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Lord Myners: My Lords, the noble Baroness, Lady Noakes, once again finds herself in a tight knot over how to address a Statement from the Government on financial policy. On the one hand, she says that this is an example of the Government again not respecting Parliament and making announcements outside Parliament. On the other hand, she points out that, in fact, this announcement is merely a further addition of texture and detail to figures and information that have already been provided to the other place by my right honourable friend the Chancellor of the Exchequer. Most of the information contained in the Prime Minister's speech on this subject had already been detailed in earlier announcements, including, in particular, the sums of money that we believed could sensibly be raised as a result of asset sales.
The Government have a long and successful record of selling public assets to facilitate investment in public infrastructure and important government programmes. Of course, it always easy to pick out something that one could have sold at a higher price if one had waited a little longer. There are other examples, such as QinetiQ, which subsequently traded well below the price at which the Government sold the shares, but I do not hear that being raised by the other side of the House. As regards gold as a component of our reserves, the essence of portfolio diversification in public assets is to have a broad spread of assets. Our Government, along with many others, determined that we were holding more in gold as a proportion of our total reserves than was sensible, particularly with the introduction of the euro, which gave us the opportunity to diversify the national reserves. Our approach to timing in the programme detailed today is to initiate now a process of taking advice, engage with investors to determine interest and formulate an optimal programme for disposal or developing alternative methods for managing these assets. As always, timing will be dictated by value-for-money considerations.
Specific questions were asked about some of the assets identified by the Prime Minister. I cannot tell the House how much the Government expect to raise from the sale of the Tote. If one reflects for a moment, no seller would ever specify how much they thought they were going to raise from an asset, and thereby signal to prospective purchasers the price at which they would sell. That suggestion is absolute nonsense. I would however add that there is nothing in today's announcement on the Tote that has any relevance to earlier commitments that have been made in respect of its sale. On the sale of student loans, this is a book of assets that does not need to stay in public ownership to provide the public policy purpose, provided there are appropriate regulations in place to cover, for instance, the rate of interest, attitudes towards foreclosure or forbearance in respect of students who are experiencing difficulties, and ensuring that the new owner of the loan book will behave in a manner consistent with public policy.
Similarly, the proposed sale of the Dartford-Thurrock Crossing will have to be subject to appropriate regulation in terms of tariffing to protect the motorist and support transport policy. Our starting point in respect of this
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Council assets have been consistently disposed of and reinvested as part of an important programme of investment that has played a major role in, for instance, ensuring that the stock of housing available through social housing programmes and similar variants is modernised and made habitable for people today.
The noble Lord, Lord Newby, asked a number of questions which I think I have on the whole covered in my response to the noble Baroness's points. Importantly, we want to ensure that local authorities have every encouragement to be efficient. That is why, when disposing of public assets, local authorities will be able to retain the proceeds for future investment or to pay down debt at their choice. That is consistent with an approach which empowers local government and local authorities but, as always, decisions will be dependent on market conditions. It is this Government's judgment that the steadily improving economic outlook-already well recognised by the stock market, which has had an extraordinarily strong recovery since the announcement of our successful interventions earlier this year-will create a good environment in which we can make sensible sales in due course.
Lord Lipsey: My Lords, the Tote legally belongs to Government but morally it belongs to racing. The Government have never put a single penny into it at any stage. As the chairman of the former shadow Racing Trust, which was the vehicle through which the Government intended to fulfil their 2005 manifesto pledge to sell the Tote to racing, I fully accept that that route has been blocked by European state aid considerations. However, does the Minister accept that racing will be rightly outraged if the proceeds of a sale of the Tote are used to pay off the Government's debt and do not go to racing, which created the Tote?
Lord Myners: I recognise my noble friend's deep and long commitment to the turf but, as he correctly identifies, the Tote is a public asset. Clearly, we have an important responsibility to ensure that public assets are disposed of for the public good rather than for individual sectoral interests. However, I remind my noble friend that I made very clear that nothing in today's announcement in any way modified earlier commitments that have been made in respect of the sale of the Tote.
Lord Mackay of Clashfern: My Lords, one of the assets that has been the subject of prolonged consideration in this House is the Royal Mail. I notice that there is no reference to that in today's Statement. The noble Lord says that no one says what they expect to get for their assets. However, a lot of Scottish home owners put advertisements in the papers asking for offers over X thousand pounds, which at least suggests what they are expecting.
Lord Myners: I fully acknowledge the observation of the noble and learned Lord, Lord Mackay, about the housing market, although my experience is that the price indicated is not necessarily the price which the vendor is willing to accept when he offers the property for sale. I merely make the point that today is far too soon to flag the price at which we would be willing to sell an asset over the next two or three years but that we remain committed to value for money. There was no mention of the Post Office in the Prime Minister's Statement and I assume that was intentional.
