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Friday, 13 February 2009

What a difference a day makes

Yesterday I woke up to hear BBC Radio 4 telling me that a UK consortium had won a vital contract to supply rolling stock for the East Coast Main Line and this was going to create or sustain 12,500 jobs, according to Geoff Hoon. By the end of the day, all this had been rubbished and it turns out that no more than 500 new jobs will be created and that this UK consortium is really Hitachi supplying the rolling stock, John Laing building a few sheds and Barclays supplying some finance.

Some of the assembly will be done in the UK, but you can bet your bottom dollar that this is to reduce the impact of EU import duties – the rate duty on the components will be smaller than that on the finished product and there is no duty at all on the component of the final sales price represented by the final assembly if that takes place inside the EU.

Undaunted, last night Geoff Hoon was spinning a new line. This was no longer a UK consortium but welcome inbound investment by Hitachi. Wrong again Mr Hoon. Inbound investment is when a foreign company makes an investment in plant and machinery in the UK to build up a business and make sales. What is happening here is sale first, capital spend later. If the government didn’t agree to buy the Hitachi imported train sets, there would be no money spent on building the maintenance depots. That money will come from Barclays and the bank market, not Hitachi.

Two untruthful spins on the same story from the same minister in one day. Is this a record?

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