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Asset sale: Deja vu?

Stephanie Flanders | 11:50 UK time, Monday, 12 October 2009

With the government now borrowing £175bn, an extra £16bn from selling off state assets is not to be sneezed at. And if the proceeds aren't used for anything else, they could help cut the deficit over the next three or four years. But it can only be a short-term fix.

Dartford CrossingAsset sales could raise £16bn by 2013-14. Last week, George Osborne proposed savings that would also come to about £16bn by 2013-14. But the following year, 2014-15, Mr Osborne's proposals are supposed to be still saving the Treasury £7bn. Whereas in that year we can expect these asset sales to be saving approximately zero.

Why? Because, in theory at least, if you limit benefits or cut the public sector wage bill, you cut spending in all years, not just this one. The same cannot be said for asset sales. You can only sell an asset once. It can help a government cut borrowing in the year of the sale, but the following year it has to sell something else to get the same effect.

In practice, the distinction between the two is a little fuzzier. You could see some of the impact of the public sector pay freeze reversed if there are "catch-up" wage settlements later on. More importantly, any saving from raising the state retirement age will only last until 2026, when the government was already planning to make all of us retire later.

But the difference in kind between the Conservative proposals and these asset sales is still fairly stark.

That was my second reaction to the prime minister's comments when we journalists were told about them on Sunday night. My first was: "haven't we heard this somewhere before?".

We had. Back in April, on Budget day, the Chancellor said he was planning to sell £16bn-worth of assets over the next few years. Ever since then, the stock answer to criticism about the government's plans to halve public sector net investment by 2014 has been that there were all these asset sales in the pipeline - the proceeds of which would be used to top up investment.

The prime minister said again today that the asset sales would be used for investment as well as for paying down debt. But, to state the obvious, they can't do both at the same time.

Number 10 said today that asset sales were just one part of the government's programme to get public borrowing under control. Many economists would say that's just as well.

In fact, the rest of the speech focussed on other differences between Labour and the Conservatives on the economy - with Gordon Brown saying how difficult it would be for any government to cut borrowing if the economy doesn't return to health. I discussed this issue at length in my last post.

But, as I said then, the difference of timing - if there is one - must apply mainly to 2010. As Evan Davis said to Lord Mandelson this morning, the government is forecasting more than 3% growth in the economy from 2011 onwards. If that's not a time to cut public borrowing, when is?

Comments

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  • Comment number 1.

    "Number 10 said tonight that asset sales were just one part of the government's programme to get public borrowing under control. Many economists would say that's just as well."

    That's because most economists are libertian anarchists!

    This is (just more) asset stripping to bail out the Private Sector and continue the privatisation/anarchistic process which has been going on relentlessly for decades.

  • Comment number 2.

    In conclusion then, Labour's plans are half-baked, not thought through properly, and were already announced months ago. Seems pretty much par for the course really.

  • Comment number 3.

    "the government is forecasting more than 3% growth in the economy from 2011 onwards"

    LOL. I would absolutely love to see how this forecast is modelled.

  • Comment number 4.

    Dont these assets also earn income which will be lost forever. This really looks like a panic measure and the idea that local Councils should be forced to sell their assets (assuming the Government can) like land during the worst property market in living memory is absurd. What would make sense is to force councils to invest their considerable capital receipts in local housing and infrastructure particularly where revenue can be saved (e.g. fewer homeless families) Herts CC for example have over £300M tucked away (rather more before placing £28M with Icelandic banks!)

  • Comment number 5.

    When you sell something, its because the buyer believes it has more value than he bought it as.

    So govt sells off assets at 16bn, it means the the buyers are going to squeeze 16bn, plus extra out of the 'customers' to pay out to their shareholders, the staff salaries, any bank interest payments for the debt they are taking on to buy and the massive bonuses the board are going to award themselves. Thank goodness I don't do the tote, use the dartford crossing or have student loans.

    Also, selling out of desperation in a recession, hardly a formular for getting a good price on the assets either...

  • Comment number 6.

    Well spotted, Stephanie!

    Once again we are being made to suffer the old trick of the same measure being announced twice. Is there no end to the deceit of this government?

    Having rescued the financial sector from certain oblivion the taxpayer is now being expected to sell off assets they have invested in previously back to the banks so that the taxpayer can pay off the debts first incurred by the banks.

    As a taxpayer it is difficult to be polite in such circumstances as we are clearly being had over.

    A fire-sale in a depressed market already constrained by debt may not produce the GBP 16 billion expected. One is reminded yet again of a rather foolish sale of gold at the bottom of the market.

    It is reassuring that the Prime Minister is an optimist as the longer he stays in office the more likely he will drive the rest of us to despair. This policy is not enough, as the only way a deficit in excess of GBP 175 billion and rising can be resolved is by cutting expenditure.

    It seems the government is locked into the same mindset as the bankers: won't change, can't change. Sorry guys; but you will change.

  • Comment number 7.

    I'm reminded of the phrase "Don't kid yourself you've found an inivative way of heating your house by burning all your furniture"

    What proportion of the assets being sold will be bought with money that only exists due to quantitative easing?

    There seem to be two problems with the sale to me.
    Is it right to sell what is being sold? The Tote, for example, seems a perfectly sensible thing to sell - that it is still in public ownership is the more surprising thing. But on the whole it looks like a cobbled together fire sale, which leads to the other problem: is now the right time to be selling all this?

  • Comment number 8.

    So once the government sell off the dartford crossing and the rail link i can look forward to higher than inflation price rises annually and an ever more costly journey to get anywhere in this country. Tied in with the ridiculous energy prices and increases, the higher rail fares and the cost of petrol is it any wonder im seriously thinking of emmigrating!

  • Comment number 9.

