Deficit Reduction

Lord Barnett Excerpts

Tuesday 18th January 2011 Lords Chamber

Asked By

[Lord Barnett]

To ask Her Majesty’s Government why the Chancellor of the Exchequer has excluded potential privatisation proceeds from his deficit reduction plans.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, since 1998, HM Treasury’s overall deficit reduction measure has been public sector net borrowing, or PSNB. Under this measure, privatisation proceeds from the selling of shares in companies do not affect the deficit.

[Lord Barnett]

Yes, my Lords, but, as the noble Lord knows, the Chancellor, replying to questions at the Select Committee recently, admitted that there are large sums that they are considering from the sale of assets. He also said that not all the proceeds must be used to reduce the national debt. The Conservative chairman of the Select Committee then said that he must have quite a bit in his back pocket; he was referring to the tens of billions of pounds from sales. I know that the noble Lord cannot reverse what the Chancellor said, but can he at least assure us that there is no basis in the dastardly charge that the Government are trying to build up a large fund to reduce taxation rather than some of the worst, most painful cuts that are now taking place?

[Lord Sassoon]

The noble Lord, Lord Barnett, called it a “dastardly charge”; I am sure that I would not characterise it quite like that. The fact is that my right honourable friend the Chancellor is hiding nothing. It is simply that, as I have explained, under the measure that has been used since 1998 for measuring the deficit, privatisation sales—the sales of shares in companies—do not rank against the deficit, so my right honourable friend can have nothing up his sleeve.

However, it is important that the Government exercise stewardship over all their assets, fixed and otherwise, so that we have an ambitious programme to raise proceeds—they may not all count for deficit reduction—which will affect the debt position. That chimes in with the modernisation of government. Of course, among the most valuable assets the Government have are the shares in the banks which were nationalised. We want to ensure that the taxpayer gets a good return on those shares.