Tory Government Accused of Selling National Assets Cheap
As the Tory government continues its strategy of disposing its assets to fix public finances, there are accusations that the deals are short-changing the British public because the government is selling these assets under their fair value. A recent report analyzing the deals undertaken by the government has revealed that a record £26.4bn has been raised in 2015 through privatization.
The government has sold its stake in more than seven institutions during 2015 as a part of its privatization drive, including the government’s final stake of 30% in Royal Mail, 11bn shares in Lloyds Bank and a stake in Eurostar.
A recent report by the organization Press Association (PA) shows that the amount raised in these sales, £26.4 billion is the highest ever amount raised by privatization in Britain’s history, with the previous high being in 1987 when Margaret Thatcher’s government sold major assets such as British Airways and Rolls-Royce for £20 billion.
In a statement, Angela Eagle, the British shadow business secretary said,
Osborne [UK Chancellor] will only meet his debt target by selling off public assets, which explains why the Tories are flogging off the family silver at record pace.
Dismissing accusations of conducting a fire sale, a Treasury spokesman said that the sale of government assets was central to its plan to fix public finances, bring down the national debt and provide economic security for Britain’s working population. The spokesman also said that the government had an ambitious target to disinvest £5 billion worth of assets by 2020 so that the government can meet its stated target.
Frances O’Grady of Trades Union Congress has charged the government of short-changing public for short-term public gain and not looking at economic security by alleging that the Eurostar and Royal Mail were sold below value. Analysis by PA has revealed that almost half of the £26.4 billion was from sale of mortgages previously owned by Northern Rock for £13 billion. The Royal Mail sale brought £1 billion and the Eurostar sale brought in £800 billion.
According to the Chief Economist at IHS Global Insight, Howard Arche stated that favorable conditions in the equity market for most of last year helped the process, but the current volatility in markets could possibly slow or delay further privatization. Lloyds Bank shares worth £2 billion are slated to be sold later this year. TV Channel 4 is also said to be on the block.
As its first sale in 2016, the government sold its stake in a 67-acre redevelopment site near King’s Cross station in London for £371 million.