UK Labour to do asset sales

October 12th, 2009 at 3:50 pm by David Farrar

Reuters reports:

UK Prime Minister Gordon Brown plans to sell off 3 billion pounds (NZ$6.47bn) worth of government assets.

The will be carried out over the next two years, and include betting company the Tote, the cross-channel rail link between Britain and France, a portfolio of student loans and the government’s stake in uranium-processing firm Urenco.

The bridge and tunnel crossing over the River Thames at Dartford is also up for sale, and local authorities are expected to raise a further 13 billion pounds (NZ$28bn) through asset sales on top of 30 billion pounds (NZ$65bn) already identified in a 2007 report …

What a shame that the British Labour Party will sensibly sell some assets that are better in private hands, and the NZ Party will not do the same.

The Labour and National consensus to rule out all assets sales, no matter how logical, is the most extreme in the western world.

I do not advocate National breaking its promise not to have asset sales during this term, but they’d better have a more rational policy going into the 2011 election. If Gordon Brown can do it, so can we.

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38 Responses to “UK Labour to do asset sales”

  1. big bruv (12,386 comments) says:

    “What a shame that the British Labour Party will sensibly sell some assets that are better in private hands, and the NZ National Party will not do the same.”

    More of a shame is that the NZ National party will not do the same.

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  2. KiwiGreg (3,129 comments) says:

    I doubt this is more than the tip of the iceberg of commercial activities that could be sold.

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  3. Chris C (224 comments) says:

    Hmm. It won’t, you know. Labour won’t be around to sell these off, and the Tories will face huge opposition from the same Labour Party and the Liberal Democrats from selling off some of these things – namely student loans (haven’t we learned our lesson about selling debt obligations?) and the chunnel link.

    It’s not so long since Railtrack fucked up so badly that people died as a result of contracting out to companies that cut corners to save money – Balfour Beatty were fined £7.5m for their involvement with the Hatfield rail crash, Jarvis paid out over £3m for their Potters Bar disgrace, and as a result of that, Railtrack were brought back into public ownership. Lots of Railtrack investors lost money, and tried to sue the government – but hey, that’s the free market.

    So they’re very cagey about private ownership of rail – and that link is very closely tied to France.

    I’m more up with the Tory plan – cut Whitehall to make the savings, because asset sales to central government is pissing in the ocean. Central government saving plans need to be longitudinal, not quick cash. Labour are fucking deluded if they think they’re ever going to get the chance.

    Besides, the entire country has been run on PPP and PFI for over 20 years. They don’t own anything else to sell.

    I don’t like the idea of selling my student loan off as a CDO though. Hey-ho, one more reason to cast Tory as a postal vote.

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  4. Adolf Fiinkensein (2,684 comments) says:

    Hear hear, David. In fact, it is a reflection of what a good job Labour and their media hand maidens have done indoctrinating middle NZ to believe that asset (read liability) sales are a bad thing. Don’t blame National for the dim witted mindset of the people it must rely upon to stay in power long enough to fix up Labour’s legions of fuck ups.

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  5. big bruv (12,386 comments) says:

    Lol..sorry DPF, I was a bit quick off the mark there and should have taken a bit more notice of your post.

    I agree with you.

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  6. davidp (3,329 comments) says:

    Chris C>I don’t like the idea of selling my student loan off as a CDO though.

    Why would you care? You still have to pay the same amount of money back at the same rate according to the same schedule. You might, but only might, have to change the name on the cheque you write.

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  7. Chris C (224 comments) says:

    No, they can change the rates – it’s in the contract. The UK Student Loans Company currently charge interest to domestic based repayers at 1.5%, which is well above the official rate at 0.5%. This isn’t likely to go down.

    I don’t trust a government who can’t even draft a piece of legislation without it being amended within 6 months to draft a contract to sell debt obligations to someone without tying down the rates the 2m+ people are going to be paying. Besides, this is a buyer’s market, so they’re more likely to go for a rush sell to someone and screw the dependents or the repayers.

    I’m supposed to be paying 12.5% of my NZ salary toward that loan, which accrues interest at 3.5% while I’m not in the UK. Fuck knows what it’s going to be if it gets sold on.

    The idea of selling those on is more balance sheet trickery and bullshit – they’re trying to make their finances look just a little better because they fucked up the bailouts and the interest is killing them. They set their targets to get 50% of young people (although I’m not classed as a young person) into higher education; we knew we’d have to pay for it, but then 3 years into my degree they came along and started moving the goalposts because their targets were stupid, arbitrary and unaffordable. I needed my degree – hundreds of thousands of people who didn’t are now part of the New Labour debt train and having the threat their promised subsidised loans sold on.

    What a fucking country. What a fucking government.