Lord Cunningham of Felling: My Lords, the Prime Minister's Statement mentioned the sale of Britain's share in URENCO, held in partnership with the Governments of the Netherlands and Germany under the conditions laid down in the treaty of Almelo. Given that there is worldwide expansion of nuclear power, and therefore that enriched uranium production must be an appreciating asset in our portfolio, it is going to be rather difficult to judge at what time it would be appropriate to seek the sale. But setting that point aside, will my noble friend tell the House what obligations the treaty of Almelo places on Her Majesty's Government in the event of the Government wanting to dispose of our one-third share in this partnership enterprise?
Lord Myners: URENCO is a uranium enrichment business. As my noble friend Lord Cunningham says, the UK owns one-third along with the Dutch Government and two German companies. The Government have long stated their intention to realise proceeds from the UK's stake. We recognise policy and security concerns and we are in the process of working with the other shareholders, URENCO and other departments within government to reach a position that best serves the taxpayer. Agreements within the shareholder arrangement direct one to a certain route of options in terms of disposal. We may not, of course, be the only shareholder who believes that it would be sensible for URENCO to be in part private sector ownership. I agree with my noble friend that in many ways the outlook for this business is rather attractive, but I suspect that it is not only my noble friend who has noticed that; it will have been noticed by other investors who will be more than happy to pay up for the growth potential which they see coming from the excellent technology of this company.
Lord Higgins: Does the Minister agree that in carrying out transactions of this kind it is crucial to have good financial judgment and a sense of timing, and that the Prime Minister, as the former Chancellor, does not have a good track record as regards selling off individual bits of the family silver, or indeed, as my noble friend pointed out, selling off the gold reserves? Will the Minister confirm what those gold reserves would be worth at current prices? No doubt his brief will include that.
I wish to raise two points of principle. First, is it the Government's intention that as a result of these transactions their balance sheet should go up or down, or remain the same? Secondly, with regard to the rates of return, do they intend to save on the rate of interest by reducing the government debt? What comparisons
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Lord Myners: If my briefing document contains a figure for the value of gold disposed, it is not one that I retain in my head. More important is what one does with the proceeds. The proceeds of gold sales were invested in a more diversified and therefore lower risk portfolio of reserves. Any part of government expenditure, whether funded by taxes or borrowing or from the proceeds of disposal, tells you only one side of the story. The other side is what happens with the proceeds, which is significant investment in education, schools, hospitals and infrastructure. Regrettably, accountants do not have accurate ways of putting a value on this; but if one really wants to judge the capability of the previous Chancellor of the Exchequer in terms of making financial judgments, one has to look at it in the round. My sense is that he will come out of it rather well.
As far as the rate of interest is concerned, I am delighted that the world and its investors are showing great confidence in the Government and in the country, and in funding long-term debt at such low rates of interest. I do not wish to be drawn at this point on quantitative easing, although I am sure that it will not be long before I am on my feet answering questions from the noble Lord, Lord Higgins, on that subject. Again, one has to look at what the issue would be as regards the proceeds from sales. This answers the question on the level of government borrowing, which will entirely depend on whether the proceeds, particularly from local government, are used to pay down debt, in which case the overall volume of outstanding public sector indebtedness will fall; or whether the proceeds are retained as liquid assets, in which case on an offset they would equalise; or whether they are used for further investment. So the impact on the government balance sheet-the public sector balance sheet-will depend upon the use of proceeds.
Lord Jenkin of Roding: My Lords, perhaps I may follow the question asked by the noble Lord, Lord Cunningham of Felling, about URENCO, because, as has been said, this has been in the Government's selling programme for a number of years. That was again confirmed in last year's Pre-Budget Report and was referred to by the Prime Minister in his speech, to which my noble friend referred. As the noble Lord, Lord Myners, rightly said, URENCO is a very valuable asset; its profits last year were £654 million and it has an £18 billion order book. This must be, by any standards, the jewel in the crown of this plethora of assets for sale. I am just a little surprised that the Answer to the Question in the other place did not mention URENCO, because it is about the biggest of the lot if we are considering all these things.
Can the noble Lord tell us a little more about the difficulties that the Government have faced in trying to sell URENCO? They were able to get rid of
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I can understand the difficulties that the Government have faced in selling URENCO, but if we are to sell it-which I am not opposed to in principle-how will we ensure the national interest of maintaining, in this nuclear renaissance, that we have sufficient enriched fuel for our nuclear programme?
Lord Myners: My Lords, in the process of selling we will be able to insist on certain conditions, if we judge those to be necessary from the perspective of national fuel supply or security. But, as the noble Lord says, the German shareholdings through E.On and RWE-two companies which have had substantial investments here in the UK-are already in the private sector. URENCO will continue to be a significant and important provider of services in the nuclear industry, regardless of whether it is in the part-ownership of the British Government, or whether a larger proportion is in due course in the hands of private sector investors and companies. However, we will certainly insist on appropriate conditions being attached to the sale to ensure that the national interest is not prejudiced. I am most encouraged by the noble Lord's observation that he has no objection in principle to this being an asset which should or could be held in the hands of private investors, rather than by the Government.
