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The Regional Mayors Investment Issue
Theory
This essay examines the investment levels available for each of the metro mayors in relation to the UK financial status.
Definitions
Regional; Metro; Mayor
‘A metro mayor is the chair of a combined authority that has agreed to a Devolution Deal and is voted in by the electorate in the combined authority area. These combined authorities are made up of several local authorities. A directly-elected metro mayor will have powers and responsibilities to make strategic decisions across whole city regions, in contrast to existing city mayors (which are also directly elected) or local council leaders that only make decisions for, and on behalf of, their local authority.’
Source: http://www.centreforcities.org/publication/everything-need-know-metro-mayors/
‘These new metro mayors are being introduced in England as part of the Government’s devolution agenda, which allows for combined authorities to take on more functions, over and above those they were allowed to take on under previous legislation. The Cities and Local Government Devolution Act, which became law in early 2016, states that, in order for a combined authority to be given these powers, a metro mayor must be elected for the area. The exact functions the combined authority and metro mayor will manage will vary across combined authorities, depending on the content of the devolution deal reached with central government.’
Source: http://www.centreforcities.org/publication/everything-need-know-metro-mayors/
Financial Leverage
‘Financial Leverage can be aptly described as the extent to which a business or investor is using the borrowed money. Business companies with high leverage are considered to be at risk of bankruptcy if, in case, they are not able to repay the debts, it might lead to difficulties in getting new lenders in future. It is not that financial leverage is always bad. However, it can lead to an increased shareholders’ return on investment. Also, very often, there are tax advantages related with borrowing, also known as leverage.’
Source: https://www.readyratios.com/reference/debt/financial_leverage.html
‘Financial leverage indicates the reliability of a business on its debts in order to operate.’
Source: https://www.readyratios.com/reference/debt/financial_leverage.html
‘If the financial leverage ratio of a company is higher than 2-to-1, it indicates financial weakness. If the company is leveraged highly, it is considered to be near bankruptcy. Also, it might not be able to secure new capital if it is incapable of meeting its current obligations.’
Source: https://www.readyratios.com/reference/debt/financial_leverage.html
‘A leverage ratio is meant to evaluate a company’s debt levels. The most common leverage ratios are the debt ratio and the debt-to-equity ratio.’
Source: http://www.investinganswers.com/dictionary/leverage-ratio
Leverage is the borrowing of money to increase the outcome of a business deal.
Debt
‘Debt is an amount of money borrowed by one party from another.’
Source: Google Search
Assets
‘an item of property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.’
Source: Google Search
Liabilities
‘a thing for which someone is responsible, especially an amount of money owed.’
Source: Google Search
Net Worth
‘Net worth is the value of all assets, minus the total of all liabilities. Put another way, net worth is what is owned minus what is owed.’
Source: https://www.bankrate.com/calculators/smart.../personal-net-worth-calculator.aspx
Debt Ratio
A debt ratio is simply a company's total debt divided by its total assets.
Source: http://www.investinganswers.com/dictionary/leverage-ratio
The Total Equity of the UK
Equity: ‘the value of the shares issued by a company.’
Source: Google Search
Shares: ‘a part or portion of a larger amount which is divided among a number of people, or to which a number of people contribute.’
Source: Google Search
The Financial Leverage Ratio of the UK.
The Financial Leverage Ratio can be expressed as
Financial Leverage Ratio = Total Debt / Total Equity
This is the same as the Debt-to-Equity Ratio.
Debt-to-Equity Ratio = Total Debt/Total Equity
Source: http://www.investinganswers.com/dictionary/leverage-ratio
Method
The essay first establishes definitions for the components of the financial status of the UK and then calculates the data for the financial status of the UK.
For each combined authority with a regional mayor it then relates the location, total investment fund, total timescale for the fund, population and land area from accredited sources in one spreadsheet.
From this data it extracts the fund available per year, the fund per capita per year and the fund per square kilometer of land area.
The revenue for the UK, location, population, tax returns revenue of UK, % of tax revenue per country, direct revenue per person, net worth, asset revenue to run country, assets per person, liabilities debt incl. interest, % of liabilities debt incl. interest per country, debt per person, direct revenue to debt ratio, assets / liabilities liquidity ratio, status as cash crunch or cash flow, net worth - assets / liabilities if assets value falls to zero and asset dependency.
Conclusions are then drawn.
Data for the Financial Status of the UK
Population
The population of the UK is 65,640,100
Source: Google Search
Source: https://en.wikipedia.org/wiki/United_Kingdom
Source: www.UKometers.info/UK-population/uk-population/
Tax Returns Revenue of the UK
This is made up of
Income and Capital Taxes £ 3,704 / person
National Insurance + £1,985 / person
Indirect Taxes + £4,345 / person
Fees and Charges + £0 / person
Business and Other Revenue + £664 / person
This allows for a Total Direct Revenue of £10,698 / person
Source: https://www.ukpublicrevenue.co.uk/numbers?units=d
The total revenue for the UK can be calculated as population x tax per person
65,640,100 x £10,698 / person, approx. £702,217,789,800
Source: https://www.ukpublicrevenue.co.uk/numbers?units=d
Debt
The Total UK Debt for 1 year incl. capital and interest equates to £1,603,000,000,000.
