In July 1979, an article in the Financial Times introduced the public to the word “privatisation” — coined by the then Treasury minister Nigel Lawson in the newly elected Conservative government. For a decade the policy gained momentum. Whole industries were transferred into the private sector, from oil exploration and steel to telecoms, energy and water utilities. It marked a sea-change in British politics, the success of which was subsequently emulated around the world.
Thirty six years on, George Osborne, chancellor, plans a sale of assets that on paper could surpass his Tory predecessors. His motivation is twofold: first, to raise cash to cut the burden of debt, and second to pep up the economy by withdrawing the government from activities where it has no proper interest or expertise.
Of these, only the second has much merit. At about 80 per cent of gross domestic product and falling, the UK government’s debt burden is not a matter of urgent concern. Cutting it by a couple of percentage points will make little difference. Selling an asset for cash just changes the structure of the balance sheet rather than improving it. That would be different for a nation struggling to pay its bills — Greece is a good example — but the British government can borrow on 30 year terms at just over 2.5 per cent, and possesses its own, legal printing press. More than debt, the challenge is to bring down the deficit, but asset sales do little for the government’s incomings or outgoings.