Brown sells state silver for pounds 12bn

A SURPRISE SALE of assets, from the Royal Mint to motorway service stations, was announced yesterday by the Chancellor to help create a pounds 30bn war chest of sweeteners for the next general election.

Gordon Brown's radical plan to raise pounds 12bn for investment in schools, health, housing and transport includes the sale of assets such as the air-traffic control system, which even the Tories dared not touch, and the Tote, a move opposed by Robin Cook, the Foreign Secretary.

The Chancellor gave a statement to the House of Commons which stunned his own backbench MPs and led to Tory cheers of "more!". Mr Brown said the partial or majority sell-offs would include: the Tote, the Commonwealth Development Corporation; the Royal Mint; National Air Traffic Services; student loans; debt held in British Energy; and licences to operate the new generation of mobile telecom services.

He also disclosed that tight public spending controls should provide budget surpluses of pounds 7bn, pounds 10bn and pounds 13bn over the next three years. Although he gave no clues as to how the surplus might be spent, it could leave him room to slash taxes for the low-paid before the election, achieving a target that the Tories never reached.

His strategy combined Thatcherite principles with a taste of socialism, and embraced some of the ideas for "asset sweating" pioneered by John Prescott, foreshadowed this week in The Independent.

The sale of the air traffic control service led to warnings last night by Gwyneth Dunwoody, Labour chair of the Transport Sub-Committee, over the threat to safety by putting the system into private hands.

Local authorities are being told to sell assets, including council housing, to reinvest in new housing. Whitehall departments have been told to sell surplus land, buildings and goods identified in their ministerial "Domesday book".

George Robertson, Secretary of State for Defence, has been told to sell off more land and grace-and-favour houses for the "brass hats". Chris Smith, Secretary of State for Culture, Media and Sport, whose department holds national heritage assets, has also been told to find items for sale.

Opposition parties said Mr Brown was building up a pounds 30bn war chest for the next election. But it could lead to pressure from Labour MPs who rebelled over the imposition of student tuition fees for a relaxation of the spending controls.

The Chancellor is proposing growth of 2.5 per cent in spending over the next three years, but the Liberal Democrat spokesman, Malcolm Bruce, said that would be the equivalent of only 1.5 per cent growth in spending over the five years of a parliament, lower than the 1.8 per cent over the 18 years of the Tories' term of office.

Francis Maude, the Tory spokesman, said the sales showed the spending review had not produced the reductions needed for the pledged increases in health and education.

The results of the review will be announced next month. The Cabinet Public Expenditure Committee, which yesterday met to endorse the Chancellor's strategy, is still engaged in reducing departmental bids.

Mr Brown announced that Whitehall departments would be kept to the totals already announced for the next three years, abolishing the annual haggling by ministers for more.

Britain's debt as a proportion of gross domestic product will be kept to 40 per cent or lower, compared to 45 per cent inherited from the Tories.

Mr Brown also re-emphasised the Government's determination to bear down on inflation, reaffirming the 2.5 per cent target.

In a speech at the Mansion House in the City of London last night, Mr Brown said: "It was controversial in 1976 when one Labour Prime Minister said we could not spend our way out of a recession. I say tonight we cannot simply spend our way through a recovery either."