    To me, it seems that our former chancellor of the exchequer and now self nominated Prime Minister has been busy banrupting the country and now is going to the pawn shop selling whatever assets this country has.
    It is not a pretty sight for a great country like Britain to have to sell good assets at the worst economic times, it is really a last resort action and in itself is a clear sign that Labour economic policies over the last 10 years have been careless.

  • Comment number 10.

    So the government is selling off the family jewels. Considering the financial situation, where are they going to find a buyer. Perhaps an oligarc in Russia? After all most of our football teams are now in foreign hands. They appear to be the only people left who have any money.
    What next?
    Gordon Brown seen coming out of the local 'pawn-shop'?

  • Comment number 11.

    So not content with flogging our gold reserves at rock bottom he now wants to flog the rest of the family silver on the cheap.

    And to think that some people actually believe Brown to be an economic genius........

  • Comment number 12.

    The sale of government owned assets to raise cash has caused only a few ripples in part as GBP 16 Billion is small beer relative to total/annual debt etc.

    What caught my eye was Urenco, and Brown saying that there are no security issues to worry about. If this really was the case surely Thatcher would have flogged this off in the 1980's?

    The enrichment of Uranium for civil and military purposes is strictly controlled by nuclear non proliferation treaties, so that rogue states or terrorists can gain the knowledge to produce a bomb.

    The six companies (mostly state owned) in the world are:

    China National Nuclear Corporation (CNNC), which has two centrifuge plants in China

    Eurodif, a joint venture between Belgium, France, Italy and Spain, with one diffusion plant in France

    Minatom, the Russian state organisation, with four centrifuge plants

    Japan Nuclear Fuel Limited (JNFL), with one centrifuge plant

    Urenco, a joint venture between companies in Germany, the Netherlands and the UK, with centrifuge plants in each of the three countries

    The United States Enrichment Corporation (USEC), a US firm with a diffusion plant in Kentucky

    The ownership of the company is only the tip of the iceberg. The ownership of the knowledge of how to enrich Uranium and the mechanics of how to do so are a lot more valuable. In theory a PhD in Physics should give someone the knowledge of how to do it, but the practical skills and knowledge to carry it out industrially is a closely guarded secret.

    Given the elite membership of the club above, I am surprised that a big stink has not been raised about this. Remember the old adage; you reap what you sow....

  • Comment number 13.

    "Whereas in that year we can expect these asset sales to be saving approximately zero. "

    Really? Zero, or a negative amount?

    If we sell of these assets are a time when the market is depressed, as it is now, we are likely to get less than their real value. Doesn't this mean that the future income we will forgo by selling these assets now will cost us more money in the long run?

    I'm not an economist, but this whole plan sounds extremely short-sighted to me. A cynic might even suggest that Gordon Brown doesn't care about what this will do in the long-term, as he won't be the one who'll be in government and have to sort out the mess.

    Am I missing something?

  • Comment number 14.

    And the revenue implications are that the lost state income e.g. from the Dartford Crossing is less than the cost of the debt repaid, for if not why would anyone buy at that price. So while the overall national debt falls by a significant sum, the annual deficit increases.

  • Comment number 15.

    #6 stallinic

    ''It seems the government is locked into the same mindset as the bankers: won't change, can't change. Sorry guys; but you will change''

    Who is going to make them change?

    How?

    When?


    Has anybody checked the migration figures recently for the well heeled professional classes with wealth based on new money?


  • Comment number 16.

    Perhaps the public-owned banks that were given tax money that they've not used could buy the assets.

  • Comment number 17.

    I take it this firesale will mean that we will no longer have to listen to Labour supporters whining about how Thatcher "sold off the family silver" in the 1980's?

    We can but live in hope!!

  • Comment number 18.

    given it is the financial 'market' that needs the 176 billion to prop it up then all PROFITS in the financial industry should be taxed at 70% until they no longer need the public to bail them out.

    otherwise all the politicians are doing is playing the privatise the profit socialise the loss model of economics?

  • Comment number 19.

    yes sell at the bottom of the market, normal behaviour for GB... what stupidity...are they even his to sell? National assets surely belong to the UK citizens and as such surely their permission should be obtained (perhaps by way of an election?) before any sale takes place...selling the family silver during a recession is just yet another dumb idea from a bankrupt government!
    and just for a laugh let's forecast 3% growth..what planet is he on? according to the IMF Annual UK growth rates averaged 2.68% between 1992-2007 .....and they were the "boom" years!

  • Comment number 20.

    Conservatives don't lose ground or support after their conference. GB needs to get the spotlight back on him, decides to reannounce some measures and get a few photos in the paper.

    Surely the people can see it's no time for a novice?

    What happens - everyone sees it for what it is. Window dressing, clinging on to power, delusion.

    It's time for a change of leadership and if GB cared about UK then he'd do us a favour and get out

  • Comment number 21.

    If every thing is sold off what are the assets of GB? Is the next thing sell off every first born child? There is not a lot left to sell

  • Comment number 22.

    Good spot, Stephanie

    How much longer do we have to put up with this economically bereft and truth-light Government spinning out headline-seeking stories that are a rehash of ones that have already been announced. Seems like it was deemed a 'good day for bad news', given that the expenses scandal has reared its head again today. The bad news being of course that this is not a new £16bn proceeds/profit from asset sales and therefore appears to be an acknowledgement that the cupboard is now virtually bare and there are no more assets to sell which will produce any kind of sum relevant to the overriding debt problem.

    And what part of this assumed sum is to be used for/or can afford to be used for investment, given the debt service obligations? Furthermore, what investment does the spin doctor have in mind?

  • Comment number 23.

    £16bn given labour's fiscal incontinence is not exactly going to make a big difference - selling £50bn of assets might be.

    The real issue is why govt has this level of "surplus" assets in the first place. Surely, at least economically, the existence of so much surplus assets has led to a lack of fiscal discipline in the public sector (not the only factor by any means) and starving the public sector a little of these assets might improve productivity.

  • Comment number 24.

