Just about everything in the proposed £16bn fire-sale of public assets is misguided. First, even if it were to happen (which is far from certain), it would be selling off a significant part of the family silver to achieve only a very small dent in the overall level of borrowing which this year is expected to reach £175bn. As a proportion of the nation’s debt, estimated at some £743bn this year and rising to a staggering £1.4 trillion in 2013-4, it is miniscule, yet the loss to the public sector is considerable. Second, it is absurd to sell such valuable assets in current market conditions when they would not realise a fraction of their real long-term value. The Government’s intention is to halve the deficit within the next 4 years, but there is no guarantee that market values will have risen anywhere near sufficiently within that time to justify such a sale. And thirdly, selling off the nation’s assets – the biggest disposal since Thatcher’s 1980s privatisations – is exactly how not to tackle an enormous budget deficit. The right way is to launch a massive public investment programme in job creation in housing, infrastructure and manufacturing to get people off benefits and into work and paying taxes.

The momentum created by that massive turnaround in employment would be hugely more effective in swinging the public accounts back into surplus than any amount of potential asset sales. So why is Gordon Brown so keen on pursuing this? If it is to pre-empt the Tories with more specific detailed cuts than anything Osborne has produced, then that is a competition Labour should not be in in the first place. If it is meant to demonstrate strong, early action to deal with the deficit, it should rather be assessed against long-term asset value to the taxpayer, particularly the loss of long-term income yield from the Channel tunnel crossing and the Tote.
Or was it motivated by the desire to use the large budget deficit to force through privatisation which have been on the stocks for the last 8 years, but have been successfully resisted all that time? If so, this is being pushed through, not because it will make any worthwhile dent in the deficit, but because the deficit finally provided the excuse to carry through this last round of privatisations which has always been New Labour’s obsession.

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