It is possible to regard me as excessively cynical but my first reaction to any political claim is “Why is this bastard bastard lying to me, the bastard?”
It’s surprising how often that’s a useful question, too, and the usual answer is because the maker of the claim thinks I’m stupid.
Now, I will admit to stupidity — or possibly gross ignorance — on many subjects. On others, I will admit to a certain knowledge and therefore get upset when certain claims are made. For there are those times when people are assuming that all you lot are stupid and will agree. Either that or they are stupid themselves.
The subject of ire at present? Well, it concerns the difference between an operating profit and a net. We have Unite the Union, you see, claiming that the National Grid makes 38 per cent profits. This then leads to the claim from NEF (the New Economics Foundation — or, as I prefer to call it, Not Economics Frankly) that nationalising the grid will drop everyone’s power bills by £142 a year through the elimination of such profits.
This, at best, is an insane level of ignorance. The 38 per cent is operating profit. That’s after the cost of running the grid. For that’s what operating profit is — the cost of operating. So, that’s before all the capital costs of having the grid. The costs of having built the grid in the first place, the costs of maintaining the grid as it is, and the costs of rebuilding out the grid to deal with those lovely renewables. When we actually include all the capital costs the grid makes £5 billion or so — perhaps 5 per cent — on the £100 billion and change of assets it has.
Nationalising the grid doesn’t change those costs of having built, keeping built or building out the grid. A government owned utility would be paying perhaps the same interest as gilts on those same costs — say, 5 per cent at present? So the necessary return upon assets, public or private, will be about the same. The use of that 40 per cent is at best foolish and at worst a deliberate appeal to the ignorance of the median voter, on the very simple grounds that the union for national grid workers knows they would be able to get better wages out of government than they can a profit-focussed private company.
I trace this specific technique back to the campaign against private sector involvement in children’s homes. Some years back, there was a report that the private homes were making vast profits — 23 per cent and the like — while also sitting on debt piles that made them financially unstable and thus a risk to the system. People who make 23 per cent profits don’t have debt problems of course. The answer was that the 23 per cent was the operating profit and the debts were things like mortgages (for you do rather need to have a home to put children in, right?). Operating profits do not include the capital costs — things like the mortgage for, the depreciation upon, the amortisation of a home to put children in.
Which is how they squared that particular circle, both vast profits and also penurious instability. I’ve complained about it for some years now — but one personal parp isn’t enough to overcome the societal ignorance of the trick being played. The current government is now set to legislate to reduce the immense profits in private sector children’s homes provision. Despite the finding that council homes are “no less expensive” than private.
We can also see one such campaign just starting: this time on the costs of ADHD testing. A groupuscule writes a “report” claiming that profit margins are vast, gross, the capitalists ripping off the taxpayer etc. We get the press reporting on it, The Times:
Major providers include ADHD360, which provides an “essential care package” of assessment via video call and treatment for £1,740. Its latest accounts, for the year ending December 2024, show turnover nearly doubled in a year to £22.5 million, with gross profits of £9.7 million.
See, those gross profits are gross. Except we can also do what The Times did, which is go and look up the public accounts for ADHD360 at Companies House. This shows profit for the financial year of £1,580,299. On a turnover of £22 million and change that’s 7 per cent. Sure, sure, we can talk of the iniquities of capitalism but that’s not wholly a rip off now, is it?
It was in the books concerning Mr Bond, J, that we got the statement that first time is happenstance, second coincidence and the third is enemy action. Perhaps it is that old cynicism talking, and perhaps this is just a case of the blind leading the blind, but I fear that groupuscules have noticed that it works to deliberately confuse and confound operating and net profits. Therefore the tactic is spreading across the universe of such groupuscules.
Perhaps we are all going to have to go back to being an informed citizenry
What really worries me, though, is the paucity of others calling this behaviour out. Of course, we would expect this sort of reporting from The Guardian — the propaganda rag for lanyard class groupuscules. But the newspaper of record as well? Yes, yes, we all know that journalists don’t do well with numbers. But really.
Perhaps we are all going to have to go back to being an informed citizenry. It might be tough to get there — but it would be very profitable.