    1 - JadedJean

    I don't think they sell off the assets because they are following some free market ideology - they are doing it because they don't know what else to do

    The result of selling assets is counter-productive as what is the first thing the new private owners of the previously publicly owned assets going to do on day 1?
    Answer - cut costs - which means jobs in the private sector - which means more on the dole queue - which means more social security payments - which means more borrowing for the Government.

    The problem with Government is that is never thinks ahead. The 'savings' Government makes always revert to costs in the future.

    It might have been better to start making these public owned bodies more profitable than simply selling them off.

    As Stephanie pointed out in the last paragraph - if we're really expecting growth in 2011 why are we selling?

    The answer is nobody expects growth in 2011 - it's like making a sales forecast exaggerating future sales in order to secure funding today. In the end it will spell disaster.

    I suspect the Treasury are making the frankly amatuer mistake of assuming the price inflation and signs of growth are genuine - where as we all know they are as a result of growth of the money supply and not actual tangible growth.

    We're currently running about 6 months behind the US in this crisis and they haven't seen positive GDP yet. I suspect they will seem some soon but it's merely a reflection of their own stimulus by expansion of the money supply.

    QE has been like throwing petrol on a dying fire - we see some flame and some heat but there is not enough fuel to sustain burning for long. It may give the impression the fire has restarted but sadly it literally is 'smoke and mirrors'.

    All QE is doing is creating a false consumption demand to replace the absent consumer demand - neither was sustainable and will be proved as such.

  • Comment number 25.

    Perhaps my memory is failing me, but I am certain I recall Peter Mandleson saying,after he abandoned the bill to part privatise the Royal Mail, just before the recess, that market conditions were not right and a realistic value would not be obtained,so whats changed over the last couple of months.
    Or would that have more do do with the fact he could not get the enabling bill through the commons without Tory support.
    You can't have it both ways either it was wrong then and wrong now or it was right then if its right now

  • Comment number 26.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 27.

    Even a £50bn asset sale wouldn't make a lot of difference. The £16bn sale will raise enough, at the current government rate of spend, to cover the budget deficit for 1 month. The £175bn deficit is the ANNUAL amount - and Brown / Darling are proposing to continue at that sort of level for another 5 years. At the moment the government is effectively re-mortgaging its house to pay for the monthly bread, milk and tea.

    £16bn is spitting on a burning barn; we see no suggestion as to how the £175bn annual total is going to be addressed. We will not be able to continue to borrow and borrow for ever, and something has to give. Tax hikes or spending cuts, or most likely both.

  • Comment number 28.

    It's already been shown that selling the Student Loans off will actual cost more in the long term... This is just to make the books look better.

    As for a 3% growth, someone should tell the government that orders are dropping again, there was a re-stocking boost in summer, but now thats over... 2011 will see a slight recovery, but with unemployment likely to keep trending upwards during 2010, not a 3% one.

    Double dip time! And just in time for the run up to the GE.

  • Comment number 29.

    I'll buy the Houses of Parliament for 50Euro, if that helps.

  • Comment number 30.

    If a company were to sell off revenue-generating assets to pay down a debt crisis, you might feel that company is heading for bankruptcy. This is because, all this action does is move things around the balance sheet to ease an immediate cash flow crisis. If the immediate crisis is overcome, those assets are no longer available to the company and it's long term prospects suffer. The assets would likely be sold at below net book value because of the seller's weak position. City analysts would place a "sell" recommendation against that company's stock because of the immediate threat of collapse and the reduction in future revenues. The share price would collapse.

    The good news I guess is that the UK doesn't have a share price. There is further good news because, unlike a company, the UK has a charitable benefactor who is contractually obliged to keep it afloat - the taxpayer!

    It amazes me how this bunch of clowns act like they know what they are doing. They haven't got a clue.

  • Comment number 31.

    JPSLotus79 (#17) "I take it this firesale will mean that we will no longer have to listen to Labour supporters whining about how Thatcher "sold off the family silver" in the 1980's?"

    This is not Labour, this is New Labour. Neo-Labour, as in Neo-Conservative!

    Why else would it have been a) taking apart the state domestically in pursuit of efficiency and PFI for years whilst b) helping the US fight Stalinist (statist) 'terrorists' throughout the world and c) dregulating Financial Servoces? These are state wreckers with a makeover. It's what entryists do.

  • Comment number 32.

    Is it just me or does nobody seem to get what is going on?

    This smacks of desperation, the same as the car scrappage deal the government are trying to think of any way to stimulate growth....If they cannot find a way out of this current situation this country will be crippled for years.

    Has anyone seen how fast China is developing?

    hmmm.....

  • Comment number 33.

    # 27 - but we have so much more to sell - think of the road transport network, hospitals, schools etc. This can all be sold off and rented back through payment of tolls etc. It has to be a winner for the politicians. The proceeds will help repay the national debt and the fact that we then have to pay charges for this infrastructure won't be reflected as tax in any official statistics. Just watch what happens in Claifornia. There's a fairly good chance it will happen here as well.

  • Comment number 34.

    Having listened to 5Live at lunchtime, it seems that £11billion of this asset sale are local authority assets. For starters, the govt can not force the local authorities to sell these assets. Secondly, if the do agree to sell, the money goes to the local authority not the Treasury. Thirdly, the suggestion from the minister on 5Live was that money raised by the local authorities this wasy would be used to improve local services.
    To summarise; Up to £11b of this money may not materialise. If it does it goes to local authorities, not government. And it would be spent, not used to pay off debt. SO HOW EXACTLY IS THIS ASSET SALE SUPPOSED TO REDUCE OUR NATIONAL DEBT?
    And surely, if these things really are assets that may be valued by private industry, are they not also of value to the existing owners (us)? If the Tote and Dartford bridge produce revenue, is it not better to keep them and have a steady income than sell them for a one-off bonus? Sure as eggs is eggs, in 10 years time we will bemoaning the sale of these things to foreign owners.

