting on Monday -

Work Scheme refunds could cost millions
Posted on 11 March 2013 | No comments yet

Liam Byrne MP, Labour’s Shadow Work and Pensions Secretary, responding to reports in the Daily Telegraph that ‘Work Scheme refunds could cost millions’, said:

“Bungling DWP ministers have turned the Work Programme into a West Coast mainline-style fiasco. Hundreds of thousands of sanctions might now be illegal because Iain Duncan Smith messed up the regulations and now the taxpayer might be on the hook for over £100 million.

“It simply beggars belief that this Government is now so incompetent it can’t even organise a simple work experience scheme. We’ll be demanding ministers come to Parliament urgently to explain themselves.”

Demanding they come explain themselves? In return for a promise to back their emergency legislation which removes the obligation to make amends to those affected by that "illegal sanctions" incompetence..?

"The Guardian understands that Labour will support the fast-tracked bill with some further safeguards and that negotiations with the coalition are ongoing"

A DWP spokesperson said: "This legislation will protect taxpayers and make sure we won't be paying back money to people who didn't do enough to find work."

That "we aren't going to pay up JSA that was withheld from claimants under sanction for not agreeing to do something we didn't actually have the legal power to sanction them for not agreeing to do" would appear to run the risk of re-opening the debate on "what the Work Programme is actually for - to help make people seeking work better fitted to achieve that or just to punish them for not having a job" [whilst funnelling large quantities of taxpayer funds to ERSA members - but that's not the issue here] were there someone willing to take it up on the floor of the House but what do I know - Over to you Liam?

DWP seeks law change to avoid benefit repayments after Poundland ruling

The Department for Work and Pensions has introduced emergency legislation to reverse the outcome of a court of appeal decision and "protect the national economy" from a £130m payout to jobseekers deemed to have been unlawfully punished.

The retroactive legislation, published on Thursday evening and expected to be rushed through parliament on Tuesday, will effectively strike down a decision by three senior judges and deny benefit claimants an average payout of between £530 and £570 each.

Reader's Letter Of The Day

From The Metro:

I find it astonishing Britain is to supply items such as body armour and vehicles to the Syrian rebels (Metro, Thu) when we can't even supply our own troops with essential equipment. We should look after our own troops on the frontline.

Lee Chambers.

Fun Online Polls: Election results & Spy in a bag

It appears that the readers of this 'blog are not the representative sample of the UK population I had imagined (well fancy that!). The responses to last week's Fun Online Poll were as follows:

Which party will you vote for on Thursday?
UKIP - 49%
Conservative - 5%
BNP - 1%
Lib Dem - 1%
Green - 1%
Labour - 1%
SNP - 0%
Other, please specify - 6%
I can't be bothered to vote - 8%
There are no elections in my area - 29%

As it happens, UKIP retained their 9 councillors who were up for re-election, and the number of Labour councillors shot up from 1,335 to 2,158. UKIP candidates appear to have got about 13% - 14% of the vote where they stood, which is pretty good by their standards, but they don't have many councillors to show for it.
------------------------------------
With the elections over and done with, I'll start next week's Fun Online Poll a bit early.

That whole spy-in-a-bag story is one of those mysteries, and even the coroner - with mountains of evidence at her disposal - couldn't make up her mind how or why he died.

So let's settle the whole thing quickly and cheaply - on the basis of no evidence whatsoever except what we might have skim read in the newspapers, such as the episode where he asked somebody to tie him to the bed but couldn't free himself - by harnessing The Power Of The Internet.

Cast your verdict here or use the widget in the side bar.

Hunt sabotages self

Yet more fun with Yvonne, the fugitive cow

From The Mirror:

PLANS to lure a runaway cow out of a forest with a bull failed when rescuers realised the bull was castrated.

Animal rights groups brought in Ernst to tempt Yvonne, who escaped 12 weeks ago while on her way to a sausage factory*, without noticing he had been given the snip to make him calm.

Yvonne has been running free in a forest in Bavaria, Germany, with a herd of deer but police want her shot. Animal lovers say they will bring in another bull and have offered thousands for the cow’s safe capture.

* I'm sure there's a joke in here somewhere, along the lines of "Maybe she wants a sausage inside her instead of being inside a sausage", or something.

Storming result!

From The Metro:

Dopey [sic] police officers stood guard outside a raided cannabis factory – while thieves broke in at the back and made off with a major part of the find.

As the two community support officers watched the front, dozens of plants were being put into bin liners and loaded into a van out the back.

