Tuesday, 6 May 2014

There's No Evidence That Privatisation Works, But It Marches On

THE GUARDIAN: From the Land Registry to East Coast rail, valuable public assets are being frittered away despite the many cautionary tales

If you think the government might hesitate to sell other national assets after the Royal Mail fiasco, think again. The Land Registry, the office that certifies property ownership, a quasi-judicial function, is being readied for privatisation. It collates data on prices and transactions and catches fraudsters. It has cut its fees, scores 98% satisfaction and last year made a £98.7m profit for the Treasury – yet it's part of this government's £20bn asset sell-off.

In the Royal Mail debacle, shares sold at £1.7bn rose to £2.7bn. The 16 investors chosen as "long-term" custodians included the most wolfish hedge funds, who sold the shares at once. Let's hope that ends any pretence that shareholders look after companies. What's more, the investment arm of Lazards, key adviser to Vince Cable, was also given "priority" status. But Lazard Asset Management sold its entire stake within a week at a profit of £8m. Likewise Goldman Sachs, employed to facilitate the sale, told its investors share prices would hit 610p a month after advising the government to float at 330p. How well these companies deserved their tongue-lashing from Margaret Hodge: "You all know each other. You work together. You trade with each other. You are part of this little clique and we the ordinary taxpayer lose out on it." This is a case of caveat vendor. » | Polly Toynbee | Tuesday, March 06, 2014