PM to unveil £16bn sale of assets

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http://news.bbc.co.uk/1/hi/uk_politics/8301927.stm

Gordon Brown is to set out proposals to reduce the soaring budget deficit by raising £16bn from the sale of assets.

The plan is to sell a "portfolio of non-financial assets" held by Whitehall and local authorities over two years.

In a speech on the economy, the PM will outline initial sales which may raise £3bn, including the Tote, Dartford crossing and the student loan book.

But he has already been criticised by opposition MPs, who say he needs to do much more to cut public spending.

Downing Street said the sale marks the beginning of a radical assessment of what other non-core government business activities can best be done by, or in partnership with, the private sector.

Aides added that although these actions are important, a vital force for debt reduction will be the restoration of strong, sustainable growth within the economy.

In April, Chancellor Alistair Darling forecast that public borrowing this year would reach a record £175bn over the next two years.

The funds raised will help finance new capital investment and pay down debt, Mr Brown will say.

'Depressed markets'

The initial offering will also include Channel Tunnel rail link.

The government's 33% stake in Urenco, a European consortium which supplies equipment to enrich uranium for the nuclear industry, will be offered but the PM will insist there will be no threat to national security.

The government will also sell surplus real estate which is part of the £220bn owned by its departments and agencies.
   
We shouldn't confuse selling assets with dealing with the real underlying problem,
Philip Hammond, Shadow chief secretary to the Treasury

Lord Mandelson told BBC Radio 4's Today the sell-offs could include local authority-owned airports.

The sale is being proposed as an alternative to immediate cuts outlined by the Tories.

Mr Brown will say premature cuts risk "snuffing out" the economic recovery when the job of fixing the global economy is only half done.

He is also expected to say that economic experts do not back the Tory plans.

However, Mr Brown will concede that the "growth of overall spending" must be reduced after April 2011, by "cutting back on low priority programmes, increasing efficiency and productivity and unwinding the programmes that have been put in place to support demand over the last year".

The Conservatives said the sale was "probably necessary" but "no substitute for a long-term plan".

Shadow chief secretary to the Treasury Philip Hammond said: "We have heard all this before from Gordon Brown and we shouldn't confuse selling assets with dealing with the real underlying problem, which is that we need to cut our spending in order to start living within our means."

Liberal Democrat Treasury spokesman Vince Cable said the policy was fundamentally flawed.

He said: "What worries me about the government proposal is that they're proposing to sell off in very depressed markets, under very depressed markets for land and for shares."

Margaret Eaton, chairman of the Local Government Association, said she was amazed the announcement had been made without consulting her organisation.