  • Comment number 35.

    Gordon Brown and labour cronies just don't get it..

    Our public expenditure this year is £175 billion MORE than tax received, in relation to our borrowing over the next few years £16billion is chicken feed.

    We have no choice but to reign expenditure or

    1.The country will go bust and salaries / pensions will not be paid.

    2.The IMF will give us a loan but insist on stringent cuts in public sector expenditure.

    3.We keep on borrowing, interest payments increase and real public sector spending is reduced significantly.

    Gordon Brown believes the country will have significant growth for the next decade and in 20 years we should be OK..

    He criticise's the banks for taking risks, he is the biggest hypocrite going. He can't admit he got it wrong and built a bloated public sector on the taxes of a dodgy financial industry.

  • Comment number 36.

    writingsonthewall (#24) "I don't think they sell off the assets because they are following some free market ideology - they are doing it because they don't know what else to do"

    Then why have they been doing this for years, well before the Credit Crunch'? Public Services have been put under strain for years not just under The Conservatives but under Neo-Labour. One way this was done was through recruitment targets.

    You need to look at the bigger picture. These have been classic anarchistic policies. State-busting. Wrecking. See Stalin's speech of 'double-dealers' in the 1930s (linked to here many times). Forget about what people say they mean or intend (psychological terms) to do, just look at the behaviour, i.e. the outcomes. The con is to make you talk and think in psychological (intensional) terms, which are inert - a distraction from behaviour, i.e accountability.

  • Comment number 37.

    #30

    Very good point gogoginger

    By the way do you think that Stephanie Flanders is getting a good seeing to?

    I think the rot set in a long time ago and the chickens are coming home to roost.

  • Comment number 38.


    I agree with all the above who say (a) that the lost income from assets like the Datford Tunnel; (b) the fact that any private investor will be looking to cut costs, and most likely lay off workers, leading to greater unemployment and public spending; and (c) sooner rather than later we'll see above inflation price increases on these services.

    Pretty desperate if you ask me!

    Now, perhaps someone could help me regarding the sale of the "student loan book". as I understand it these loans are at a preferential rate of interest and not repayable until the student begins to earn above a certain threshold.

    Presumably these limitations reduce the commercial value of these loans significantly (unless the Government underwrites the difference?). More importantly, the people who buy the loan book will presumably put in place some sort of "debt collection agency" to chase people and check whether their earning exceed the threshold.

    So, following the withdrawal of the grant system, the generation promised low interest loans from a benign government may suddenly find themselves exposed to the tender mercies of the debt collection industry.

    That will be a significant disincentive to those interested in further education: particularly if you also consider the steady devaluation of the resulting qualification.

  • Comment number 39.

    15 jericoa

    Please be assured that when change is necessary it happens. Of course it is resisted by those who will lose out but they have a choice: either embrace the inevitable or go down screaming like the Bourbons.

    I would rather have peaceful and gradual change. However, if we can't have that then we will have to put up with something a bit more abrasive.

    When? Good question: either soon or after the next banking collapse.

  • Comment number 40.

    What is most alarming is that the cupboard of assets is bare. The Government talked of selling off the waterways network then found it needs too much investment + maintenance to appeal to buyers. I expect a number of other assets have been considered for sale and discarded. What GB has left is the £16bn "low hanging fruit".
    Also read that there are problems in reducing Whitehall employees as the deal is that Civil Servants are offered 3 x annual salary when made compulsorily redundant! The talk is that to finance this cash outflow will impair departments ability to deliver current core services.
    Government seeks to reduce this to 2 x annual salary, but unions are getting tetchy.
    I hope someone gets a grip and changes the terms for civil servants to get statutory minimum redundancy and reduced pensions, as we in the private sector will do. They have to understand that they were employed in unsustainable jobs, so as Stanilic says "Sorry guys; but you will change"

  • Comment number 41.

    #36 Jadedjean. State assets are assets owned by the population of the state. If the state then takes these assets and sells them, then that is just theft.

    It has nothing to do with Stalin, anarchists, intelligence or anything else. If someone comes round your house and robs it then the only thing you can deduce is that you will have been robbed. You will not know whether the thief was more or less intelligent than you, you will not know whether the thief loved or loathed Stalin, and neither will you know whether the thief was an anarchist. All you will know is that the person who robbed you was a thief.

    Only an idiot would pay any attention to a person caught red handed engaging in theft who then denied that he was doing what he evidentially was doing.

    Not all things are complicated.

  • Comment number 42.

    This sell off sounds like desperation to me. Now is not the moment. The market has hardly recovered. If the sell off our gold reserves or the fire sale of Qinetic are to go by, the Labour Government will give these assets away and not for £16 billion. So for a change, if it has to happen, why can't they be sold to us, like BP, BG etc were? I am sure the Dartford Crossing would a nice steady earner and shareholders could go across for nothing - that would spark a bidding war from Essex and Kent drivers.

  • Comment number 43.

    #12 excellentcatblogger. Maybe Thatcher was worried about places like Pakistan developing weapons technology. Today there is no need to worry -they have developed it.

    Ask yourself how and why could AQ Khan have been left in peace for so long to complete his work.

    The forces that confront you are more nefarious than you imagine.

  • Comment number 44.

    # 36 - JJ, I read your posts (and the posts of many of the other contributors to this blog) with interest. I have to say that I am agnostic (perhaps not the right word) on much of what you write as I do not have sufficient knowledge of the areas you write on; I acknowledge that you include many links in your entries but consider that I would have to invest many, many hours of investigation, research and thought to be able to take a properly informed position on what you write. At the moment, I do not have the time to do this. I of course do have views on many of the issues but frankly do not have the expertise to say if these are well founded. In any case, on the references to the instensional in your latest entry, I was left with an image in my mind of the old "cowboy and injun" films - you know the bit where the native american say "White man speak with forked tongue". This is certainly true of the Labour Party. With the change of economic circustances, they are desparately trying to revert back to the old battle lines between labour and the Tories but the truth is there is no substantial difference between their respective policies and ideologies.