Source: https://en.wikipedia.org/wiki/United_Kingdom_national_debt
Approx. £24,421 per person
Source: UK Public Spending.co.uk UK Central Government and Local Authority Public Spending 2016 - Pie Charts Tables
Assets
The actual UK Asset value be calculated as
Total UK Debt - Tax Returns = Assets
£1,603,000,000,000 - £702,217,789,800
This leaves a remaining revenue of
£900,782,210,200 to run the country for a year.
This amounts to approx. £13,723 per person in the UK.
Source: https://www.ukpublicrevenue.co.uk/numbers?units=d
Source: http://www.tradingeconomics.com/united-kingdom/money-supply-m1
Asset spending per Country in the UK
The total asset spending per capita can be calculated as country spending from
UK Funds / Country Population = total asset spending per capita.
In England the spending per capita £9,111
In Wales the spending per Capita £10,120
In Scotland the spending per Capita £10,689
In N. Ireland the spending per Capita £11,209
Source: https://www.ukpublicspending.co.uk/year_spending_2016NIbn_17bc1n#ukgs302
Source: Google Search
Source: Public Expenditure by Country and Region www. parliament.co.uk
Liabilities
If the total UK debt is taken as the total liabilities of the UK the capital and interest for 1 year equate to £1,603,000,000,000.
Source: https://en.wikipedia.org/wiki/United_Kingdom_national_debt
Approx. £24,421 per person
Source: UK Public Spending.co.uk UK Central Government and Local Authority Public Spending 2016 - Pie Charts Tables
Net Worth
The Net Worth of the UK can be calculated as
Total Assets – Total Liabilities
£900,782,210,200 - £1,603,000,000,000
= £702,217,789,800.
Debt Ratio
The Debt Ratio of the UK can be calculated as
Total Liabilities / Total Assets
£1,603,000,000,000 / £900,782,210,200
1.77 or 1.77%
Equity
Allowing for the total stock exchange to represent the total equity of the UK; as a business.
The UK stock exchange has a total value of £3,272,000,000
Source: http://www.visualcapitalist.com/all-of-the-worlds-stock-exchanges-by-size/
£3,272,000,000 for a population of 65,640,000
Source: Google Search
Source: World Bank
The Financial Leverage to Equity Ratio can be considered to be the total Debt to Equity Ratio.
Debt is considered to be an asset that is invested, a liability to be repaid or a leverage; the amount of borrowed money that is relied upon.
Financial Leverage to Equity Ratio or the Debt to Equity Ratio
The Financial Leverage or the amount of Debt being used related to the shares per head of population of the UK can be calculated as.
Total Debt / Total Equity
£1,603,000,000,000 / £3,272,000,000
489.91 to 1
Conclusions
The investment levels available for each of the metro mayors to allocate are minimal when examined in terms of the money available for each member of the population over the thirty year period of the investment.
The investment fund has been allocated from central government and as such must be part of the total government finances.
The total government finance assets of the UK are less than the total debts or liabilities of the UK.
The total government finances indicate that the UK has a negative net worth.
The total government finances indicate that for every pound of UK assets, the UK has £1.77 of debt.
The financial leverage ratio of the UK is more than 2 to 1 and so the UK is financially weak and moving to bankruptcy.
For every £1 of the UK owned by the shareholders; population; £489.91 is owed to someone else.
The UK government finance can be considered to be permanently moving towards a solvent situation by maintaining a revenue surplus; by regarding debt, leverage as investment; above the tax collected to allow for constant investment.
The current UK economy is therefore debt; leverage; investment financed since the total public debt per person is higher than the per person amount of tax revenue.
The UK economy is dependent on infinite debt, leverage and investment.
This equates not only to money but also to environment, resources and energy.
This form of government financing; by regarding debt, leverage as investment; will not be available in the future after the effects of climate change, fossil fuel phase out and environment, resource and energy depletion due to increasing populations are considered.
If the central government is in debt then they have no ability to provide money as investment to each country in the UK or each combined regional area.
If the debt is considered as money borrowed to be invested then the nature of the investment is as a transferred debt repaid over a longer tax return timescale by the person, persons or location it is invested in.
The investment allocated to the combined regional authorities is therefore a debt moved from central government to a combined regional authority.
The money available as investment per capita can be regarded as the amount of money each member of the population receives as an investment or as the amount of money each member of the population has to pay back as a repayment on the original debt by an increase per year in their taxes equal to their share of the total investment; debt; over 30 years.
Other References
Source:https://www.ribaj.com/intelligence/www-ribaj-com-intelligence-metro-mayors-england-built-environment
Source: http://www.centreforcities.org/west-of-england/
Source: http://www.centreforcities.org/cambridgeshire-and-peterborough/
Source: http://www.centreforcities.org/liverpool-city-region/
Source: http://www.centreforcities.org/greater-manchester/
Source: http://www.centreforcities.org/tees-valley/
Source: http://www.centreforcities.org/west-midlands-3/
Ian K Whittaker
Websites:
https://sites.google.com/site/architecturearticles
Email: iankwhittaker@gmail.com
12/02/2018
13/03/2018
14/10/2020
1748 words over 5
Data
Regional Mayors 30 Year Investment Fund Breakdown
Financial Status UK
Financial Status UK
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