Gordon Brown announced a sale of £16bn of state assets in order to “deal with our debt issues”. On the block are the Channel Tunnel Rail Link, the Dartford Crossing toll road and Tote, the nationalised bookmaker, along with a 33% stake in uranium enrichment company Urenco. Around £11bn of the total is expected to come from sales by local authorities.
What the commentators said
The government’s track record on asset sales “does not inspire confidence”, said The Daily Telegraph. It sold over half our gold reserves at the bottom of the market for an average of $275 an ounce. If it hadn’t, we would now be £6bn better off. This sale isn’t looking promising either.
It’s a classic “fire sale”, said David Prosser in The Independent. Buyers won’t be inclined to overpay because it’s clear that we’re desperate for the money. What’s more, most of the assets up for sale “come with so much baggage attached” that the price tags will be lower than the government hopes. And if the £16bn isn’t forthcoming from this “car boot sale”, we face a further hole in our finances, as the Liberal Democrats’ Vince Cable pointed out. These sales were first announced during the budget and have therefore already been pencilled in.
Yet, even assuming the money is raised, it will make scant difference. A one-off £16bn is dwarfed by this year’s budget deficit of £175bn, while our overall debt pile in 2013-2014 will be £1,370bn, said Chris Giles in the FT.
PricewaterhouseCoopers (PwC) noted that getting back on top of the public finances would mean extra taxes of £26bn a year, or cumulative real spending cuts of 17% over the next three years – over and above the plans outlined in the budget. These sales, said John Hawksworth of PwC, are “pinpricks” in the deficit.