Why susidise private profit asks Chris Franks AM

Chris Franks AM Plaid Cymru writes in the local paper

Why subsidise private profit?

PLANS for a new road to Cardiff International Airport are currently being
considered.
The reaction to my comments questioning whether any of the three possible
routes was suitable was interesting.
Neither Labour MPs nor Tory AMs are prepared to state which of the three
possible routes they support. Hardly a ringing endorsement but they all want
to spend £100m plus on the road.
However, we all know the operators of the airport are not complaining about
road access.
It has been suggested that the road would be to serve the St Athan training
academy.
Personally, I think it would be an outrage to spend such huge amounts of
Welsh public money on feather- bedding the training academy project.
This is a scheme of the UK government and will be provided by a consortium
of private companies. It will cost £12bn.
They will understandably want to make a profit but why should Welsh
taxpayers subsidise private organisations?
If a builder wants to develop a housing scheme the company must pay for the
necessary highway improvements.
So why should we divert cash from hospitals and schools to boost the balance
sheets of multi-national companies involved in St Athan?
The vague idea that any road is good to deal with the current economic
crisis is nonsense. None of the routes are designed and no land has been purchased.
All this will take a significant length of time.

Chris Franks AM Plaid Cymru

Investors' Chronicle Case weakens for defence 23 December 2008
Written by: Julian Hofmann
The year has been less of a rollercoaster for defence and aerospace
companies relative to classic cyclical sectors. However, the received wisdom
that dictated that defence companies would be the stock market's big winners
in an economic downturn has been turned on its head as industry observers
worry about the rapidly changing nature of defence budgets in the US and the
UK. Different companies in the sector have tackled this problem in different
ways.

The main problem for UK-based aerospace and defence companies is that the
boom in defence spending, driven by extra appropriations to pay for the Iraq
and Afghan wars, is coming to a close as tight budget conditions and a
winding down of those sorry conflicts starts to bite into budgets.
Meanwhile, most analysts predict that the US defence spending will start to
come under pressure from 2010 onwards when the new budget is set.
UK defence is also under severe pressure as the Ministry of Defence seeks to
plug a yawning £2bn deficit. Already it has delayed the introduction of the
Navy's new £4bn super-aircraft carriers, which are due to replace the
Invincible class, by two years and there may be more cuts to come as the
economic environment worsens.
The three strands of the defence sector are facing up to these challenges in
different ways.
The service provider QinetiQ is a newcomer to the defence club and the former government-owned defence research agency has a business model which provides both contract
services to governments, running payrolls and pension schemes, as well as
advanced research and development work. It differs in this respect from its
sector peers, which are more manufacturing-based.
QinetiQ piled debt on to its balance sheet to build up an American presence from
scratch. This generated double digit-growth last year at the cost of it being the
most indebted of all British defence companies
with more that two times net debt to earnings before interest, tax,
depreciation and amortisation (Ebitda).

Analysts say the company is too reliant on one large UK contract to manage
weapons ranges and that the 10 per cent margin it achieves is relatively low
for the sector.

A further problem for QinetiQ is the uncertain future of the
Defence Training Review (DTR) private finance initiative (PFI) project, a
contract to centralise the army's training facilities in St Athan in Wales.
Land Securities has already pulled out of the Metrix consortium, of which
QinetiQ is part, while the company acknowledges that DTR is the single
biggest opportunity in its managed services division and is worth some £5bn
over time. Strains on the UK defence budget may put the scheme on the
back-burner, especially as some reports suggest it is unpopular with the
military's top brass..........