  • Comment number 45.

    This is typical Gordon Brown behaviour - re-announce something (anything!) to make it look as though he actually has a plan and is not really totally bereft of original ideas. I just wish he would not play his pathetic games with our money. He does not have a particularly good record of such sales (the Big Gold giveaway, the Qintetic bargain of the decade, etc).

    He continues to do so much damage to this country. His behaviour should be considered treasonable.

  • Comment number 46.

    The problem with the final period of this dying Parliament prior to the election is that we're increasingly going to get knee-jerk policies like this, formulated on the hoof and not thought out. The sooner the election happens to clear the air the better. Caledonian Comment

  • Comment number 47.

    When you borrow money you do so against the payment of interest and secured against an asset. We have the asset. The profits from that asset pay the interest. Why sell the asset instead of borrowing against it? Makes no sense. Also how can the government sell to a non government body the right to tax its citizens? This is what the Dartford toll is. Otherwise it would have been abolished when the debt was repaid.

  • Comment number 48.

    43. At 3:13pm on 12 Oct 2009, armagediontimes wrote:
    #12 excellentcatblogger. Maybe Thatcher was worried about places like Pakistan developing weapons technology. Today there is no need to worry -they have developed it.

    Ask yourself how and why could AQ Khan have been left in peace for so long to complete his work.

    The forces that confront you are more nefarious than you imagine.

    ----------------------------------------------

    Thanks for that, I did not know about AQ Khan and that he had access to the most restricted parts of Urenco when he worked there. And then passed this info onto pakistan, Libya, Iran, North Korea...

    Not sure if I will be able to sleep soundly at night from now on. Words fail me.

  • Comment number 49.

    Stephanie Flanders wrote:
    "if the proceeds aren't used for anything else, they could help cut the deficit over the next three or four years".

    I'm not a highly paid BBC commentator, but surely the proceeds cut the debt, not the defict.

    Don't we need to compare the reduced income stream from the assets sold against any reduction in servicing that portion of the national debt that is reduced by the asset sale? Not easy to reduce to a sound-bite.

  • Comment number 50.

    Steph: "...any saving from raising the state retirement age will only last until 2026, when the government was already planning to make all of us retire later."

    Errr... no. It's still a saving beyond 2026. Just because it was planned doesn't meant that it isn't still having a beneficial effect.

    Gordy: ".. and for investment". Ah, you mean public spending don't you Gord?
    Slippery as ever. How much will be used for repayments and how much for election sweeteners then Gordy? You couldn't keep your hands out of the cookie jar even now.

  • Comment number 51.

    armagediontimes (#44) "It has nothing to do with Stalin, anarchists, intelligence or anything else."

    'Stalinism' is usd as a term for statism as just as National Socialism once was. 'Anarchists' are deregulating free-marketeers (see the history of anarchism and Judaism at the turn of the C20th in the UK and USA), and 'intelligence' is one of the two main (groups of) statistical factors (data reduced form correlations of lots of variables ranging ofver cogntive behaviour) used as variables in the scientific prediction and control of behaviour. When I talk of these things I assume people will know what thsi refers to or at least, follow up trhe links. It seems you do not. Therefore, you do not understand my posts. You need to understand that you do not understand them, or you will keep posting comments to me which make no sense.

    "If someone comes round your house and robs it then the only thing you can deduce is that you will have been robbed."

    Most of these crimes remain undetected. That is, they are reported, but the culprits are not detected, apprehended, prosecuted, convicted. Only crimes against the person have a high detection rate. Many offences like the above have detection rates in single figures! Of 16m crimes a year, only about 600,000 offenders are prosecuted, about half get off and only about 80,000 get custodial and 120,000 community sentences!

    "You will not know whether the thief was more or less intelligent than you, you will not know whether the thief loved or loathed Stalin, and neither will you know whether the thief was an anarchist. All you will know is that the person who robbed you was a thief."

    We know from statistics of offenders that hey are below average IQ, about 8 points lower. We also know that most of them have Axis II Cluster B Personality disorders. Tey have empathy (aka self-esteem) problems. That is, they take what hey want from others as they see others as objects.

    "Only an idiot would pay any attention to a person caught red handed engaging in theft who then denied that he was doing what he evidentially was doing."

    See above. The problem is that most are not caught at all. We know who they are, why they do it etc - the problem is getting the evdience.

    "Not all things are complicated."

    I wish! You don't know the half of it! ;-)

  • Comment number 52.

    I'm confused. How can selling national assets at a depressed price, removing our income in future years make any kind of long term economic sense?

    Oh, wait, it can't (unless, fair enough, the asset is not strategic and the returns are lower than the bond rate).

    Dartford Crossing - already responsible for horrible queues. The choices being mulled over by were to either make it toll free (since it paid for itself in 2002 and we were promised that it would be free THEN), or to build a new crossing. Selling off this crossing will kill the chance of another one. Who'd buy it if it became worthless later?

    Result: Environmental and economic misery.

    Brown has killed off the long term chances of this country on a 10 year binge drinking session. Someone with an E at A level would be a better chancellor than he was, and now he's still running the treasury from No. 10.

    Gah!

  • Comment number 53.

    Selling student loans was mentioned too. A friend asked me "how do you sell student loans?". I think he has to ask the sub-primes markets that one... once more round the carousel please, guv'.
    And 'deja vu' indeed it is, Stephanie. Being 63 I've seen all this nonsense before. BBC moderators rejected my reply to "how would you save energy?" which was "... by burning next year's ballot papers!"
    Ah well, perhaps we shoud sell the students? Slaves are going to be the ONLY trade in the UK soon!

