PM outlines £16bn asset sales programme

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Indy Politics

The PM has unveiled a £16 billion programme of asset sales as part of a deficit reduction plan to bring down the state debt built up during the recession.

Some £3 billion of assets are planned to be sold off over the next two years - including the Tote, the Dartford crossing, the Channel Tunnel rail link, and the Student Loan book. Much of the rest of the funds will be realised by encouraging local authorities to exchange assets for cash.

Mr Brown said Britain was "only halfway there" in overcoming the recession, and warned that cutting back spending too soon risked repeating the mistakes of the 1930s and thrusting the country into depression.

It was "essential", alongside reducing the deficit, to continue the fiscal stimulus, invest in improving workers' skills to boost the UK, and work with Europe and the rest of the world to restore the global economy.

Speaking to an audience of economists in London, Mr Brown said: "There is a fundamental divide within British politics.

"Some people would withdraw the fiscal stimulus now, at a time when the economy is still in difficulty; some people would stop quantitative easing today and that would imperil the recovery; some people would fail to invest in the productive sector of our economy, so we are denied a future in high-skilled and knowledge-based industries; some people would withdraw the co-operation that is necessary with our European partners and the rest of the world to enable the only way the international economy can function in the future, with the international co-operation that is necessary.

"I will fight over the next few months for what I believe. I believe we have been proved right over the last year to restructure the banking system and make sure there is international co-operation and deal with the problem that arises from the lack of stimulus in the economy by taking fiscal and monetary action.

"I am absolutely sure that, over the next year, the pursuit of growth in the context of a deficit reduction plan that is sensible and properly timed, and at the same time the pursuit of an investment- and export-led growth strategy, alongside international co-operation, is the only way that we can avoid a decade where growth will be low and unemployment high.

"I am an optimist. I believe that working together, we can make a difference."

Tory leader David Cameron said selling assets was a good idea but added that the Prime Minister needed to avoid "any more incompetence".

Mr Cameron made the comments on a visit to Bedford to meet Parvez Akhtar, the Conservative candidate for a mayoral by-election on Thursday.

During the brief visit, Mr Cameron said: "Obviously we do need to do this but we must make sure, as every family knows, if you sell something it can help in the short term but it does not help you live within your spending in the long-term.

"We have still got to get to grips with public spending, get to grips with the deficit.

"We must make sure we get good value for money, this is the Prime Minister who sold our gold reserves and if he had sold them later would have got four times the quantity.

"Let's not have any more incompetence from him."

During a question and answer session following his speech Mr Brown said he was confident the markets would carry on buying Government gilts despite the level of the deficit.

"I believe that the experience of the last few months is that people are prepared to buy and I don't see that changing over the next few months either," he said.

Mr Brown rejected suggestions that the Financial Services Authority had acted as a "cheerleader" for the City but acknowledged regulation in the past could have been tougher.

"I am prepared to accept in retrospect that we should have been even tougher," he said.

However he stressed that no one national regulator acting alone could have prevented the global financial collapse of last year.

Liberal Democrat Treasury spokesman Vince Cable said he had secured an emergency Commons statement from Chancellor Alistair Darling to tell MPs of the sell-off plans.

Mr Cable said: "Selling off what is left of the family silver is not going to solve the long-term problem of Britain's structural deficit.

"Asset sales do have a role to play in Britain's recovery but selling them off now when markets are depressed is not the most prudent way to go.

"With £16 billion already pencilled into the budget, if this car boot sale fails to raise the necessary revenue there is a danger that the Government will open up yet another black hole in its finances.

"With the Government acknowledging just 12 months ago that market conditions were not right for the sale of the Tote, concerns must be raised that this dramatic turnaround is due to political rather financial considerations.

"What is also worrying is that yet again this Government chose to make a vital policy announcement on television instead of in front of Parliament.

"With MPs returning to Westminster today, this is crass politicking at its worst. I have secured an urgent question to ensure that the Chancellor comes before the House as a matter of urgency."

The University and College Union said the Government needed to make a clear commitment that if the student loan sale was to go ahead, future students would not be hit with increased interest rates on their repayments.

General secretary Sally Hunt said: "The Government has tried to sell off parts of the student loan book before, but not gone through with it because it didn't feel the taxpayer would get a good deal. It now needs to make the case to the taxpayer that this would represent a good deal if it is to go ahead.

"As students are forced to borrow more to meet the cost of their university education, we need a guarantee that the interest rate on student loans will not rise and we will not move towards a system with a commercial rate of borrowing."

The union added that many students and parents may welcome the loan book being sold off because of the current "fiasco" of students still waiting to receive money.