CRISIS - WHAT CRISIS?

The last time there was a great economic collapse, some major political and economic changes followed it. Now this was a combination of the legacy of failure to deal with the political, economic, and social consequences of the economic collapse, combined with a desire not to return to a grim pre war world and the positive legacy of the combined effort to win the war and defeat fascism. This 'economic revolution' was established or perhaps enshrined at the Bretton Woods conference (in 1944) and lasted until the late 1970's.

This time around following the greed and stupidity induced banking crisis which triggered economic collapse there has been no 'economic revolution', there appears to be no collective desire to make sure the same mistakes does not happen again – at least amongst the political elite. We are collectively stuck with the same old deeply flawed unregulated 'free market' theories that helped to contributed to the banking crisis in the first place - there is apparently 'no alternative' but simply to hope that the failures of the past don't come back to haunt us in future years.

Yet, the version of 'free market' unregulated capitalism, where the big banks pretty much hoovered up their smaller competitors in the years before the collapse (the one legacy of Thatcher that's never talked about is the eradication (with a few exceptions) of our building societies). The same thing happened with the electricity and gas companies, which were rapidly smothers and absorbed to leave us with the unpalatable, untouchable 'Big 6' cartel members - who continue to squeeze their customers and monopolise the so called 'free market'.

Somehow, while Westminster and Washington were distracted or disinterested we ended up with privately owned, privately funded institutions that had become 'too big to fail'. Their financial misdemeanours largely went unchallenged, un-investigated and unreported (save by a few honourable individuals at Westminster who did their level best to shine a light on the nefarious activities of an increasingly unregulated banking sector).

One take on this is that the Westminster elite (elected and non- elected) have for far too long been far too closely involved with the pernicious influence of the city. It has always been too easy for the Westminster elite to flit back and got into and out of lucrative employment in the City (and back again) with little beyond half-hearted ineffective scrutiny.

This was as true under the long Conservative period of governance between 1979 and 1997 as it was under the New Labour governments between 1997 and 2010 and to a great extent remains largely unchanged if not unchallenged. The questionable privatisations under the Conservative, New Labour and Con Dem governments certainly provided plenty of opportunities for cosy well salaried non executive jobs on the board. 

This combined with the blending of private capital with the public sector, begun under John Major, accelerated by Blair / Brown and continued by the Con Dens blurred the boundaries between the public meant that when the crash happened there was real panic, followed by the handing over of significant amounts of public money to private business (banking) concerns pretty much will little regulation of what was done with it (hence the continuance of the business as usual banking bonus culture even within those banks that ended up effectively under public ownership).

After the current crash, unlike after the crash in the 1930's there has been no period of reflection of reform and very little legislative or regulatory action to try to ensure that the circumstances that led to the crash don't happen again. The speed with which the current unrestrained Conservative government has moved to lighten the tax load on the big banks and to reduce corporation tax - something that a former New Labour government would have probably done - reflects the continued unhealthily close relationship between the City and Westminster.

When the crash happened governments and internal financial institutions stood blinking like rabbits gazing into the headlights of an oncoming car - the hard impact that followed left the rabbits stunned and in shock rather than dead. There has been no fix beyond collective wishful thinking that it won't happen again and perhaps a silent hope that some other financial rabbit will take the head on impact next time.

The 'free market' ideology that we have got lumbered with is perhaps the adoptive child of all those other financial experts who were proved so wrong by John Maynard Keynes (back in the 1940's). Certainly the 'free market' economists have re-shaped (shattered) or shaken our world since the late 1970's and unleashed a ‘free market unregulated capitalism' onto the developed, the developing and the former communist worlds - with some pretty dire consequences.

Whether you live in Russia or the old West by and large (although with a few healthy exceptions) former state / publicly owned enterprises and assets are largely no more. They were depending on how you see it, privatised (on the cheap) or plundered by a new class of carpet baggers who enriched themselves at our collective expense. In the East the process was more brutal and profits of the oligarchs larger and even more unregulated. Embedding and developing democracy was always secondary to making a profit - something that has not helped ordinary people very much at all – but has made the city traders very happy!

AN END TO THE GREAT PFI RIPOFF?

