In message
-sept
ember.org, at 10:36:22 on Mon, 8 Jan 2018, Recliner
remarked:
Roland Perry wrote:
In message , at 09:49:27 on Mon, 8 Jan
2018, remarked:
mix of internally generated surplus and govt investment grant pays
for new =
train fleets. I can't recall a train fleet being "flogged off" to
pay for a=
new one. It was Caroline Pidgeon who remarked that the proposal was "craz=
y" (or some similar term).
And will almost certainly cost TfL more in the long run. Whoever buys the
trains won't be doing it for the good of mankind, they'll want a long term
profit. As ever short termism rules in british government.
What government wants is stability (whichever political party in power
we are talking about).
Thus, raising taxes to fund those trains could result in voters making a
change at the top, which tends to cause all sorts of costly consequences
reversing earlier policy decisions.
A long term lease (which is the opposite of short-term-ism actually)
does at least make things predictable.
This is a form of off-balance sheet government borrowing. It would be much
cheaper if the Treasury borrowed the money directly.
Does TfL have the powers to demand the Treasury take out such loans?
With the best PFI deals, the greater efficiency of a private sector
builder/provider/operator more than makes up for the higher interest
rates they have to pay, but there's no potential for such efficiencies
in a sale/leaseback deal.
And because the depreciating asset has very little value to anyone other
than LU, the lender has to include a risk premium.
Are you sure this leasing deal has no penalty for early termination?
It's not like a building sale/leaseback, where the asset has an
intrinsic, and possibly growing, value. At the end of the lease, the LU
trains will be worth little more than scrap value,
The same value as to TfL, had they owned them outright, then.
so the lease charge has to be high enough to cover their declining
value.
Which is what all leases for diminishing assets do, inherently.
--
Roland Perry