Friday, December 04, 2009

Bank bailout: UK taxpayer on the hook for $850 billion

From the National Audit Office:

"The purchases of shares by the public sector together with offers of guarantees, insurance and loans made to banks reached £850 billion, an unprecedented level of support."

The numbers just keep getting bigger. The NAO says the losses to taxpayers will not be known for years, and concludes that the support has been justified, given the scale of the economic and social costs if one or more major banks had collapsed. We're not going to comment on that -- we'll do so when we are able to get a better picture, with hindsight, which might take 20 years or more -- but given the huge damage done to the UK economy even before the latest crisis, it's amazing that anyone can think business should go on as usual.

Oh, and on the subject of the National Audit Office, here's another minor matter. As the FT reports,

"A 20-year private finance initiative deal in which the private sector took over the management of offices for HM Revenue & Customs has so far proved poor value for money, the National Audit Office said on Wednesday. HMRC could also be in serious trouble if the downturn claims its private sector partner, Mapeley."

And who is Mapeley? Britain's parliament was informed a few years ago that

"the main contracting party is Mapeley STEPS Contractor Limited, also registered in the UK; and that the majority of the assets are held by Mapeley STEPS Limited, registered in Bermuda. Mapeley told us that in PFI contracting the private sector contractor is "typically a special purpose, bankruptcy remote, corporate vehicle.
and
Mapeley "structured its tax affairs to minimise exposure to Capital Gains Tax."

Read more in the parliamentary report.

This is not new, but it still staggers us to know that Britain's tax authority offices are managed by an offshore-diving, tax-avoiding, private finance initiative company. And private finance, of course, is effectively the British government's wheeze to get a bunch of costs off its balance sheet (but not off the taxpayer's back.) And what has the NAO just found?

"HMRC had no long-term plan when it handed over its estate to Mapeley in 2001. It has already paid out £312m ($520m) more than planned – a figure that could rise to £570m, the NAO says."

Jeepers creepers.

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