  • Comment number 54.

    nedafo (#44) "In any case, on the references to the instensional in your latest entry, I was left with an image in my mind of the old "cowboy and injun" films - you know the bit where the native american say "White man speak with forked tongue".

    Close enough. The problem with intesional contexts (the psychological verbs essentially) is that they are non-truth functional. They are thus the favoured tools of spin-doctors etc. Take Clinton's speech in NI today. Try putting a NOT before all her sentences as see what it reads like. It was vacuous nonsense. Can anyone imagine a British Minister like Miliband going to California and telling them how to sort out their socio-economic problems? We also get a sympathy showing of 1984 bombing of the Brighton Hotel!

    Maybe Obama should be advised to devolve a few States, maybe offering New York and Hollywood independence (or allowing them to become Israeli/Jewish settlements)?

    The BBC had a naive/Lysenkoist piece running today about education throughout the world, with e-mails from total nitwits being read out. The verbiage being peddled as news these days is outrageous - be critical of the presenters and their productions team's language/assumptions/agendas.

  • Comment number 55.

    #1 and subsequent JJ
    and
    #41 armagediontimes:

    JJ consider this: The problem with all that you contribute is that the psudo complexity and naming of parts that you engage in detracts from the analysis of what is actually happening. And because of this obfuscation, that which you contribute actually results in letting off those who are doing the things that many (including you) complain about.

    The consequence of this is that those who are in error, and even deemed to be in error by you, continue to get away with their erroneous actions. I am also led to wonder if you are deliberately confusing things so as to support the status-quo. (You like conspiracy theories so how about this one!)

    In short: I do not care what label you want to give economists - as it is not helpful in analysing where they are in error.

  • Comment number 56.

    Ahh I see Gordon is back to his misuse of the term "invest"; it sounds so much better than consume and spend, but its use is deceptive (not that anyone believes him anymore) either deliberately so as a sound bit or self delusional and demonstrating a lack of economic understanding.

    Investment = spending now to recoup more in the future.
    Indeed there is a solid rational for selling unproductive assets to generate funds to apply to more productive investments.
    There is even an argument for selling assets to reduce debt and therefore avoid debt interest.
    However, without measures to reduce /eliminate the structural deficit, the proceeds are just spent, and will vanish into sustaining public sector inefficiency and maintaining non-productive jobs for political ends. Not that they will finance this for any time.
    The irrelevant amounts involved will do nothing to add to confidence in the UK economy and indeed the refusal to address the underlying issues indicated in such announcements may further weaken the position (which as has been mentioned in previous threads isn't as bad as it could be as markets don't expect Brown to be around much longer and have discounted for future policy changes by another government acting to repair the mess).

    It all seems like window dressing being seen to do something, without owning up to the fundamental mistakes in mismanaging the economy, i.e. spending beyond our means, total reliance on financial services, etc.

  • Comment number 57.

    # 47. neverspeakbadly wrote:

    "When you borrow money you do so against the payment of interest and secured against an asset. We have the asset. The profits from that asset pay the interest. Why sell the asset instead of borrowing against it?"

    Not strictly true.
    A secured loan (e.g. mortgage) is secured on assets, however other loans are given on an unsecured basis and are based on expected ability to pay.

    The assets that are being mentioned for sale are of nothing like the value required to be considered as adequate security for current government borrowing.

    Of course the expected ability to pay as security issue is an often mentioned concern - if you keep over spending and growing a debt, eventually confidence in ability to repay falls, and lenders charge more to cover the perceived risk.

  • Comment number 58.

    I think we have to put this one down to the government playing us all for idiots.

    They have so far printed the mind boggling sum of £175 billion pounds to boost the mioney supply in the economy.

    A piddling sale of a few pocket money assets at a time when they have billions of toxic assets coming out of their ears does not even warrant a mention.

    Just another attempt to diffuse the subject of MP's expenses and pospone the real problems for another day. So typical.

  • Comment number 59.

    #51 Jadedjean. You just don´t get it do you? The people selling assets that do not belong to them are the government and their paymasters in high finance. There is no issue in detecting them, everyone knows who they are.

    There is a problem in prosecuting them because they have captured the institutions responsible for defining crime and for prosecuting criminals. Look at MP´s expenses - try that in private industry and there would be no problem in bringing prosecutions.

    Logic does not seem to be your strong point does it? You can only know anything about anyone if they have been identified. If they have not been identified and only their actions have been identified (as per my example) then the only thing you can possibly know about them is their willingness to engage in the actions described.

    There is no problem in obtaining evidence. Look at Iraq and look at the law as developed and implemented at Nurnberg.

    This is very simple. All you do is develop a huge fog of opacity which acts as the prefect smokescreen for the master criminals who walk brazenly amongst us all. If the law were to be applied then you would most likely be facing a charge of aiding and abetting or of providing a false alibi.



  • Comment number 60.

    There's a word for asset strippers in private business - SCUM!

  • Comment number 61.

    Why stop at the QE2 bridge??? - surely they could sell the Queen and the crown jewels too!

  • Comment number 62.

    Oh dear, this really smacks of desperation.

    Does the government have any idea how much damage it is doing the reputation of the UK by acting so unprofessionally ?

    Have Labour ministers lost their empathy with the country that they are supposedly serving ?

  • Comment number 63.

    A very good article Stephanie exposing another attempt by Peter Mandelson and his government (of which Baroness Scotland is still a member)to hoodwink the electorate. Let's have the election and move on.

  • Comment number 64.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 65.

    I am in the very fortunate position of largely being without access to British TV.

    Imagine my surprise when I saw a British TV advertisment for a company offering short term loans to people that had run out money. The APR? Why a mere 2,356%. Yes: TWO THOUSAND THREE HUNDRED AND FIFTY SIX PERCENT. Apparently the most they will lend you is GBP1,000!!!

    What kind of country has this turned into? Does no-one have any shame? Insanity does not even begin to describe it. Will someone appear promoting cannibalism next?

