Shrinking state

The present government has surpassed a record set by Margaret Thatcher after selling off public assets in 2015 worth 26.4bn, beating the previous highest figure sell-off year, 1987, by ÂŁ6m.

 
Half of last year’s sell-offs came in November from the sale of mortgage assets of Northern Rock and Bradford & Bingley, worth £13bn, while the government shed more of its stake in Lloyds Bank, netting £9bn across the whole year.

 
Now, the government owns less than 10 per cent of Lloyds, which received a ÂŁ20bn taxpayer funded bailout during the financial crisis in 2008.

 
The remaining 30 per cent stake that the government had in Royal Mail was also shed this year, raising just over ÂŁ1bn.

Short-changed
Many of the government’s public asset sales have been criticised as short-changing the taxpayer.

 
MPs on the House of Commons public accounts committee argued that the government selling its entire 40 per cent stake in Eurostar in March of last year, which raised £757.1m, netted “significantly less” than the £3bn that taxpayers originally put into it.

 
The 5.4 per cent stake in the Royal Bank of Scotland that was sold off in August was also criticised as being undersold – the proceeds were a third below the price the taxpayer originally paid.

 
The government has announced its intention to continue selling off public assets in order reduce the deficit.

 
Chief secretary to the treasury Greg Hands described the sale of assets as “central to our plan to help pay down the national debt and ensure economic security for working people.”

 
The first sale of a public asset this year has already taken place – the government announced last week that it had sold its stake in a 67-acre development site near King’s Cross station in London, which raised £371m.

 
It is thought that Channel 4 may also be on the chopping block, with prime minister David Cameron saying in November he thought it was “right to look at all of the options, including to see whether private investment into Channel 4 could help safeguard it for the future.”

 
Former business secretary Vince Cable condemned the potential sale of Channel 4, noting in a Guardian comment piece today that “a sale would imperil the effective operation of the UK’s TV industry”.

 
“Asset sales do not, by themselves, improve the public sector balance sheet – public debt is reduced but so are assets, leaving net debt unchanged,” he said.

Lloyds stock U-turn
The Press Association analysis of last year’s public asset sales came just as chancellor George Osborne announced today (January 28) that he would pause his planned retail sale of Lloyd’s shares this spring, blaming volatile markets.

 
Osborne first announced the sale of shares to members of the public in October.

 
The U-turn is seen as an embarrassing move for the chancellor, who had hyped the sale to ordinary investors, hundreds of thousands of whom had registered their interest on a government website.

 
Unite national officer for finance Rob MacGregor highlighted why the government should retain its public stake in the bank.

 
“Osborne has already lost the public billions through his fire sale of our stake in both Lloyds and RBS,” he argued. “Instead of merely postponing the sale of Lloyds stock the Chancellor should use this pause to completely reconsider the role of the government in the banking sector.

 
“If the government were truly concerned with the long-term health and sustainability of Britain’s banks, the public stake would be used to bring much needed accountability and transparency to The City’s boardrooms,” MacGregor added. “That would better serve bank workers, the tax payer and the wider economy.”

Rip-off con
Unite general secretary Len McCluskey condemned the government’s “ideological obsession” with “shrinking the state” through its sale of public assets.

 
“This fire sale is aimed at plugging the financial holes in chancellor George Osborne’s illiterate economic policy characterised by faltering growth and increased borrowing costs,” he said.

 
“It is a sell-off determined by an ideological obsession with shrinking the state and a categorical refusal to consider that investment, not cuts, is the way to secure the economy.

 
“We know full well from past form that those who will line their pockets with the proceeds will be the shady ‘wheelers and dealers’ in the City and friends of the Tory party who have contributed so liberally to party coffers in recent years,” McCluskey added.

 
“Ministers suggesting that everything is better off in private hands simply insult the public’s intelligence. Tell that to fed-up customers who have had to endure the twin abuses of higher costs and poorer service when big business gets its hands on public services like the railways.”

 
“The claim of treasury secretary Greg Hands that these sell-offs will ‘ensure security for working people’ is just plain wrong,” he went on to say. “What this is about is short-term financial gains for the Treasury, so Osborne can give it away in the form of tax cut ‘bribes’ just before the 2020 general election.

 
“Beware of Tory ministers bringing privatisation ‘gifts’ – it is a rip off con being played on the British taxpayer.”