State-owned asset sale will set new record

GOVERNMENT stakes in a host of companies will be sold off this year to bring down the debt.

Some £32bn of state-owned assets will be offloaded in 2015 alone, the highest figure ever.

The plethora of privatisations will include holdings in RBS, Lloyds, UK Asset Resolution, which houses the loan books of Northern Rock and Bradford & Bingley, and Royal Mail.

The Chancellor said: ‘We can make faster progress in returning our banks, including RBS, to where they belong – the private sector. Indeed the sale of Government assets this year will deliver the largest privatisation proceeds of all time, higher than the previous record in 1987.’

Some £20bn of assets were offloaded in 1987 at the height of Margaret Thatcher’s programme, including shares in British Airways.

George Osborne had pledged to sell off three-quarters of the 78pc stake in RBS in this Parliament, raising £2bn this year and then around £6bn a year until 2020.

Ministers offloaded a 15pc holding in Royal Mail – after the first wave of privatisation in 2013 - and they will also sell remaining shares in Lloyds this year.

The Budget document says the RBS sale will start in the coming months, adding that: ‘Sales of Lloyds shares and UKAR assets are ongoing.’

But the Government’s independent forecaster said that the sell-offs could be seen as a wheeze to cash in quickly and lower the debt in the short-term.

Robert Chote, chairman of the Office for Budget Responsibility, said: ‘The Government is now planning to sell financial assets worth £32bn this year, which reduces public sector net debt straight away but forfeits the flow of income that these assets would generate in the future.’

He added: ‘It is only because of these asset sales that public sector net debt is forecast to fall as a share of GDP this year.’ Tina Hallett from PwC also criticised the Government’s handling of its investments.

She said: ‘The Government also needs to put the spotlight on whether it is generating enough value from the assets it holds.

‘We heard more about asset sales in the budget, but we still need to release more value from the estimated £1.3trillion that the public sector holds.

‘It is essential that the optimum value is generated.

‘Although asset sales are part of the debt reduction plan, particularly the sale of bank shares, the Chancellor could go further and faster on this agenda.’