Danny Alexander, the chief secretary to the Treasury, will announce on Wednesday that he has doubled the coalition's target for the disposal of state assets to £20bn over the next six years, just weeks after the government was criticised for undervaluing Royal Mail during its controversial flotation.
The disposal of the UK's 40% stake in Eurostar could potentially net the Treasury hundreds of millions of pounds.
The higher target for privatisations will lead to speculation about which other businesses in the government's estimated £600bn corporate and property portfolio will be sold in the coming years. Assets held by the state include the broadcaster Channel 4, and support services businesses such as Companies House, the Royal Mint, the Met Office and Ordnance Survey, as well as the Post Office.
In the past, coalition ministers have maintained that the Eurostar stake would be retained. The company, which is majority-owned by the French state rail firm, SNCF, more than doubled profits to £52m last year.
The surprise announcement comes weeks after ministers were criticised for allowing Eurostar to bid for the state-owned East Coast mainline over concerns it would create a conflict of interest.
The sell-off also comes at a time of debate about private versus public ownership of the railways, amid concern about soaring fares and poor performance by many franchises. Labour is opposing the sale of the East Coast mainline and has indicated it would allow publicly owned companies to operate railways on the same terms as private companies.
Ministers are already trying to sell a series of taxpayer-owned assets to help pay down the UK's debts, including a £3bn stake in the nuclear firm Urenco.
The coalition recently sold the blood company Plasma UK for £200m and part of the student loan book to a consortium of investment funds for £160m.
Further privatisations could be fiercely opposed by the unions, which have threatened strike action over the Royal Mail sell-off.
The latest privatisation round will be detailed as part of an updated national infrastructure plan set out by Alexander in a speech at the Institution of Civil Engineers, in which he will say the value of planned projects in Britain has now risen by 20% to £375bn, with more than a quarter to be provided with public money and the rest from the private sector. Alexander will announce:
• Billions of pounds of public money will be used to back the new Wylfa nuclear power station, due to be built by Japanese investors Hitachi on the Welsh island of Anglesey. The Treasury has signed an agreement that it will guarantee loans to the project in future – enabling Hitachi to get cheap finance – in a deal similar to the one offered to France's EDF to build a nuclear plant at Hinkley Point, Somerset.
• Large insurance companies have put aside £25bn for spending on national infrastructure over the next five years, following changes in European rules pushed for by the UK that incentivise investment in a wider range of assets.
• Plans to bring in the UK's first toll road for a decade have been scrapped. Improvements to the A14 between Cambridge and Huntingdon will be financed by the government and not by the motorists using the road, after a public outcry and David Cameron's acknowledgment of "strong feelings" about it in East Anglia.
• Terms have been agreed on a £1bn guarantee for the London Underground's Northern line extension to Battersea.
• An extra £50m will be allocated to redevelop the railway station at Gatwick Airport.
Describing the £25bn investment by insurers as a "massive vote of confidence", Alexander will say Britain's infrastructure is being rebuilt after years of neglect.
"It supports the wider £100bn public investment to rebuild Britain over the next seven years that I announced at the spending round 2013. Underground, overground, on shore, offshore, wired or wireless, tarmac or train track. You name it, we're building it right now," he will say.
The response from the CBI business group was tentative, with Katja Hall, its chief policy director, saying "the devil will be in the detail on timelines and delivery".
Chris Leslie, shadow chief secretary, accused the government of "complete failure" over infrastructure, as official statistics show work on projects is down 3.7% in the past year and fell by 10% in 2012. "Scheme after scheme has been announced to great fanfare but then little actually delivered. Yet another announcement from ministers about possible future investment will do little to reassure business that warm words will finally translate into diggers in the ground."
On Tuesday night, the Treasury said 99% of the government's 27 priority road, rail and flood projects are on target. Two have been completed so far.
Original Article
Source: theguardian.com
Author: Rowena Mason
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