This was not a headline I would have expected to be in the Daily telegraph:

PFI: £70m bill for schools that had to close

The Daily Telegraph has rather belatedly discovered that PFI (in England) costs a fortune and brings little medium of long term benefits to users who continue to pay through the nose for maintenance. What seems to have wound up the Daily Telegraph is the fact that at the very least three PFI schools which have been closed due to falling pupil numbers are still being paid for by education authorities (in England) who continue to pay the contractors millions of pounds each year for them until 2035. Additionally, and this must come as something of a shock to the Daily Telegraph, that dozens of other PFI schools which have been built and operated by the private sector, which rented back to the taxpayer regularly face high costs and “incredibly frustrating” restrictions which “hamstring” how they are able to use their school buildings.

Oddly enough the House of Commons’ Committee on Public Accounts which has backed Plaid Cymru’s stance on Private Finance Initiatives (PFI) on housing and hospitals. PFI was developed by the last New Labour government which involves private companies developing projects and paid back by the government over a long contract. Plaid has consistently criticised PFI projects for being costly to the taxpayer and poor in delivery. Right from the start Plaid said that Private Finance Initiatives were a New Labour trick which would eventually cost the taxpayer much more than if they were government-funded upfront. The Public Accounts Committee report has slammed PFI housing projects which have cost considerably more than originally planned and have been, on average, two and a half years late, and says that poor administration, rising costs and the well-known cunning of the financial services sector mean that taxpayers have not benefited from using this method of funding.

It's worth noting that the Plaid-driven One Wales Government confirmed back in 2007 that it would end PFI in the Welsh NHS as part of our goals of keeping the markets out of the health service. Previous reports have shown that PFI has failed when used in the defence sector and this Public Accounts Committee report says that there have been serious problems using it for building housing and hospitals in the NHS. Yet, despite this the UK Government persists in continuing blindly down this road, it's time to draw a line, its time to reconsider the best and most appropriate ways of funding new projects, especially as the Westminster Government is hell-bent on slashing the capital spending which was their core funding.

Further Telegraph revelations have revealed that existing PFI agreements, taxpayers are having to pay more than £200 billion for schools, hospitals and other projects whose capital value was little more than £50 billion. The is the price we are all having to pay (and pay again) for Blair and Brown's premierships – one questions I would like answered is where exactly was the Daily Telegraph when the rush to PFI was under-way? perhaps now that the Daily Telegraph has woken up to the expensive mess that excessive use of PFI has created then perhaps the Conservative part of the Con Dem Government will stop using PFI - perhaps not as it is rather popular with their friends in the City?

BETTER LATE? OR BETTER NEVER?

The news that the Severn bridges will now accept payments via debit and credit cards before the Ryder Cup is welcome news, even if it is only a temporary measure until a more permanent solution is found. Whatever the nature or duration of this quick fix the problem of the tolls on the Severn bridges remains ongoing - basically they can be considered as a tax on jobs, a tax on commuters and tax on anyone or any organisation that does business back and forth across the bridges.

The news that the Welsh affairs committee is in October set to examine the future of the bridges after the crossings have reverted to public ownership should also be welcomed. At the moment the concessions are operated by a private company, the Severn Bridge will return to government ownership when the firm has collected a fixed sum of money from tolls.

The committee plans to look at how tolls on the bridges affect the Welsh economy, the amount of cash that is spent on maintaining the bridges, their future when they return to public ownership and at the level of the tolls, payment methods, the impact of the tolls on tourism and the condition of the bridges.

It's good to see that some of our local New Labour MPs are fully behind this enquiry, which is what you would expect - Jessica Morden, MP for Newport East (and a member of the committee) has welcomed the move (in June of this year), saying that the tolls could be lowered for people living in the surrounding area: “Like the Dartford crossing I can't see why you shouldn't be able to get a concession for those within a certain postcode area.”

Now this is all well and good and very welcome but a tad late, as lest we forget, that New or Unreconstructed Old Labour (under Tony Blair and then Gordon 'Houdini' Brown) were firmly in power (with significant majorities) from 1997 until 2010 so why did they not do something about the Severn bridge tolls then when they had the opportunity?

