{"id":4483,"date":"2015-06-16T14:09:51","date_gmt":"2015-06-16T13:09:51","guid":{"rendered":"http:\/\/unitelive.org\/?p=4483"},"modified":"2015-06-16T14:09:51","modified_gmt":"2015-06-16T13:09:51","slug":"great-british-sell-off","status":"publish","type":"post","link":"https:\/\/unitelive.test.igniteamt.com\/?p=4483","title":{"rendered":"Great British sell-off"},"content":{"rendered":"
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Axing \u00c2\u014112bn from the welfare bill was a prime Tory election pledge \u00e2\u20ac\u201c one that\u00e2\u20ac\u2122s proving so impossible that even senior officials within the party\u00e2\u20ac\u2122s ranks itself are now pressuring chancellor George Osborne to backtrack<\/a>.<\/p>\n

 
\nBut Osborne\u00e2\u20ac\u2122s zealous ideological commitment to austerity and rapid debt reduction, while absurdly ruling out tax rises and ring-fencing certain budgets, means that desperate moves now carry the day \u00e2\u20ac\u201c with taxpayers footing the bill.<\/p>\n

 
\nLast week has seen one of the government\u00e2\u20ac\u2122s most frantic moves to date \u00e2\u20ac\u201c rushing to sell off public assets including stakes in the Royal Mail and the Royal Bank of Scotland, the beneficiary of a \u00c2\u014145bn taxpayer-funded bailout.<\/p>\n

 
\nOsborne outlined his case for each respective fire sale in his Mansion House speech<\/a>, arguing that it was the \u00e2\u20ac\u015bright thing to do\u00e2\u20ac\u0165.<\/p>\n

 
\n\u00e2\u20ac\u015bAll the evidence suggests that commercial organisations are more efficient, more innovative and more effective when they are in the private sector,\u00e2\u20ac\u0165 he noted, while also adding the government would \u00e2\u20ac\u015buse the money we raise in return to pay down the national debt.\u00e2\u20ac\u0165<\/p>\n

 
\nBut each of these arguments \u00e2\u20ac\u201c that privatisation improves a service and that selling off taxpayer assets effectively pays down the debt \u00e2\u20ac\u201c are far from being rooted in reality.<\/p>\n

 
\nThe cost of privatisation<\/strong><\/em><\/p>\n

 
\nYou don\u00e2\u20ac\u2122t have to look dig too deep to see how privatising a service makes it less efficient and less effective, not more.<\/p>\n

 
\nA CorporateWatch report<\/a> from last year showed the price we\u00e2\u20ac\u2122ve paid for privatisation \u00e2\u20ac\u201c each household would have roughly saved \u00c2\u0141250 annually on rail, gas and water bills had each of these enterprises remained in public hands.<\/p>\n

 
\nAnd it\u00e2\u20ac\u2122s not just the inflation-busting price hikes that consumers must contend with. A Class report <\/a>found that rail privatisation alone — whose subsidies have increased, not decreased as promised — has cost the taxpayer more than \u00c2\u014110bn cumulatively.<\/p>\n

 
\nThis enormous cost, doubly paid for by the public in fares and subsidies lining the pockets of private corporations, has given us longer wait times and a less safe, much more fragmented service.<\/p>\n

 
\nEven former chief executive Gerald Corbett of Railtrack, a failed enterprise following rail privatisation, admitted:<\/p>\n

 
\n\u00e2\u20ac\u015bThere is a tension between shareholder interests and public service obligations…the only way we can make profits is by not doing the things we should do to make the railways better.\u00e2\u20ac\u0165<\/p>\n

 
\nEasy political points<\/strong><\/em><\/p>\n

 
\nBut what about the idea that selling off publically owned enterprises helps pay down government debt and so reduce the deficit?<\/p>\n

 
\nIt might seem a straightforward notion on the surface \u00e2\u20ac\u201c you sell off your possessions, and you\u00e2\u20ac\u2122ll have extra money to pay off your debts \u00e2\u20ac\u201c but, on a macroeconomic level, Oxford University professor Simon Wren-Lewis contends that this is the \u00e2\u20ac\u015bworst\u00e2\u20ac\u0165 reason for privatising part of the public sector.<\/a><\/p>\n

 
\n\u00e2\u20ac\u015bWhile privatisation might reduce debt, it will also reduce future revenues or increase future public sector payments,\u00e2\u20ac\u0165 he noted. \u00e2\u20ac\u015bPrivatisation will either mean that the public sector loses the revenue that the privatised activity produced, or the private sector will have to be paid to undertake the outsourced activity.\u00e2\u20ac\u0165<\/p>\n

 
\nWren-Lewis went on to argue that selling off assets to reduce debt is an easy political points scoring scheme.<\/p>\n