Baroness O'Cathain: My Lords, perhaps I may follow on from that point. If it is true, as the Minister said, that we are now going for growth and that we should witness what the stock market has done, but on the other hand we are told that we are in for a period of about three years of interest rates at 2 per cent, is it right to realise these assets, which are bound to increase by more than 2 per cent per year? What are we going to do with the money? I am very confused.
I am also confused on another point. The Minister said that he had briefing on what the gold would be worth now. Again, there is a lot of talk about how the £3.5 billion would now be worth £15 billion. Is that not in his briefing? He says that he has his briefing. Is this a state secret or could he look at his briefing and provide the right figure?
Lord Myners: Then perish the thought that one would try to make a cheap point about the Conservatives completely failing to correctly calculate the benefit of delaying pensions by a year. I am more than happy to accept the noble Baroness's figures on this point.
The stock market is a discounting mechanism; it looks forward and often recovers well before the economy. To some extent this improving economic scenario is already reflected in higher EBITDA multiples, price-earnings multiples, price-to-book value multiples and others which will have a bearing on the assets that we are selling, so this is not an issue which should be compared with interest rates. Clearly, this portfolio of assets is in some respects worth considerably more now than it would have been earlier this year.
Lord Lea of Crondall: My Lords, I hope that it is in order for me to ask a question given that I was not here at the start, although I have read the Statement. If it is so essential to reduce accumulated debt-some of us are a bit more sceptical about how essential it is at the moment-should those people criticising today's announcement not stand up and state whether it is true that their policy is for a rapid reduction in accumulated debt?
Lord Myners: I thank my noble friend for his observation. The Government's policy is that debt will need to be reduced in due course and that we will need to move towards more sustainable public finances. That will be achieved, significantly as a consequence of growth, once the recovery is firmly established. However, there is an underlying structural deficit which we have made very clear we will address, in addition to the cyclical adjustments that will come through the automatic stabilisers, but only at the right time. Now is not the right time, and to move precipitously now to talk about exit or about reducing public expenditure will be to place at risk the economic recovery and to affect the lives of many people in this country. This Government will not do that.
Lord Dixon-Smith: My Lords, when the Dartford tunnel was originally conceived and built, its promoters always intended that, in time, if the revenues were sufficient, the tunnel-or tunnels, as they became-would become toll-free. When the crossing was put into private hands to enhance it to the crossing that we know today, the projections that I saw then suggested that, had that principle been maintained, the crossing would now be toll-free. Will that principle be reinstated in the process of putting the crossing back into private hands? If not, why not?
Lord Myners: My Lords, the Dartford-Thurrock Crossing complex will in due course be sold to achieve value for the public. It will be sold with conditions relating to tariffs and maintenance and with other requirements that ensure that the interests of the wider population continue to be protected.
The Parliamentary Under-Secretary of State, Department for Children, Schools and Families (Baroness Morgan of Drefelin): My Lords, I shall also speak to government Amendments 136D, 136E, 140A, 140B, 143A and 143B, as well as Amendments 137 to 142A-just in case we were not sure where we were.
This is an important debate about the transport duties in the Bill and earlier legislation, which seek to ensure that adequate transport support is made available for 19 to 24 year-olds with learning difficulties and disabilities. The noble Lord, Lord Low, will know well, as I am sure he will remind us in a few moments, that steps are already being taken to improve transport arrangements. Indeed, we are very grateful for the work that he and his charities have done to support us in bringing forward these measures today. I am speaking in particular about the new requirement in Clause 55 for local authorities to produce a policy statement setting out the transport arrangements available to learners with learning difficulties and disabilities.
We need to ensure that local authorities are absolutely clear about their responsibilities and provide adequate transport support. Therefore, we are looking carefully at whether statutory guidance is needed in respect of Clause 55. Without pre-empting what I am sure others will want to say, I am happy to commit to returning to this issue on Report. I should like to put on record my thanks in particular to the noble Lord, Lord Low, and to Skill for their contribution to our work in this area. I am pleased with the progress that we have been able to make.
On Amendment 142, of course young people aged 19 to 24 with learning difficulties and disabilities should have the right to complain about transport arrangements, as their peers do. As noble Lords will be aware, my honourable friend Sarah McCarthy-Fry agreed to look again at complaints provisions during the consideration of the Bill in another place. Having listened to the representations, in particular from the noble Lord, Lord Low, and the noble Baroness, Lady Sharp, I am pleased to inform the Committee that we are moving these government amendments to achieve the aim set out in Amendment 142. This will ensure that all young people have a voice in local transport arrangements and that local authorities will have the information that they need to make sure that transport arrangements meet young people's needs.
I understand that there are concerns that there should be a link between Clause 40, which we have already debated, and Clause 55 so that transport and the commissioning of educational provision are not considered independently. I wholeheartedly support that view. I reassure the Committee that the national commissioning framework issued under Clause 40 will specify that local authorities must consider transport arrangements in carrying out their new commissioning functions. Any guidance issued under Clause 55 would also make this link clear. We are exploring how to make a more explicit link in the legislation. We will keep the Committee updated and come back to this on Report.
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