  • Comment number 66.

    Cut the deficit? Rubbish - it will just about cover August's overspend of £16 billion.

    So what will he sell for the remaining months of his maladministration?

  • Comment number 67.

    armagediontimes (#59) "You just don´t get it do you?"

    Yes, I get it only too well. You don't though.

    You can't tell the differnece between what I've prompted (shaped) you to think, and what you think yourself! You're confusing things which are dawning on you, with what I don't get. I've induced you to grasp these things you nitwit ;-)

  • Comment number 68.

    I am glad to hear that you are trying to hold this government to account and can now spot these re-issues of statements

    Whereas Gordon probably thinks that we can just roll everything up together and not notice

    It is noticeable, however, that they haven't done anything yet

  • Comment number 69.

    DEMOGRAPHICS

    Study these data #5 very closely. Then consider 9/11 and geopolitics.

    Who is paying for what? With what? Why?

  • Comment number 70.

    #67 Jadedjean.
    "And as I was standing by the edge
    I could see the faces of those that led p*ssing theirselves laughing
    (and the flames grew)
    Their mad eyes buldged their flushed faces said
    The weak get crushed as the strong grow stronger

    We feast on flesh and drink on blood
    Live by fear and despise love in a crises"

    Pual Weller (Circa 1979).

    My thinking has not changed.

  • Comment number 71.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 72.

    No 10 "So the government is selling off the family jewels."

    I beg to differ, Sir !! The government had already sold the family jewels *AND* silver long ago !! They are now selling the lead off the roof !! Soon, they'll be selling their grandmothers !!

    Is this supposed to be the grand and glorious "Labour Investments" ?? What is there to "invest" in when all the assets are sold ??

    When the government start to believe their own lies, we'll know the end is nigh !!

    Err....excuse Mr. Noah, but can I book a seat in your ark to wherever you're going ?? It looks like rainy weather ahead !!

  • Comment number 73.

    Ms Flanders,

    Do these sales do any good?

    The idea seems to be to make the government a bit more credit worthy. However, If the governemnt sells assets ot pay off debt, the net balance between between its' assets and liabilities does not change, and lenders to the government are no more secure.

    That is if the governemnt gets a fair price for the assets it sells. This government and its predecessor have usually sold assets at prices which turn out to be less than they could have got for them. If that happens this time, the governments asets will be reduced by more than its liabilities; the net balance will worsen. That cannot improve the government's credit worthiness.

    If some (or all) the money is reinvested in new assets which have a higher return than the old assets, the Governemnt might come out of this more credit worthy. But if it is used to borrow less at today's very low interest rates, isn't cash flow out from reduced debt repayments going to be less than cash now coming in from the assets to be sold? That would imply that the sale makes the government less credit worthy

    All in all, is this sale anything more than piece of dubious accounting offerd in the hope that it will fool the markets for a time?

  • Comment number 74.

    armagdeniotimes (#70) "My thinking has not changed."

    A bit like John_from_Hendon then? He lacks insight too. ;-)

  • Comment number 75.

    No 12 "The six companies (mostly state owned) in the world are:!

    I think you missed out a few others !! Both India and Pakistan didn't get their fissibles from thin air, you know !! And just where did Israel and Iran get their nuclear material from ?? And DPRK had successfully tested a nuke or two !!

    Welcome to the Nuclear Non-proliferation Age !!

    One thing is almost certain. Neither Russia nor China, two of the countries with spare cash to buy this company, will have any need for it since they've been cheerfully churning out more of that stuff than they need !!

    A certain Saudi gentleman would have the cash to buy it but I think he's unavailable for comment from his "mountain resort", somewhere in Afghanistan !!

  • Comment number 76.

    No 13 "Am I missing something?"

    Yes !! A possible directorship in one of the "sold" companies for a mere £1 million per year !! A trifle, really !!

  • Comment number 77.

    No 20 "It's time for a change of leadership and if GB cared about UK then he'd do us a favour and get out"

    He cared ?? When ??

  • Comment number 78.

    If the cancellation of the M4 relief road around Newport and then resale of the compulsory purchased land for the cancelled project is anything to go on, £20 million lost on properties.

    http://www.southwalesargus.co.uk/news/4673510.AM___s_anger_at____wasted____M4_relief_road_cash/

    I suspect a lot more lost on Gordon's Ebay sale

  • Comment number 79.

    #64. JadedJean wrote:

    "what drives that is genes and their distribution"

    R U B B I S H

    Please desist from such absurd 'explanations' particularly when arithmetic and a more or a less complete access to information is all that is needed to 'explain' economics. Just because you can't do sums.....

  • Comment number 80.

    ishkandar (#72) "Is this supposed to be the grand and glorious "Labour Investments" ??"

    No. This is the Not The Labour Party and its 'investments'. This was The Labour Party. Do you see any similarities to Neo Labour?

    These Neocons have got everyone thinking that they are the Labour Party. That way you jump back into the fire of the anarchistic Conservative Party who will continue the same policies but with a little less spin (perhaps).

  • Comment number 81.

    No 24 "The 'savings' Government makes always revert to costs in the future."

    Hey, that's somebody else's problem after the election !! They just want to look good now !!

    "All QE is doing is creating a false consumption demand to replace the absent consumer demand - neither was sustainable and will be proved as such."

    And it generates soooo much confidence and trust in the hearts of foreign investors and creditors that they'll queue up round the block to let us have their money !!

    Call me when I reach that planet, I'll have a nap now !!

  • Comment number 82.

    No 29 Frank - "I'll buy the Houses of Parliament for 50Euro, if that helps."

    Complete with squatters on the roof ??
    http://news.bbc.co.uk/1/hi/uk_politics/8301586.stm

    Enjoy !! :-)

  • Comment number 83.

    No 37 "I think the rot set in a long time ago and the chickens are coming home to roost."

