Asset sale: Deja vu?
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.
Asset 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?