Energy Price Rises (2010)

November 2006

Price hikes have been examined/reported before and signals continue to suggest a dreadful future. A worse future cannot be imagined than a nuclear power future. It's very suggestive of softening up (conditioning) the people to accept nuclear power.

• Cheap
• Zero CO2 emissions

Basically, the healthy alternative to expensive fossil fuels involving decreasing oil resources and filthy coal is nuclear power. Spinning it around this sounds like a good idea. A really great idea.

• The argument is similar in principle to poor quality (cheap) 'pseudo-food' being better than real food. Those in gross denial imagine it's a good thing to be fat and unhealthy.

James Lovelock usually produces sensible argument and in his book Vanishing Face of Gaia, makes a strong case for a possible disastrous future for planet Earth in the face of commercial stupidity that focuses on the very short term thinking of making money. Yet while advocating nuclear energy as the clean way forward, totally, ironically and paradoxically at worst ignores and at best attempts to justify the issue of nuclear waste that could potentially lay waste to the very planet (Gaia) that he desires to protect. Downplaying the dangers of nuclear waste does not make them go away and concentrating nuclear sources into one place increases these (very real) dangers. Obviously, the potential to make money and sustain life are completely incompatible as concepts though the critical factor still remains the growing population, but in the

idiots' charter:

more people means more money 

even though the pathway to the future comes to an

abrupt dead-end

Interestingly (!) , or just notably, when commercial adjustments are made that almost certainly will create reduced costs that could be passed onto the customer (smart meters), the savings will enable the commercial energy supplier to retain greater profits for the same customer base. The same amount in, but less out. Cynically, a small reduction is likely to be made that gives the appearance of a generous supplier. In reality, it is more likely to be a simple gesture to create that illusion. It's a commercial business that creates profit for shareholders and it does not maximise the yield by giving too much away. It benefits (itself) by appearing to be fair and reasonable.

• More notably, the popular press (greatest consumer coverage) never expresses the obvious , but actually explicity avoids it and one interpretation of this is the suggestion of collusion against the interests of the consumer. More nauseating irony: the press behaves as a parasite and feeds off the consumer, but denies them the reasoned and important conclusion.

Cars: The Scrappage Deal

Cars: The Real Purchase Price

The conditions for a successful application suggest that the scrappage of a vehicle is just another name for a trade-in. The vehicle must have both current (renewable) road tax (and NOT SORNed) and an unexpired MOT certificate. These two requirements indicate that the vehicle is classified as roadworthy. It must also have insurance cover (legally delivered by road to the dealer and collection by the dealership is allowed). The dealer organises everything removing any possibility of any scrutiny by the seller afterwards. The seller receives £1000 from the dealership and £1000 from the government against the purchase cost of a new car. It's likely that the dealer then applies to the government to get back the £1000. It doesn't concern the buyer of the new car how the finance is arranged. The only cost to government (taxpayer underwritten) is reduction in taxes raised from the sale of the new vehicle. It's just another cynical method of the taxpayer bailing out the car manufacturer and then buying a vehicle with his own already taxed money.

The 'scrappage' of a vehicle could be interpreted as complete removal from the system and never ending up on the roads again. But this doesn't indicate destruction by crushing. The car almost certainly will end up on a road somewhere: the 'scrapped' = 'traded' car (for £2000) would be sold on into the used vehicle business. This removes the requirement for a private seller of the 'old' vehicle to organise its sale before buying new.

• This is similar in principle to the insurance write-off. From the insurers' point of view the repair cost being more than 50% of the car trade-in value, it doesn't make economical sense to effect repairs. It will not necessarily be destroyed by crushing (that should depend on the extent of the damage), but may be sold onto a business at a price that does make it economical to repair and then resell.