A neighbour saw what was going on and called police, who arrived too late to prevent about £15,000-worth of plants being taken. An investigation into the blunder has begun...

Welsh Councils: really raising the bar

Here's a bit of useful background info if you're undecided how to vote in this week's Fun Online Poll.

Grit supplies are "disappearing fast" in the wintry weather, councils across Wales have warned. Three councils, Powys, Carmarthenshire and Caerphilly, have used at least a quarter of their stock, while across Wales 15% of the salt supply has gone.

Welsh Local Government Association (WLGA) spokesman John Davies said: "If this weather persists it is going to be very difficult to keep supplies going." Councils have been given an extra £7m for pothole repair and gritting.

The WLGA is also trying to source 12,000 tonnes of rock salt from Sweden by the end of the month. Mr Davies told BBC Wales: "We have enough grit at the moment, but it is disappearing fast. The effects of last winter are plain to see, and every county has suffered. These are extreme conditions but they've come early."

He said councils in the Wales and England were competing for road salt supplies from the same sources. Welsh councils can use 12,000 tonnes of road salt on the roads in 24 hours, while salt mines could only provide the UK with up to 6,000 tonnes in the same period, he said.

Asking for underpaid tax to be written off under Extra Statutory Concession A19.

The Guardian explains how you do it, or read up at HM Revenue & Customs. Be advised, this is a 'concession', it is Revenue practice only, this is not a legal right.

I do wonder whether this was something that Alistair Darling bunged in the tray labelled "Things for the next lot to sort out" a year ago or whether they've only just noticed.

Via Longrider.

Government Data Loss Of The Week

From the BBC:

The private financial details of up to 50,000 people who claim tax credits have been mistakenly sent out in the post by HM Revenue & Customs (HMRC).

Claimants were sent their annual tax credit award notice, along with personal details of other claimants. One woman from Hyde in Greater Manchester has told the BBC her letter included her neighbour's earnings. She also got the bank sort code and the last four digits of the bank account number of another claimant. The HMRC has said the mistake was caused by a printing error and it will be apologising to all the people affected.

"Health records found in Asda car park"

Spotted over at the BBC, does what it says on the tin.

How not to win the hearts and minds of the Afghan people ...

From The Metro:

A young Afghan girl has been killed after a box of public information leaflets dropped by an RAF aircraft landed on top of her, the Ministry of Defence has confirmed.

The box failed to break apart in mid-air and hit the young girl, who was taken to a hospital in Kandahar where she later died. The leaflets were dropped over a rural area of Helmand province by an RAF C130 Hercules on June 23...

So how did they do it then?

When this story first broke, those who commented reckoned it would be very difficult for them to shift the cash.

It's now reported that they've fled the country with NZ$ 2.3 million of the NZ$ 10 million that was erroneously credited to their account - what the public wants to know (or me at least) is how on earth did they do it?

Don't we all dream of doing this?

From The Metro:

Police are looking for a New Zealand couple who disappeared after a bank mistakenly put $10 million into their account.

The couple, who ran a gas station in the northern city of Rotorua, applied to Westpac Bank for a NZ$10,000 ($6,000) overdraft and had 1,000 times that amount paid into their account. The two then withdrew some of the money and disappeared, Detective Senior Sgt. David Harvey said.

Harvey said Interpol has been contacted for help, suggesting authorities believe they may have fled abroad with the cash...

Tax Credits: A load of shit (part 94)

From Channel 4:

A total of 1.3 million families were underpaid the benefit during the year, up from 800,000 the previous year, with people missing out on an average of £610 each, the HM Revenue & Customs data showed. At the same time £1 billion was overpaid to 1.3 million families, with these people receiving around £705 too much...

It's difficult to say which is worse, but moving on:

A Revenue spokesman said: "Overpayments are not wrong payments. Responsive systems mean that awards can be changed in-year, adjusting to customers changing circumstances. Awards are finalised at the end of the tax year to make sure families have received the tax credits they were entitled to...

Doing a Tax Credits form is about as much fun as doing an income tax return, and they expect 'families' to re-submit claims every time their working hours change; a child ends nursery and goes to school etc. Does that sound very "responsive"? And they ended a sentence with a preposition.

"The level of overpayments is now £1 billion, less than half the level in 2003/04 and 5% of finalised entitlement paid out by HMRC."

Well, whoopie-f***ing-doo!

Overall, 5.98 million families received tax credits during 2007/08, with the average payment increasing by £200 compared with the previous year to £3,611.

I love the spurious accuracy of those figures.

The number of people on low incomes without children who received money through tax credits rose by 10% to 336,000 during the year.

