Knock-down prices cut pounds 100m from state sales

A pounds 100m "black hole" has opened up in the public finances after ministers allowed four flagship privatisations to go through at knock- down prices, Labour said last night.

The sales, all of which have taken place during the last year, were meant to raise almost pounds 400m but were finally made for a total of pounds 298m, according to figures obtained by the shadow Chancellor of the Duchy of Lancaster, Derek Foster.

The least profitable of all was the sale of Her Majesty's Stationery Office, bought by Electra Fleming for pounds 54m despite its pounds 100m price tag. This sale has also attracted attention because two former cabinet ministers are involved with the Electra Fleming - Tom King, former Secretary of State for Defence, is on the board of one of its two parent companies, the Electra Investment Trust, and Tim Renton, former chief whip, is consultant to the other, Robert Fleming Holdings.

The HMSO sale is now being investigated by the National Audit Office, as most large privatisations are.

The other knock-down sales included the Atomic Energy Authority, which raised pounds 210m when it was floated on the stock exchange last September despite expectations that it would sell for around pounds 250m.

Chessington Computer Centre was sold to a management buy-out team for pounds 11m despite a pre-sale price tag of pounds 20m.

The Paymaster Agency has been sold to a United States computer company, EDS, for pounds 23m, though the sale was expected to raise pounds 25m.

This last privatisation has also attracted criticism because of its speed. Civil Service unions have announced that they are planning a legal challenge to the sale of the Paymaster Agency on the grounds that attempts to push it through before the general election have left insufficient time for consultation.

Mr Foster said that had the extra pounds 100m been raised it would have paid for 3,000 police officers, 5,000 nurses or a new hospital.

He added: "As the election looms the Conservatives have adopted a car- boot sale approach to valuable public assets - everything must go at a knock-down price, no questions asked.

"In desperation the Conservatives have resorted to anything which will raise a quick buck. Hard-pressed tax-payers deserve better than this pounds 100m black hole."

A Treasury spokesman said that it did not publish pre-sale estimates and that although the House of Commons library had produced figures for the receipts, the estimates had been gleaned from newspaper cuttings. The Government had raised pounds 70bn since 1979 from privatisations, he added. "Value for money is the key objective and these sales were no different. The reality sometimes turns out to be somewhat different from some of the wilder pre-sales estimates."