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  8. getstaffed (9,188 comments) says:

    I agree with Adolf. We have drifted so far left that modern day Act is well to the left of where Labour was in the 1980′s. The media have been duplicit in this slide

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  9. camrun (49 comments) says:

    Leaving aside the issue of asset sales, (which I believe is a good idea in this case), do Gordon Brown and the Labour Party have a mandate to make such a major decision?

    They are polling around 25%, no chance at the election in mid 2010, and a lot of people think Brown should stand down for someone (or anyone) else.

    Are the Tories backing the plan as well?

    To me, this seems as the same as the NZ Labour Party buying KiwiRail just before the election, it was not a campaign promise, they were about to be kicked out, and there was no impression of majority support from the public.

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  10. Colonel Masters (420 comments) says:

    Hmm, not sure that I would sell uranium processing facilities AND the Chunnel to foreign interests…?

    Why don’t they go the whole hog and sell them some triggering mechanisms too?

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  11. Adolf Fiinkensein (2,684 comments) says:

    I’m surprised so many of the people who are abusing National for breaking its tax cut pre-election promise now want the party to break it’s pre-election promise to not sell state owned assets in its first term.

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  12. big bruv (12,386 comments) says:

    Is this the same Adolph who is happy that the Nat’s broke their tax cut promise?

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  13. gravedodger (1,426 comments) says:

    Absolutely freeking brilliant the stupid socialists spend the best world economic times driving Britain from Great to weak then when teetering on a possible recovery from the biggest recession in 60 years decide to now try and sell assets. Was Broon getting sage advice from our great finance master of the stupid response, Mick Sullen, the clown prince of financial mastery.

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  14. Chris C (224 comments) says:

    @Colonel Masters: Why not – the Atomic Weapons Establishment is already owned by Americans, and QinetiQ is privately owned. They wanted to sell off Royal Mail, they already have made huge steps in paving the way to privatising BNFL. Oh, fuck, yeah, and Gordon sold a load of gold a few years ago at a bargain price. Some people reckon that ill-judged sale cost the UK… hm. About £10bn. So around the amount he’s expecting to get from selling off everything else.

    @camrun: the Tories are pushing asset sales too, but it’s not a frontline plan. This is Labour’s replacement for real cuts. They think they can push a £175bn deficit off the balance sheet by flogging off some (profitable) arrangements. It’s like selling the TV to pay the power bill. It only works until the next power bill comes in.

    Oddly enough, I trust the Tories more because they’ve touted realistic cuts to pay back the deficit. Like the ID card scheme and NHS Spine… £20bn right there.

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  15. dimmocrazy (286 comments) says:

    Adolf, what do Key et al have to do before you might possibly consider to review your undying adulation?
    You’re of course fully entitled to your opinion, and respected for your staunch partisanship, but hey, there must be a limit?

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  16. KiwiGreg (3,129 comments) says:

    “They wanted to sell off Royal Mail”

    God they should have. Think how much the value has gone down over the last decade. Wish our government had had the wisdom and foresight to sell NZ Post, say in 2004 or earlier.

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  17. Chris C (224 comments) says:

    # KiwiGreg (667)
    October 12th, 2009 at 5:23 pm

    “They wanted to sell off Royal Mail”

    God they should have. Think how much the value has gone down over the last decade. Wish our government had had the wisdom and foresight to sell NZ Post, say in 2004 or earlier.

    I’d agree with some of the sales or attempts at sales if it didn’t smack very strongly of a fire sale to cover up 12 years of incompetence in government. Oh, and if the coordinator and generator of the ideas wasn’t a slimy little unelected piece of shit on his third try at making it in government. That’s New Labour all over – if no-one wants them, just make them a peer.

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  18. Kris K (3,570 comments) says:

    The asset sales will be carried out over the next two years, and include betting company the Tote, the cross-channel rail link between Britain and France, a portfolio of student loans and the government’s stake in uranium-processing firm Urenco.

    My only concern with selling infrastuctural assets off to private companies, is that government (the country) can end up in the situation of having to buy back the essential, but non profitable, portions of the business. Such as was the case where the NZ rail system had been run down to such an extent by the new owners that they regarded it as unfeasible to bear the maintenance costs for certain ‘unprofitable lines’, and therefore considered closing those lines down. We, of course, could not allow these lines to close down, and therefore had to buy back ‘less appealing’ portions of the infrastructure. Just seems dumb to me. Analogous to selling your house, and then have to buy back all the bits that require maintenance (like the roof), because if you don’t the landlord will let the house run down to such an extent that pretty soon you’ll have no where to live.

    I really do believe that countries should own ALL their essential infrastructure; rail (& ferries), telecommunications, energy generation and transmission, postal services, and some banks. No doubt many here disagree with me – especially in light of free market wisdom. I really do believe in our case that NZ is too small to survive in an unfetted global free market. Too small, too far away – and the ETS only makes this worse.

    I guess time will tell in the case of the UK. Watch this space.

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  19. toad (3,654 comments) says:

    Any chance Nick Smith will do asset sales too?

    I’m not suggesting he’s done anything wrong re his electorate office financing, but the sneaking suspicion of that possibility should be enough for him to front up and put the figures into the public domain.

    Transparency is what it is all about. Jeanette Fitzsimons and Catherine Delahunty dobbed themselves in over a $6,000 stuff-up. Would be good to know that other MPs are prepared to do similar, (even though the amount may be greater).

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  20. redqueen (347 comments) says:

    DPF, I agree with your point that National should be willing to sell off some government assets, particularly where there is no market reason for it (the specific assets, at the moment, don’t need to be debated), but I think using the UK Labour Party and Gordon Brown as an example isn’t so great. The Labour Party in the UK has been selling off assets throughout the decade to pay for an ever expanding state. It hasn’t done this because it honestly believes in letting markets get on, but instead wants to make a capital sum now to pay for revenue expenditure. In this line of policy they’ve nearly bankrupted Britain (and will probably have a chance soon, if only through the Conservatives following their policies). So yes, National should serious look at disposing of some assets, but using Gordon Brown and UK Labour as a poster for this is hardly attractive.

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  21. ISeeRed (244 comments) says:

    Kris K, you’re obviously too young to remember the 70s. NZ has been there and done that. It nearly bankrupted the country.

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  22. Kris K (3,570 comments) says:

    ISeeRed 7:02 pm,

    Kris K, you’re obviously too young to remember the 70s. NZ has been there and done that. It nearly bankrupted the country.

    Being held to ransom by offshore interests whose primary aim is in maximising returns to offshore shareholders, and where we’re lucky to get a tax return, much less any profit return, is also a road to financial ruin. Once the family silver’s gone you loose all control, all your asset wealth, and we’ll ultimately end up as tenants in our own country. Not to mention loss of sovereign statehood.

    And I lived through the 70s, having been born in 1962.

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  23. redqueen (347 comments) says:

    Kris, the problem is that government ownership of assets tends to distort markets and they tend to be run for non-commercial purposes. While in the case of some infrastructure this can be justified (such as roads) things like telecom, banking, and railways are often better left to private concerns. The issue of profit retention and sovereignty are different from who owns our companies. While I am a great believer in Kiwi ownership and Kiwi companies, these should be achieved through people saving money and owning shares. That people are pessimistic, and often rightly so, about the sharemarket and that we choose to buy consumer goods rather than save and invest, is more the issue than whether our government owns companies or not. The argument is akin to ‘the people won’t do the right thing, so the government will do it’, and that, I’m afraid, leads to absurdity and ruin.

    So rather than insulting you, I’d merely cast your attention to the issues which we should be addressing, rather than having the government own vast swathes of the economy and for no reason but profits and the ability to rent seek (such as with electricity).

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  24. toad (3,654 comments) says:

    Kris K said: And I lived through the 70s, having been born in 1962.

    And you obviousy didn’t lean anything from the experience Kris K. When Muldoon tried to run the economy like a Soviet shipyard.

    And you still didn’t learn anything for the ’80s and early ’90s, when Douglas and Richardson tried to run it like Milton Friedman’s thinktank.

    Kris K -you are at the top of my “naughty list” right now – because you provide doctrinaire responses (based on what you interpret from dubiously translated scripture that your Lord Jesus Christ may or may not have wanted) rather than rational argument.

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  25. davidp (3,329 comments) says:

    Toad>Transparency is what it is all about. Jeanette Fitzsimons and Catherine Delahunty dobbed themselves in over a $6,000 stuff-up.

    They “dobbed themselves in” months later when it was obvious the media were about to break the story. Which is a bit like murdering someone, waiting till the police are about to batter down your door, give up, and then claim that you deserve a reduced sentence for turning yourself in.

    But well done having enough cheek to try and get away with such an outrageous argument tho. Have you ever tried selling dodgy used cars, real estate, or bridges? Because you’d be a natural.

    As far as asset sales go… Aren’t the government trying to sell the Skyhawks and Macchis? Surely that violates election promises and the “all government assets represent much lowed family silverware that can never be sold” principles that Labour have left us with. I demand that we keep them at Blenheim airport! No asset sales!

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  26. Kris K (3,570 comments) says:

    redqueen 7:55 pm,

    Of course, there was a time when the people of NZ owned the country and its infrastructure. The government was resticted to managing the country on behalf of, and according to the will of the people. If government went back to this model, and the populous were regarded as the shareholders of productive assets, rather than something from which to suck the last dollar from, then NZ would be a more prosperous nation and not driven by the winds of the global economy to the same degree we are today.

    Instead we have government that does the opposite of what the people want, and what is usually in the very worst possible interests of the people. Whether that be economically, morally, in the formulating of our laws, or the appointment of minority group representatives that in no way represent the will, or the best interests, of the majority.