    Chickens ?? Those look like vultures to me !!

  • Comment number 84.

    No 38 "So, following the withdrawal of the grant system, the generation promised low interest loans from a benign government may suddenly find themselves exposed to the tender mercies of the debt collection industry."

    Obviously these students are learning a good lesson in politics from a famous politician, Machiavelli - "Put not your trust in kings and princes (or politicians, for that matter)" !!

    Or to put it in vernacular, they've been played for suckers for someone's political ambitions !! Welcome to the School of Hard Knocks !!

    Cynical ?? Moi ??

  • Comment number 85.

    John_from_Hendon (#79) Arithmetic, like logic, is just a set of empty tautologous transformations to help the extensionally challenged human brain deal with empirical reality. It's what one applies it to which matters, and for some time, I've been telling you what matters, and yet you aren't paying attention, nor are you posting anything worth reading at present.

    Read this and see if you learn. ;-)

  • Comment number 86.

    ishkandar (#80) "Chickens ?? Those look like vultures to me !!"

    It's chickens

  • Comment number 87.

    #85. JadedJean wrote: GARBAGE as is usual.

    You are either the stupidest person ever to blog, or alternatively you are just a joker!

    There is northing remotely logical about any of you absurd genetic nonsense and you know it - it is just a smokescreen to deliberately preventing critical examination of the realities of the economic World. What you say are 'explanations' are rubbish and nonsense and totally without any merit whatsoever. You arrogance is laughable in fact you should do stand-up!

  • Comment number 88.

    "They accuse the Labour Party of wishing to impose controls for the sake of control. That is not true, and they know it. What is true is that the anti-controllers and anti-planners desire to sweep away public controls, simply in order to give the profiteering interests and the privileged rich an entirely free hand to plunder the rest of the nation as shamelessly as they did in the nineteen-twenties. "

  • Comment number 89.

    #85 again Jumped Up

    You are clearly a cretin totally unable to understand that any argument that uses generics in it as a discriminatory factor is racist and that puts it beyond any further consideration. You must stop this objectionable nonsense.

  • Comment number 90.

    #74 Jadedjean. Sounds like nefarious rhetoric to me.

    Maybe you should take to some time to listen to the Jam - perhaps you too could learn something.

  • Comment number 91.

    No 47 "Also how can the government sell to a non government body the right to tax its citizens?"

    Hello ?? Ever heard of tax farmers ?? It's a ancient and "honourable" profession, I believe !!

  • Comment number 92.

    Sorry about my sudden disappearance but we just had 2 blackouts in North London in 2 hours !! Is Blackout Britain here to stay ??

  • Comment number 93.

    If I didnt know any better I would swear Gord is deliberately trying to start a riot that would lead to a revolution

  • Comment number 94.

    The thing I find interesting about this announcement is how paltry it is by comparison with the reality of government borrowing.

    The headline number is £16 billion, yet it seems that three quarters of that is to come from unspecified asset sales by local government, which may or may not materialise, and even if it does, the proceeds might not be used for debt repayment but rather for "investment". This leaves us with about £3 billion of identified asset sales. As others have noted, that figure is the very largest sum that might be realised (or else Brown would have claimed the higher figure) and Brown will likely divert some of that away from debt management and into "investment". So, in practice, this announcement might well correspond to about £2 billion of debt relief - or less than 4 days borrowing - to be realised over a period of two years.

    What this tells us is that asset sales will play no meaningful part in repaying the exploding debt. The sums in this announcement are far too small to matter and this is the good stuff. If Brown had, say, a £25 billion asset to sell, he would have announced it by now. So, the cupboard is bare. There is no secret room filled with priceless antiques that can be sold off to save the family home. Oops.

  • Comment number 95.

    John_from_Hendon (#79) "what drives that is genes and their distribution"

    R U B B I S H


    You try telling a successful Western farmer that genes don't determine crop/stock yield.

    You haven't a clue.

  • Comment number 96.

    No 65 "Will someone appear promoting cannibalism next?"

    Not when there are still a few dogs and cats around !! They are very tasty when cooked properly !!

    And then there's the rat kebabs.... :-)

  • Comment number 97.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 98.

    JJ / Arma / Ish

    Do any of you have Mathcad installed?

    F

  • Comment number 99.

    RE: 89. John_from_Hendon

    "any argument that uses generics in it as a discriminatory factor is racist and that puts it beyond any further consideration. You must stop this objectionable nonsense."

    No. That absolutely will not do.

    Use of genetics to "discriminate" ie draw meaningful distinctions between groups - is absolutely essential to rational medical care. Tay-Sachs disease is an inherited genetic disorder that typically kills its victims before they are four years old. The recessive gene in question is much more common among Ashkenazi Jews than in the general population. If we took your raving seriously then simply making that observation would be racist. Happily, the affected population ignored your moralising, recognised that they were a group at risk defined by their shared genes and took effective action to reduce the incidence of Tay-Sachs. The action took the form of discouraging mating between pairs of people who were likely to have Tay-Sachs children. It is a harsh discipline with an obvious emotional cost that is rooted exclusively in genetic discrimination and it works.

    The last thing people in that position need is for someone like you to start calling them racists.

  • Comment number 100.

    John_from_Hendon (#87) "any argument that uses generics in it as a discriminatory factor is racist and that puts it beyond any further consideration."

    Unproductive countries (groups) are so because of their low mean IQ. This in turn is mainly genetic.

    Low productive farms tend to be so because of their poor stock. This in turn is mainly genetic.

    If you replace good stock/crops with inferior stock, productivity will deteriorate.

    Talking to plants etc (all dure respect to Prince Charles etc) doesn't work.

    Talking to John_from_Hendon is much like talking to plants etc.

    Substitute 'educating' for 'talking' to. Substitute 'kids' for 'plants' etc.

    Get it now? if not, give up...;-)

 

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