Sunday, October 19, 2008

News From BOM Correspondents- 8

While we've been wringing our hands over Armageddon, BOM correspondents have spotted the following:

Crossrail bill already soaring

The taxfunded Crossrail project is supposedly going to cost £16bn, which we reckon translates into a final bill of £25-30bn (see this blog). But as BOM reader MP points out, it's already cost us £500m, even though nothing has yet been built. He says:

"A project that has cost £500 million has spent £25,000 on a party to celebrate a milestone in the project. It has spent over £9,000 on commissioning artworks (paintings and photographs) many of which gather dust in its warehouse in Canning Town, along with over £150,000 of 'overprinting' of promotional documents (plans and proposals)."

Crossrail's PR chief (oh yes, they've got one of them all right) boasts about how their artists will vie with famous railway painters Turner, Pissaro, and Frith. Somehow he forgot to mention none of them were employed by tax-funded railway companies.

2012 bill still soaring

"Taxpayers may have to fund the full cost of the £1billion Olympic village as the credit crunch scares off private investors for the 2012 Games, Olympic chiefs have admitted.

The private sector was originally expected to fund the full £1 billion for the village but the Government has already pledged £550million with Lendlease trying to secure the remaining £450million from private banks with little success.

“We remain very largely in line with budget with cost pressures in some areas offset by potential savings in others,” Mr Armitt told the Assembly in City Hall."
(Times 9.10.08 - HTP JP)

We've blogged the Olympic Village funding fiasco before (eg here). The organisers blithely assumed the private sector would be happy to stump up the £1bn cost, on the grounds that they'd own the village and property prices are a one-way bet. Everybody knows that, don't they?

Naivety doesn't quite capture it.

Outright fraud is closer.

Either way, we taxpayers are now paying the price. And Armitt's phrase "very largely in line with budget" should send a serious chill down our spines.

Bail-out bill set to soar even further

We've blogged before about the wild financial risks the Simple Shopper takes on our behalf - dodgy Icelandic banks being only the tip of the, er, iceberg. Now Joan W has spotted the next such disaster heading our way:

"The £30bn (€38bn) Universities Superannuation Scheme will invest $3bn (€2.2bn) in hedge funds. The decision comes despite several high-profile hedge funds reporting substantial falls so far this year and hedge fund indices recording double-digit negative returns.

Michael Powell, head of alternative assets at the pension scheme, said: “The turbulence in the hedge fund industry has provided USS with a great opportunity as a new entrant.”

Riiiiiiiight. Would that be Great Opportunity as in that great opportunity to step aboard the Titanic just as its bow dipped temporarily beneath the icy waters?

And who guarantees all those university pensions?

Need you ask.

Soaring cost of chavs

NL draws our attention to the forthcoming uprating of welfare benefits. According to the ONS:

"Many state benefits, such as Child Benefit, Incapacity Benefit and Disability Living Allowance, are usually uprated in line with the 12-month rate in September of the all items Retail Prices Index (RPI). In 2008, the September rate was 5.0 per cent, compared with 3.9 per cent in September 2007.

The September RPI is also used in the formula governing the basic state pension, which was set out in the 2007 Budget Report and repeated in 2008. This states that increases in the basic state pension will be in line with the Retail Prices Index or 2.5 per cent (whichever is higher).

Income-related benefits (for example, Job Seeker's Allowance, Housing Benefit and Income Support) are usually uprated in line with September's 12-month rate of the Rossi index, defined as the all items Retail Prices Index excluding rent, mortgage interest payments, council tax and depreciation costs. In the months to September 2008, the Rossi index increased by 6.3 per cent, compared with 2.3 per cent in September 2007."

Or as NL puts it, that's 6.3% for the chavs then.

And since average earnings are now growing by only 3.4% pa, work will be paying considerably less well than benefits this winter.

Last One Standing

A Tory posts a good letter making visible the strength of HSBC.

HSBC are widely thought to be standing ready to take over any other High Street bank casualties - but only on the firm insistence that existing shareholders are totally wiped out. Pity they're not representing taxpayers in place of our wibbly deal makers... er, deal takers.

A Little Piece of Repeat History

Not sure about its original source, but LH sends this spooky chart for us all to fret over:

Sleep well.


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