    Selling off and privitising our essential infrastructural asset base is ultimately just another means by which the people of NZ are further pushed toward a position of servitude; whereby we become slaves to offshore financial interests, and those with vested political and ideological global interests.

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  27. Kris K (3,570 comments) says:

    Yah!
    I’m at the top of Toad’s “naughty list”.
    That must count for something, right?
    Chocolate fish, perhaps?

    You may revile me, you may even revile my Lord, but sadly for you He will revile you too when you stand before Him.

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  28. reid (15,603 comments) says:

    Kris, ever read The Road to Serfdom?

    You should.

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  29. redqueen (347 comments) says:

    Kris, that still doesn’t address the issue: things like telecom, electricity, and banking aren’t things which the government needs to have a stake in. As for the government not representing the people here, I think it does. People, for the most part, don’t understand the things which government deals with and vote on issues which are, often, irrelevant (from my perspective). That we have minority interests being represented left, right, and centre is a function of how people feel (right or wrong). That we have several good, key (no pun intended), ministers is a sign that National and ACT have done a good job in getting elected, but there was a price to pay for that. The average Kiwi wants government ownership of vast areas of our economy to ‘protect’ us. They think in terms of wanting something for nothing and not taking personal responsibility. If they really want a Kiwi owned bank, they could buy shares and vote for decent directors, but instead they go, ‘Oh, no, I’ll let the Government do that for me’. That is akin to, ‘Oh, look, I could do the right thing, but heck, I’ll let God solve all my problems’. Sorry, but that isn’t the way life works and the Kiwi Government is mostly certainly not divine, even if I think Key and English are closer than most of our politicians in the past 50 years.

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  30. jag (54 comments) says:

    “Jeanette Fitzsimons and Catherine Delahunty dobbed themselves in”

    Excuse me?

    “dobbed themselves in”????

    To whom??

    What is it with the Green vernacular that you always seem to spin it to sound like sanctimonious a-holes.

    I watched Q&A, I witnessed the ‘confession’ – there was no unprompted public announcement – although Metiria Turei certainly tried to make out this was the case.
    Just so you know, when information has to be teased out of you that is not generally classified as ‘dobbing yourself in’.
    It’s akin to arguing that Jan Molenaar handed himself over to the Po-Po without duress and of his own free will. It’s nonsensical.

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  31. Tom Semmens (79 comments) says:

    If National runs in 2011 on a privatisation agenda they’ll be voted out.

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  32. Kris K (3,570 comments) says:

    reid 8:57 pm,

    Kris, ever read The Road to Serfdom?
    You should.

    No I haven’t. I’ll try and track it down.

    redqueen 8:57 pm,

    I guess we’ll just have to agree to disagree. And I’d be happy to be proven wrong, I just don’t see it from where I’m sitting.

    I’m off. Chow for now.

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  33. kiki (425 comments) says:

    Generally governments sell because they have to not want to. England is broke, America is broke, we are going that way again.

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  34. BlueDevil (92 comments) says:

    Chris C 4.03pm
    The way the pound is going 12.5% should just about enough to pay it off!

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  35. James (1,338 comments) says:

    “If National runs in 2011 on a privatisation agenda they’ll be voted out.”

    Then NZ deserves to die.Im serious….if the cure is to hard for the poor dears to take then they can go to hell.I’ll be off and won’t shed a tear.

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  36. libertyscott (355 comments) says:

    Yes, the Gordon Brown government is privatising a road – a very strategic road at that. The Dartford Crossing is effectively an 8 lane highway (4 lane bridge and 2 2 lane tunnels) with a toll, which comprises the eastern connection for the M25 across the Thames. It easily carries as much as the busiest highways in New Zealand, and there is no ready alternative

    It is quite profitable as a toll road, the same could be done for the Auckland Harbour Bridge with the rights to build a duplicate crossing, with tolls, from Victoria Park to Constellation Drive.

    The world wouldn’t come to an end, the government wouldn’t need to borrow to build a new crossing, the timing of the crossing would be when it is optimal (based on tolls), tolls could be offset by existing fuel tax/RUC consumed while using the road, and the Western Ring Route would provide a check on toll rates (and the Commerce Act allows price control if need be).

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  37. V (660 comments) says:

    The only problem is Gordon is a complete pariah …

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  38. Flashman (184 comments) says:

    kiki’s is right. The UK is flat busted broke. These will not be surgical strategically selected asset sales, but a desperate garage jumble sale of odd bits of tat whose proceeds might temporarily pay Blair-Brown’s nanny state operating expenses.

    Think of a dysfunctional householder on the breadline throwing all its bits and pieces into a threadbare sheet and taking the whole lot round the pawnbroker the day before the rent collector’s due. That’s Brooniland 2009.

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