By Tash Shifrin
16 October 2009
Shocked council leaders heard of government plans to sell off their assets ‘on the teatime news’.
Ministers were forced to clarify that town halls would be able to keep the proceeds of any sales the following day.
A spokesman for the Local Government Association said council leaders had discovered from the media on Sunday October 11 that they ‘would be expected to flog £13bn of assets and the government would keep the money’.
Number 10 officials had not even warned Whitehall of the move, he claimed. ‘The first thing we heard was on the tea-time news, as with the Treasury, as with the Department for Communities and Local Government. We were all in the dark.’
The news prompted LGA chair Margaret Eaton to warn of ‘protracted legal wrangling’ if councils were made to sell off property against their will.
But on October 12, the government was forced to clarify to the LGA and to Parliament that it would not seize councils’ asset-sale cash, which it expected to total £11bn between 2011 and 2014.
Chief Secretary to the Treasury Liam Byrne told MPs: ‘That is based on a long-term picture of what local government tends to sell each year... Of course they are free to keep those receipts and reinvest them in priorities such as affordable housing and schools.’
The LGA spokesman described the rapid switch as ‘less of a U-turn and more of a Starsky and Hutch-style skidding handbrake turn’.
Economists warned the total £16bn sell-off would do little to cut a deficit that the chancellor expects to
reach £175bn this year.
In what critics dubbed ‘a car-boot sale’, assets listed included Tote bookmakers, the Channel Tunnel rail link, the Dartford tunnel and bridge river crossing and the government stake in uranium firm Urenco.
Gemma Tetlow, senior research economist at the independent Institute for Fiscal Studies, told Public Finance: ‘It will have very little effect on the yearly deficit position.’
Although the move might bring ‘slightly lower debt servicing costs’, the reduction would be ‘very small’. Tetlow added that the assets could only be sold once, but some of those slated for sale, such as the student loan book, would be expected to bring in funds in future. She said this would mean ‘trading off a stream of future income for an upfront payment’.
In Parliament, opposition MPs noted that earlier moves to sell off some of the assets had come to nothing.
On October 14 the European Commission warned that the UK’s worsening deficit – expected to hit 13.8% of gross domestic product – posed ‘a serious concern’.
16 October 2009
Shocked council leaders heard of government plans to sell off their assets ‘on the teatime news’.
Ministers were forced to clarify that town halls would be able to keep the proceeds of any sales the following day.
A spokesman for the Local Government Association said council leaders had discovered from the media on Sunday October 11 that they ‘would be expected to flog £13bn of assets and the government would keep the money’.
Number 10 officials had not even warned Whitehall of the move, he claimed. ‘The first thing we heard was on the tea-time news, as with the Treasury, as with the Department for Communities and Local Government. We were all in the dark.’
The news prompted LGA chair Margaret Eaton to warn of ‘protracted legal wrangling’ if councils were made to sell off property against their will.
But on October 12, the government was forced to clarify to the LGA and to Parliament that it would not seize councils’ asset-sale cash, which it expected to total £11bn between 2011 and 2014.
Chief Secretary to the Treasury Liam Byrne told MPs: ‘That is based on a long-term picture of what local government tends to sell each year... Of course they are free to keep those receipts and reinvest them in priorities such as affordable housing and schools.’
The LGA spokesman described the rapid switch as ‘less of a U-turn and more of a Starsky and Hutch-style skidding handbrake turn’.
Economists warned the total £16bn sell-off would do little to cut a deficit that the chancellor expects to
reach £175bn this year.
In what critics dubbed ‘a car-boot sale’, assets listed included Tote bookmakers, the Channel Tunnel rail link, the Dartford tunnel and bridge river crossing and the government stake in uranium firm Urenco.
Gemma Tetlow, senior research economist at the independent Institute for Fiscal Studies, told Public Finance: ‘It will have very little effect on the yearly deficit position.’
Although the move might bring ‘slightly lower debt servicing costs’, the reduction would be ‘very small’. Tetlow added that the assets could only be sold once, but some of those slated for sale, such as the student loan book, would be expected to bring in funds in future. She said this would mean ‘trading off a stream of future income for an upfront payment’.
In Parliament, opposition MPs noted that earlier moves to sell off some of the assets had come to nothing.
On October 14 the European Commission warned that the UK’s worsening deficit – expected to hit 13.8% of gross domestic product – posed ‘a serious concern’.
