David Prosser: The great government firesale

Outlook: £16bn represents a tiny proportion of the total deficit

Ever since Margaret Thatcher began her famous programme of privatisations, the metaphor of choice for critics of public asset sales has been that they are akin to "selling the family silver". But it is time we found a more appropriate comparison, for the latest disposals – the £16bn of sales that were formally unveiled by Gordon Brown yesterday – are hardly of assets the nation will miss. In most stakes, they're more like the family copper.

If only this was the worst of the criticism one might level at the Prime Minister's jumble sale. In fact, there is quite a contest for that accolade.

The business world has a word for this kind of disposal programme: it's called a firesale. It's what you do when you're desperate for cash: you sell off any asset you can lay your hands on at whatever price a buyer will offer, as you scrabble together the pennies before the bailiffs arrive. Naturally enough, your buyers know you're in a tight spot and tend not to feel inclined to overpay.

Of the assets we know Mr Brown intends to sell, only the Dartford Crossing, with its strong and more-or-less guaranteed income stream, is worth paying top dollar for. The Tote – this will be at least the fourth time the Government has tried to sell it – the student loan portfolio and Urenco all come with so much baggage attached that their price tags will be lower than the Prime Minister hopes.

No wonder that local authorities are already panicking at the prospect of making good the shortfall on Mr Brown's projected £16bn worth of disposals: once central government has had a go at selling its assets, councils are going to find themselves forced to flog anything that isn't nailed down.

Still, at least the Treasury is now doing something to tackle the budget deficit. Well, that's what Mr Brown's supporters would have you believe. The problem is that there are at least three good reasons why this sell-off won't help the UK to get back on top of the public finances.

The most obvious of these is that the sell-offs are not new. This is a classic example of one of Labour's favourite tricks: reannouncing old news. If that figure of £16bn sounds familiar, it's because you've heard it before. Alistair Darling announced it in April's Budget, when the Government first unveiled these privatisations. And if the sale proceeds have already been factored into the Treasury's projections, the Prime Minister's claim that he is now addressing the budget deficit looks a little hollow.

The second problem is that these sell-offs don't do much for the deficit except on a one-off basis. Think about your household finances: if you're spending more than you earn, selling a bit of silver (or copper) might get you out of trouble in the month when you make the sale, but the underlying problem remains. Unless you cut your spending, or find a way to earn more, your personal budget deficit will continue to grow.

This is one reason why bodies such as the National Audit Office and the Office for National Statistics have strict accounting rules about how the Government classifies all the money it raises. Reason number three for these sales doing little to reduce debt is that for various technical factors, a good deal of the money raised won't actually count against the deficit.

Mr Brown was at pains again yesterday to insist that cutting back on borrowing too quickly might plunge the UK back into recession (assuming that it is about to come out), this being one of his chief lines of attack against the Conservatives.

Well, the good news is that we certainly have nothing to fear on that front from the disposal programme. Even if we were to ignore all of the problems with the sell-offs, £16bn represents a tiny proportion of the total deficit, which will be £175bn this year alone on the Government's optimistic projections.

Every little helps, you might counter. Well, for all of the reasons above, in this case it doesn't. These disposals won't raise the money Mr Brown is hoping for, the cash has already been accounted for in any case, and it can't be used to reduce the deficit. It's not the best way to proceed if you want to convince people – including the international money markets from which we borrow all that cash and the credit ratings agencies that advise those investors – that you're serious about tacking the public finances.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot