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Business Comment

Ageing assets need improving, but at what cost to struggling households?

Outlook: If the widespread use of food banks is worrying you now, just imagine what will happen when those bills start to come in

The Public Accounts Committee at the House of Commons has been busy of late.

Having eviscerated IT company Atos over disability benefits, and the Treasury over tax reliefs, it today turns its attention to infrastructure and the money being spent on making it fit  for purpose.

A rather drier subject than an out and out fiasco causing misery to one of society’s most vulnerable groups or what amounts to arguably a Government-sponsored tax dodgers’ charter?

The numbers suggest otherwise.

The Treasury has identified more than £375bn of investment that is required to bring ageing assets up to scratch, or at least to bring them up to a point where the EU considers them to be up to scratch.

Around two thirds of that – some £250bn – is to be financed and delivered by the private sector, the costs of which will ultimately be passed on to the consumer through higher charges for services such as water and energy.

As a result, it seems that Ed Miliband’s one good line – the “cost of living crisis” – is about to become a cost of billing crisis.

The investment is necessary. If its impact on household bills will be severe just imagine the impact down the line from not making the improvements: if action is not taken soon there might not be any affordable energy – to take one of the more obvious examples – available to bill for.

However, as the bipartisan PAC has correctly identified, it’s the method of paying for it that is at issue. Rising bills have the greatest impact on the poorest in society, the people who have the least slack in their household budgets to cope with them. 

If the widespread use of food banks is worrying you now, just imagine what will happen when those bills start to come in. 

This argues strongly for re-balancing the funding away from billing – which is regressive – to taxation, which is more progressive. Oddly, however, while bills from the likes of utilities make people cross, it scarcely compares to the fury when bills or levies are imposed by  the state.

So it’s unlikely that any Government – of whatever hue – will be willing to do much more than tinker around the edges.

Which behoves them at the very least to ensure that the regulatory agencies appointed to oversee the private providers represent the interests of the consumer rather more aggressively than they have up until now.

The gold rush around utilities, with a bevy of pension funds, private equity firms and other investors competing to pay top dollar for the companies in the sector, tells its own story.

Utility regulators need to grow – or be given – teeth, if worries about the lights going out aren’t to be replaced by concerns about food banks running out.

Poor pay packets derail Coalition’s grandstanding

 Why did employment grow so strongly during the Coalition’s first few years when the economy struggled so much?

This so-called “productivity puzzle” has been taxing some of the City’s brightest economists, and threatening to overload the inboxes of those who receive their research reports.

If you’re among them, it looks as if you might be about to get at least some relief from the IT bods who’ve been moaning about the strains you’ve been placing on email servers with all those heavyweight pdfs that you’ve been forgetting to delete.

That’s because it looks like a partial solution might be about to emerge from within the dusty environs of the Office for National Statistics’ headquarters in Newport, South Wales. And it is that there wasn’t such a puzzle in the first place.

The ONS is changing the assumptions it uses to calculate several rather important figures such as Britain’s GDP, and its economic performance, in order to bring them into line with international standards.

The upshot is that while the recent recession was still the worst since the Wall Street Crash, it wasn’t quite as bad as it had previously been assumed. Isn’t that a relief? 

Pity the poor cleaners who’ve had to mop up the drool on the desks of the Treasury’s ministers at the prospect of this.

Unfortunately for their electoral prospects, what none of this does is change the fact that wage packets have been failing to keep pace with inflation throughout the Coalition’s tenure and there’s not a lot the ONS can do about that.

It might say the economy has been performing much better than anyone had realised, but a cynical electorate, which views official figures with some scepticism at the best of times, still isn’t really feeling it.

What’s that at the back? Did I hear someone talking about lies, damned lies and…

Spending more may cost SFO fewer failures

 The Serious Fraud Office says it is taking on fewer but bigger cases. Wags might wonder if that will simply result in fewer and bigger cock-ups.

Except that it’s hard to envisage a much bigger cock-up than the botched investigation of the Tchenguiz brothers that may yet break the organisation.

Should we be all that surprised? The SFO’s accounts reveal that its chief investigator makes £100,000 a year, a sum you’d likely be pulling in during your mid to late 20s at one of the bigger City law firms.

So, in effect, the SFO is left fighting the Towering Inferno with a water pistol. And it keeps getting jammed.