It's also worth remembering that the private company that operates the Severn Toll Bridges has raised almost £226m over the past three years – yet has spent barely £15m on essential maintenance on the original crossing's damaged cables - which suggests that the bridge tolls are being used as little more than a cash cow, should not come as much of a surprise to many people.

This little gem was extracted by Plaid Cymru's South Wales Central AM Chris Franks, who obtained the figures (in June 2010) under the Freedom of Information Act. The FOI request showed a significant difference between the large amounts of money raised by Severn River Crossing PLC from the toll, and the relatively small amount being spent on treating the damage to the cables on the old crossing.

The Highways Agency suggested that another £5.8m worth of maintenance will take place over the next five years. This despite the fact that some £225,733,000 has been collected in bridge toll revenue since 2006. People may well begin to wonder if they are going to get saddled with major work to maintain the bridges after the toll profits have been siphoned off by the concessionary company when the bridges are finally returned to public ownership in 2014 or 2016.

Even when you looking beyond the immediate teeth grinding impact of yet another annual increase in the Severn bridge tolls (which we will all face in January 2011) there is another issue – one that is beginning to become worth considering, what's going to happen in 2014 (or 2016) when it has been estimated that the PFI contract will have been covered by toll receipts.

Who actually is going to own the bridge (or bridges) and will they stop collecting the tolls? If not then the bridge (or bridges) which sit on the border - with the toll on the newer bridge being collected in Wales, and the older one being collected in England - will the bridge and the tolls simply revert back to the Department of Transport?

Or if perchance the whole package ends with the National Assembly, by default, then if the current tolls were halved then, what could be accomplished by using a percentage to cover maintenance of the bridge and using the remainder of the toll for ring fenced capital projects – such as new integrated transport systems, reopening railway lines, funding tram systems and investing in rail freight – which would be far more beneficial for all of us in Wales than the finance disappearing into the Westminster coffers or to bail out the bankers?

Something else that is worth noting that in October 2009, Sadiq Khan, the then New Labour Minister of Transport, announced a grant of £6m to the Humber Bridge company, saying that, “the Government was committed to doing everything it can to protect communities and businesses from economic downturn and help the country to recover. That is why I decided not to accept the Humber Bridge board's proposed toll increases” if that's the case in England, then why not in Wales?

HERE WE GO AGAIN!

Once again the Severn Bridge tolls, which are the highest in the UK, are set to rise again on 1st January 2010, upon receipt of an order from the Secretary of State, in line with the Severn Bridges Act 1992. It is worth noting that there is provision in the Act for the Secretary of State to amend the tolls, which would at least be a start in helping reduce the costs that road users in Wales are currently facing.

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The Severn Bridge crossing tolls will rise on January 1st 2010, the new tolls will be:

Cars and Motor Caravans: Currently £5.40 will rise to £5.50

Small Goods Vehicles and Small Buses: Currently £10.90 will stay at £10.90

Heavy Goods Vehicles and Buses: currently £16.30 will rise to £16.40

Source Severn River Crossing Plc Website: http://www.severnbridge.co.uk/TollPrices2010.pdf

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By way of comparison across the bridge so to speak, it is worth noting that in October, Sadiq Khan, the Minister of Transport, announced a grant of £6m to the Humber Bridge company, saying that, “the Government was committed to doing everything it can to protect communities and businesses from economic downturn and help the country to recover. That is why I decided not to accept the Humber Bridge board’s proposed toll increases” if that’s the case in England, then why not in Wales?

Looking beyond the immediate and irritating problem of the tolls, as has been pointed out elsewhere, there is another issue that is worth thinking about – what’s going to happen in 2014, which is not that far away, when it has been estimated that the PFI contract will have been covered by toll receipts. Who actually is going to own the bridge (or bridges) and will they stop collecting the tolls? If not then the bridge (or bridges) sit on the border - but the toll on the newer bridge is collected in Wales, so will the bridge and the tolls simply revert back to the Department of transport?

Or if it comes to the National Assembly, by default, then if the current tolls were halved then, what could be accomplished by using a percentage to cover maintenance of the bridge and using the remainder of the toll for ring fenced capital projects – such as new integrated transport systems, reopening railway lines, funding tram systems and investing in rail freight – which would be far more beneficial for all of us in Wales than the finance disappearing into the Westminster coffers or to bail out the bankers?