 
\n\u00e2\u20ac\u015bPrivatisation is one of a number of devices that flatter the short term public finances with no impact (or worse) on the long term position,\u00e2\u20ac\u0165 he explained. \u00e2\u20ac\u015b[This is] considerably worse if the asset is sold far too cheaply, as in [the initial Royal Mail sell-off]. Because fiscal rules inevitably focus on the next few years, politicians will always be tempted to use these devices to in effect cheat those rules.\u00e2\u20ac\u0165<\/p>\n

 
\nIt\u00e2\u20ac\u2122s a point also made by the Institute of Fiscal Studies<\/a>, whose deputy director Carl Emmerson warned last week that quick public fire sales will do nothing to reduce the deficit in the long-term because it will only contribute a one-off windfall.<\/p>\n

 
\n\u00e2\u20ac\u015bWe have a large deficit, and to reduce a deficit you need spending cuts or tax rises, so asset sales are not really helping,\u00e2\u20ac\u0165 Emmerson said.<\/p>\n

 
\n\u00e2\u20ac\u015bPure ideology\u00e2\u20ac\u0165<\/strong><\/em><\/p>\n

 
\nIf Osborne\u00e2\u20ac\u2122s sell-off of RBS and its remaining stake in the Royal Mail can\u00e2\u20ac\u2122t be justified by reducing debt in the long-term or giving the public better services, what justification is left?<\/p>\n

 
\nBoth public assets are will be sold at a loss. With RBS, the taxpayer will lose roughly \u00c2\u014113bn from the sale, as Osborne proposed selling shares at \u00c2\u01413.54 a share, down from the \u00c2\u01415 a share the public paid in 2008 to bail out the bank.<\/p>\n

 
\nA Guardian editorial noted the coincidence<\/a> \u00e2\u20ac\u201c the \u00c2\u014113bn that taxpayers will lose is almost exactly the same as the figure that the Government hopes to slash from the welfare bill.<\/p>\n

 
\n\u00e2\u20ac\u015bAs they say on American TV dramas: you do the math,\u00e2\u20ac\u0165 the Guardian noted. \u00e2\u20ac\u015bThis is almost a textbook case of taking money from the poor and handing it to the wealthy, who will be able to buy shares in a giant bank at a healthy discount in order to meet the artificial electoral timetable of a political party.\u00e2\u20ac\u0165<\/p>\n

 
\nThe next round of the Royal Mail\u00e2\u20ac\u2122s sell-off too has created a d\u0102\u00a9j\u0102\u00a0 vu scenario \u00e2\u20ac\u201c 2013\u00e2\u20ac\u2122s botched underselling has led to what looks like yet another. \u00c2\u0141750m in shares were sold on Thursday (June 11) to \u00e2\u20ac\u0098institutional investors\u00e2\u20ac\u2122 at 500p a share \u00e2\u20ac\u201c well below last year\u00e2\u20ac\u2122s peak share price of 604p, representing a potential \u00c2\u0141100m loss to the taxpayer.<\/p>\n

 
\nTo add insult to injury, average household investors, the very taxpayers who are being fleeced, have not been not offered shares, with only large investors such as pension schemes, banks, hedge funds or insurance funds being given the opportunity to buy.<\/p>\n

 
\nAs yet, the identities of these institutional investors now owning a public asset have not been confirmed.<\/p>\n

 
\nThis leaves us with the only motivation that Osborne and his government can have for their Great British Sell-Off \u00e2\u20ac\u201c an ideological drive to redistribute money from ordinary working households to the City, a point made by Unite national officer for finance Rob MacGregor.<\/p>\n

 
\n\u00e2\u20ac\u015bLike Royal Mail and British Gas before it, the Tories are ripping off the public by selling our stake in RBS at a knock down rate to city investors,\u00e2\u20ac\u0165 he said.<\/p>\n

 
\n\u00e2\u20ac\u015bThat Osborne is choosing to let the Treasury lose out on millions, while using the deficit to justify \u00c2\u014112 billion in welfare cuts shows he is motivated by pure ideology.\u00e2\u20ac\u0165<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Axing \u00c2\u014112bn from the welfare bill was a prime Tory election pledge \u00e2\u20ac\u201c one that\u00e2\u20ac\u2122s proving so impossible that even senior officials within the party\u00e2\u20ac\u2122s ranks itself are now pressuring chancellor George Osborne to backtrack.   But Osborne\u00e2\u20ac\u2122s zealous ideological commitment to austerity and rapid debt reduction, while absurdly ruling out tax rises and ring-fencing […]<\/p>\n","protected":false},"author":1,"featured_media":4396,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[252,123,314],"wps_subtitle":"RBS and Royal Mail fire sales ideologically motivated","_links":{"self":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/4483"}],"collection":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4483"}],"version-history":[{"count":2,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/4483\/revisions"}],"predecessor-version":[{"id":4487,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/4483\/revisions\/4487"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/media\/4396"}],"wp:attachment":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4483"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4483"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4483"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}