This could, in theory, be revealed during the car checks made on a second-hand vehicle before purchase, but that will depend on whether the 'written-off' status has been declared. Only the legal ownership tracking and any outstanding finance or pending prosecutions would be returned. After all, the 'written-off' status is only a commercial decision to declare the vehicle a 'write-off' and doesn't mean that a vehicle is absolutely unroadworthy or that such a declaration must be made. The full vehicle service history is critical to ascertain reliable tracking from new and any break in the history could be that window through which a technical write-off reappeared on a used-car forecourt. If a vehicle does not have a full history then caution should be exercised.

This is no guarantee of a
vehicle's true history

The absolute continuity of history could never be known for an unknown vehicle. The more cars that appear in the used-car trade, and many are bought at auction, the possibility of buying a suspect vehicle increases.

The potential hazards are extensive especially

when a cheap car is the buyer's target

Cars: The Real Purchase Price

• Cars: The Scrappage Deal

Economical Driving

Searching the internet for New Car Sales Tax brings up almost nothing but the so-called road fund license. Almost. Some companies deal in selling new and used cars to HM Forces based in the UK or overseas free of tax. By implication, to be free of UK tax suggests tax is imposed. It used to be 2.5% of the cost of the vehicle. On top of this the VAT is imposed. Either way: VAT before or after car sales tax, this amounts to the same total, but still a tax on a tax. Information appears to be suppressed regarding car sales tax since no information is available. Unless a new car is purchased and then this becomes known, but only to the prospective purchaser. It tends to restrict and contain the flow of information.

When a car is subsequently sold or traded, the tax that had been paid is generally not recoverable and this explains why the worth of a vehicle the moment after a transaction is concluded involves the immediate and highest 'depreciation' cost for the unused vehicle in its overall expected history: it may never have even touched a surface other than the show room floor. The dealer's profit must also (additionally) be taken into account (taxable). The on the road price is inclusive of all the additional costs so the purchaser has to be aware of ALL the added costs. Used cars attract VAT for another tax levy giving more tax finance to government. Again for doing nothing. The VAT will be included in the sale price, but not explicitly declared. Every time a car is traded, more VAT is payable. Again.

A new car with a basic value of £20,000 will have an additional 17.5% (£3500) then another 2.5% (£587.5) on top of this (or the other way around). The additional payments become £4087.5 and the total to be paid would then be £24,087.5. This is the for sale price. If a loan (£24,000 over 5 years for an 'excellent' credit profile) is used to finance a new vehicle, the interest payable will also additionally raise the overall purchase cost to the buyer: almost £500 per month reaching a total of nearly £30,000. So, for a £20,000 vehicle the cost escalates to eventually £30,000. If the car is sold or traded before term, the trade-in price will be considerably less than the original £24,000 (after taxes). At the most it could only be £20,000. But that amount is the original 'value'. Take off another £5000 and this goes downwards to £15,000 of the potential £30,000. Buy another new car (probably the best trade-in price) and start all over. But up to £15,000 poorer. The financed purchase price includes the cost of the imposed tax. Road fund license and the cost of delivery, number plates and the first-time registration fee (the administrative charge for entering the vehicle onto the DVLA system: £55) also add to the cost of a new car.

The £20,000 escalates to the much greater

Real Purchase Price

of £30,000 with none of it recoverable

This could explain why the estimated (annual) running cost of car ownership is possibly unrealistic. The published information on these costs never seems to include the early year(s) that must include the original car-sale's tax and dealers' commission. These costs cannot recur in subsequent resale of a second-hand vehicle. The real average cost could be much lower, since it does not need to include this massive 'depreciation' cost. Of a new car.

Loans (currently around 8.5% and upwards) are offered on new cars without a deposit being necessary. This will increase the amount NOT paid up front, maximising the borrowings and the associated interest payable. Any arrangement fee (commission) to the vendor is added on at the expense of the buyer.

• Businesses can offset these losses. A private individual cannot and bears the entire loss.

Buying a new car or house is buying totally untested. If problems arise, straightforward redress doesn't always run smoothly. Any other purchase has the Sales of Goods Act (Fact Sheet) covering the purchase. The perceived prestige attached to such items as cars and houses (for many the most expensive) seems to render the potential problems and enormous additional costs immaterial. Perceptions can distort judgment.