Chancellor Alistair Darling is planning to sell off the M25 Dartford Crossing and the UK’s canal network as part of a £16bn-plus privatisation programme.
Money from the sell offs will help maintain Darling’s recession-busting public spending spree.
Darling’s surprise announcement on Monday is aimed at keeping public spending flowing as government borrowing rises to a record £175bn by the end of the year. Darling said he wanted to build on savings already made in the public sector and prioritise areas for investment “where we get the most bang for our buck”.
“Start with investment. We need to look at what non-essential public sector assets we can sell, so that we can free up capital for key projects.
“We need to look at what non-essential public sector assets we can sell, so that we can free up capital for key projects.”
“We will look at every corner of public sector spending, and allocate money to those areas where it will make the most positive difference to people’s lives,” he said. The Treasury confirmed that a public assets sell off list had already been drawn up (see box).
Plans to raise £16bn through asset sales had already been announced in April’s Budget. A Treasury spokesmen indicated that the £16bn was not a fixed target and that the asset sale list was not exhaustive. Further sales could made he said.
RAC Foundation director Stephen Glaister said the move could offset “terrifying” cuts in public spending announced in April’s budget. Spending was due to fall from around 3% of GDP now to 1.25% by 2012.
Glaister said parts of the road network would be the obvious choice for further sales. These could be done by selling off assets or operating concessions.
A welcome move
“The government needs measured rates of return on any sale,” he told NCE. “That is what Darling or the Conservatives should be looking at.” Association for Consultancy & Engineering (ACE) chief executive Nelson Ogunshakin welcomed the move.
“The ACE hopes that the government will continue to pursue policy measures that stimulate economic activity and ensure that there is long term investment for the consulting and engineering sector,” he said.
The ACE’s 2009 State of Business report, published on Monday, showed pessimism for the remainder of 2009, with 58% of respondents saying confidence was low.
“The ACE hopes that the government will continue to pursue policy measures that ensure that there is long term investment for the consulting and engineering sector.”
Its members said workloads would not improve for another 18 months, but identified the energy sector and other western European markets as opportunities.
New investment streams are good news for the beleaguered construction sector, which is still awaiting a sustained recovery.
The monthly Chartered Institute of Purchasing & Supply/Markit survey showed the smallest fall in construction activity since the start of the recession.
However, the civil engineering sector, which has until now been relatively robust compared to the remainder of the construction sector, showed a renewed fall. News from the materials sector is more worrying. While prices have increased - a healthy sign - analysts are forecasting falls later in the year.
“While we don’t want to be pessimistic, the construction sector is particularly fragile at the moment and there is still a great deal of uncertainty. The reality is that the recovery of the industry will be some time away,” said BDO Stoy Hayward head of construction, Richard Kelly.
Up for Sale
- British Waterways
- QE II Conference centre
- Ordnance Survey
- Land Registry
- Dartford Crossing
- Royal Mint
- Met Office
- Oil and Pipelines Agency
- Defence Storage and Distribution Agency