Banking bail-out: what £1.3tr could have bought

What Britain could have bought for £1.3 trillion

The money being squandered on protecting the assets of bank shareholders could have been spent on hospitals, school and safeguarding our future

FIRST POSTED MARCH 2, 2009

Let's draw up a wish-list. Let's imagine that the £1.3 trillion now committed by the government to bailing out the banks existed in the form of disposable cash. How might you choose to distribute that Everest of money?

A "super hospital" like the new Royal Derby Hospital costs about £250m. For a mere £10bn, therefore, the country could be provided with 40 such hospitals and the entire NHS could become the most modern and best-equipped health service in Europe. Currently, our position is roughly comparable with Poland's.

If it is built, the new Holland Park comprehensive will cost £72.5m, making it the most expensive state school in Britain. We could pay for 13 such magnificent schools for £1bn. For £50bn, we could afford one in every major town in the country.

Nearly 30 years have now elapsed since we were promised a high-speed rail network which would connect Scotland and North of England to the Channel Tunnel and provide a TGV service all the way to Marseilles. That failed promise could be delivered with a snippet of the £1.3 trillion.

A mere £32bn would pay for a network from London to the West Midlands, Liverpool and Manchester on a westerly branch and the East Midlands, Yorkshire, Newcastle, Glasgow and Edinburgh on an easterly branch, with new city centre stations.

In the context of a £1.3 trillion budget most projects will cost chicken feedFor a further £30bn, 15 major cities in Britain could be provided with light railway systems. A high-speed rail link between Glasgow and Edinburgh would cost £3bn. A new Forth Road Bridge would cost £4bn. What are those sums in the context of that £1.3 trillion commitment? Chicken feed.

If we spent the £60bn on the road system which the government promised but has failed to deliver, Britain would go from near the bottom of the European league for the provision of motorways to near the top. A south coast motorway from Poole to Dover has been in need of development for 30 years, as has a motorway from Salisbury to Plymouth. Now, at last, we could have them.

At £3m a mile, we could afford 1000 miles of new motorway and still have enough money left to resurface every inch of Britain's

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I may be wrong but I do not believe that the shareholdings of the banks amount to $1.3 trillion. In any case, a large proportion of the shares is held by Pension Funds which are owned by everybody. So it is not so simple. But who has the money we lost - the USA.

Posted by Peter Robinson at 2:55pm on March 3, 2009

Can we have a proper article that explains why the banks needed propping up? This sort of mindless tosh helps no one to understand the situation. Without a banking system none of the above shopping list would be possible. While undoubtedly the current situation should never have been allowed to arise (and the blame can be attributed to various governments), right now needs must.

Posted by The Anti-Pawn at 10:19pm on March 3, 2009

Agree with Thomas. Feel that the writer - whoever he is - deliberately oversimplifies the financial system in favor of his ideological predelections and the website's need to post well-written stories that grab. The banking system isn't just about deposits, after all. Evidently the editors of this site don't read these comments from readers, , but I'll repeat what I've said before (at the risk of sounding tiresome). I have no idea who the writer is. Maybe he's a household name throughout the Sceptered Kingdom, but you have many readers in more dicey regions like the entire European Union of 28 nations and North America :) Hugs, Roger

Posted by Roger Choate at 11:59am on March 5, 2009

OK, will add a little PS to my note. I've now done a Google on Lyndon, now know a bit about him. He's an old English leftie who has apologized for some of his early positions, and that's great, I apologize for some of my actions 45 years ago, too. That's not the point. The point is that The First Post might want to explain to a worldwide audience who some of your UK writers are, filing opinion pieces that evidently match the magazine's own views. Peace, Roger

Posted by Roger Choate at 12:54pm on March 5, 2009

If you click on his name there is a very succinct summary of his accomplishments. Apparently he has been a motoring correspondent for 11 years and is also a commentator on gender politics. How this qualifies him to pontificate on this subject is beyond me. I suggest he sticks to gender politics, clearly economics and finance is an intellectual bridge too far.

Posted by The Anti-Pawn at 8:51pm on March 5, 2009

Yes but Neal, We hear what you're saying but bankers and their wives have the spending habits of African dictators (and their wives.) Without a substantial cash injection into the banking system how else will they be able to afford a top of the range Mercedes each on an annual basis? If the bank's customers are too broke to milk where else is the money coming from? Think about it. This has serious implications.

Posted by dfg fdg at 10:02pm on March 5, 2009

Its also just a bit silly to talk in terms of one-off capital investments without reference to associated ongoing operational costs. 40 hospitals without staff and ongoing funding is no better than zero hospitals. Generally a very silly article. Must try harder.

Posted by Fred Smith at 10:15am on March 8, 2009

I think you're missing the point. If you run a small business and need money to buy stock to sell to your customers the banks would only lend if you put up bricks and mortar as security. They said this was because it was "too risky". Yet the banks have been gambling on the financial markets and buying so called "toxic assets" without any concern for the risk. When it goes wrong the government bails out the banks. When the small businessman gets it wrong the bank takes his house. Lyndon may have simplified things but his basic point is right. Its one rule for them and another rule for us. regards, Barry

Posted by Barry Cash at 7:06pm on August 9, 2009