Inferno Continues

MONDAY, OCTOBER 25, 2010

Inferno Continues

It still seems to be alight

BOM correspondents have spotted the following ongoing money pyres:

1. British Council

The good old £0.5bn pa British Council escaped the quango cull (see this blog), and carries on torching our cash as if nothing has happened. David Blackie reports that they have just spent an unknown amount on the“style.uz” fashion week in Tashkent. As David comments:

"If the British Council sponsors a “fashion show” anywhere you might wonder whether in this age of austerity it was an appropriate use of taxpayers money. If the organisation sponsors a fashion show to demonstrate support for such a deeply oppressive regime, you know bloody well that it should do no such thing."

2. Unfunded unprivatised pensions

Nick L highlights last week's court ruling on pension guarantees for the employees of privatised state companies.

As regular BOM readers will know, when companies like BT were privatised back in the 80s, it wasn't done cleanly - HMG issued a Crown Guaranteecovering the companies' accrued pension liabilities. In effect, the problem was kicked off into the long grass by ministers and civil servants who have long since retired on their own index-linked pensions. Unfortunately, what with everyone now living to 120, and the dismal performance of the stock market, those guarantees are coming home to roost big time.

The High Court has now ruled in favour of the BT pension fund trustees, saying that taxpayers are on the line for liabilities of up to £23bn. And that opens the door for a slew of other pension funds to make the same claim. Industry insiders reckon Railway Pensions, UK Coal and Trinity House, would all have strong cases. But British Gas and National Grid could also be included.

The final bill could be... what shall we say... £50 - 100bn? All because privatisation was cocked up.



3. BBC

Long-time BOM correspondent Keith M points out that the much-bewailed cut to the BBC's funding may be more apparent than real.

Yes, the BBC has lost its funding for the the World Service, but if they look well about them they could recoup that - and quite possibly a great deal more - by opening the World Service to adverts.

He also points out that although the BBC is being made responsible for funding rural broadband and SC4, a large chunk of those costs are already being carried within the existing arrangements. For example, £804m (c£134m pa) in the last settlement was earmarked for supposed digital switchover costs. And now that most people have switched, that cash is effectively available to fund the BBC's new responsibilities.

Finally, he reminds us that a 6 year freeze in the licence fee is not the same thing as a revenue freeze. The BBC will still benefit from the growth in the number of licence holders.

Roll on privatisation.


Conclusion...

What all three of these pyres highlight is that even after George's cuts, the incineration problem has most certainly not gone away.

But on the positive side, when the BBC keeps asking "what's your Plan B?",it's clear that there's still plenty of scope to cut spending further. And that includes spending on the BBC.