That's the easiest bit to sort out actually: you find the break-even level, where PAYE deducted = Tax Credits paid (slightly above £10,000) and declare that to be the tax-free personal allowance, job done.

Why I love economics

If you have a vague inkling of economics and the closely related topics of taxes and subsidies, combined with a working assumption that most civil servants are totally clueless and there is no co-ordination between different government departments, it must have been perfectly clear that the car scrappage scheme just would not 'work'. It was just a question of sitting back and wait for it to fizzle out.

For starters, it would only appeal to people driving cars more than ten years old that are worth less than £2,000 but who could afford to buy a new car, which appears to be about six per cent of respondents to this Fun Online Poll. Then there's the issue that an average new car will depreciate in value by £2,000 in less than three months, so it's not much of a bribe.

Then, with a huge overcapacity in car manufacturing and a lack of credit, it is a buyer's market - any new car buyer can easily haggle a discount of fifteen or twenty per cent off list price, so even if there were a notional £2,000 subsidy, it begs the question, what is the base price from which the £2,000 is to be deducted? For real hard-core econo-geeks, there's the kinked demand curve*, which says that small changes in the prevailing market price of cars do not actually lead to large changes in quantity demanded anyway, and with huge stockpiles rusting away, the motor industry cares about shifting numbers as much as whether it makes much of a profit on each one.

Then chuck in tax - the most important tax here is Value Added Tax, which makes up £2,000 of the selling price of an average new car costing £15,000. It would have been a damn' sight easier just to scrap VAT on new car sales and have done with it, of course, but we can't do that because of the EU - so with VAT, there is the fundamental point, should the supplier pay VAT on the selling price before or after deducting £2,000? This appears to be one of the sticking points (although I can't say for sure from the scant reporting).

Finally, stir in a handsome dollop of civil service incompetence and garnish with waffle about 'green cars', and what do you get?

Twenty-eight thousand Google results like this.

* My own explanation for the kinked demand curve is that the flat section represents private buyers who buy cars for fun, so demand is price elastic, while the steeper demand curve represents people who need a decent car for business use, so their demand is price-inelastic, but hey.

Memory loss of the day

From the BBC:

A memory stick containing information on hundreds of police investigations has gone missing in Edinburgh. A search was launched after the loss was reported on 26 February - up to two months after it disappeared at Lothian and Borders Police's headquarters.

Non-essential flights of the week

I asked recently how on earth The Righteous were going to distinguish between 'essential' and 'non-essential' flights* - the first question of course being from whose point of view we assess the essentiality of any flight.

The Metro very helpfully reports the case of at least three non-essential flights in this article. Or five, depending on your point of view.

* I am sure that this database will be very useful...

Why a debt-for-equity swap WILL work

NVM alerts me to an article entitled Insolvent Banks: Why a Debt-for-Equity Swap Won't Work.

The author has at least used the real life example of Citigroup, which appears to be deeply in the mire. He points out that if assets were written down by 20% (a reasonable guess), not only would all bonds have to be converted to equity, but (1) some ordinary deposits as well, which would of course trigger a run on the bank, and (2) a lot of those bonds represent money invested by the government on the taxpayers' behalf, so the taxpayer still has to take a loss on the chin.

Problem (1) has only arisen because banks were allowed to move away from the good old-fashioned model whereby they are financed solely by deposits and share capital/retained profits. This keep a tight lid on the lending side, as funding is by definition restricted to 'spare cash' in the economy, which is of necessity a fairly stable amount.

Problem (2) arises because governments have been steering the wrong course for the past year; once you start bailing out banks, it is difficult to know when to stop - the UK government invested £5 billion in RBS preference shares two months ago and is now about to swap this for equity worth about £0.5 billion.

Be that as it may, and as painful as a debt-for-equity swap may be, it is best to get it done and over with as soon as possible - a year ago would have been better than now, but doing it now is better than letting things drag on for another year. Most governments guarantee ordinary deposits (probably rightly so), but clearly they have been undercharging banks for this implicit insurance and not supervising banks closely enough to minimise the risk that it will have to pay out.

Using the author's figures, and assuming that the government guarantees deposits, there would still be an immediate cost to the taxpayer, but at least the loss would be capped once and for all and The Black Hole would be shut.

I did similar workings on the Bradford & Bingley last September, with a 10% write down and it worked just fine - even with a 20% or 30% write down, that bank would not have to eat in to ordinary deposits, so it all depends on the numbers.

There is another cunning way of doing what is effectively a debt-for-equity swap, and that is the New Bank/Good Bank model.

Just sayin', is all.