British prime minister Gordon Brown has unveiled plans to raise £16 billion (€17 billion; $25 billion) through the sale of government-owned infrastructure, real estate and other “non-financial” assets in an effort to stem the country’s rising budget deficit.
Today Brown said in a speech to a group of economists gathered in London that the government would put a number of assets up for sale over the next two years, including the Dartford Crossing toll bridge and tunnel in Essex and the Channel Tunnel rail link between England and France.
Other assets likely to hit the market under the plans include state-owned bookmaker the Tote, the Student Loan Company and the government’s 33 percent stake in Urenco, the uranium processing company.
Real estate assets owned by local governments including sports centres and business parks also form part of the sell-off.
The second part of the sale will comprise local government-owned real estate assets. Brown is hoping to sell up to £13 billion of what is a £220 billion portfolio, but said in his speech that this real estate aspect of the asset sale would only take place when the market for property assets picks up.
Among the government assets to go up for sale are two major transport infrastructure assets in the South of England. The Dartford Crossing comprises two toll tunnels and a toll bridge over the Thames linking Dartford to Thurrock in Essex. It handles around 150,000 vehicles daily. The Channel Tunnel rail link is the high speed rail line on the British side of the Channel Tunnel, along which Eurostar services operate.
The UK government had previously tried selling the Tote bookmaking business, later abandoning the process after failing to reach its £400 million asking price. The value of the UK student loan book currently stands at around £18 billion.
The move to instigate the asset sales comes as the UK faces a spiralling public debt as a result of the recession. Earlier this year chancellor of the exchequer Alistair Darling revealed public borrowing could exceed £175 billion next year, an all-time high.
The asset sales have been dubbed by some opposition members of parliament as the biggest sell-off since the 1980s privatisations, referring to the privatisation of British Telecom and several utilities under Margaret Thatcher’s Conservative government.
News of the proposed sales has led to investors selling sterling in large numbers, causing the pound to fall to five month lows against the dollar and euro on the back of the announcement.
Brown’s announcement comes as his Labour government continues to lag significantly behind the opposition Conservative party in opinion polls. A general election is to take place next year.