Article 240 - The Regional Mayors Investment Issue

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