Financial News

  • 5 December 2013, 8:55

Eurostar: Government's 40% Stake Up For Sale

The Government is to sell its 40% stake in Eurostar in a move that could raise up to £10bn as part of a new privatisation project.

The sale is part of a plan to privatise £20bn of financial and corporate assets by 2020, but is likely to spark accusations that the 'family silver' is being sold off.

Speaking to Sky News, Chief Secretary to the Treasury Danny Alexander said he thought there was "scope to expand the sale of Government assets".

His comments will prompt speculation that other assets in the Government's £600bn portfolio including the Post Office, the Royal Mint, the Met Office and Channel 4, could be next under the hammer.

The announcement follows the £3.3bn sale of the Royal Mail in October, which left Business Secretary Vince Cable facing allegations the business was undervalued by up to £6bn.

The £160m sale of the Government's student loans book to private debt collectors last month led to claims that the public was "subsidising a private company making a profit from pubic debt".

The plan for the Eurostar†sell-off is contained in the new national infrastructure plan (NIP) which sets out over £375bn of planned public and private investments to 2030 and beyond.

As part of the announcement it was disclosed that the Government has set a new target for selling off state financial assets from £10bn to £20bn.

Mr Alexander told Sky News: "The principle that would apply is that if there are assets that the Government does not need to own and we can release vital resources that can go to improve infrastructure elsewhere in the country, then that is a good decision to make.

"But of course it would have to be demonstrated to be good value for money for the taxpayer that's a process that would have to be gone through before any final decision would be made."

He added: "We think there is scope to expand the sale of Government assets with the objective of making sure those project are managed effectively in the private sector and we can release funds to build much-needed infrastructure elsewhere."

He stressed that Eurostar would not necessarily be sold this year or next but that it could be sold between now and 2020.

Mr Cameron told Sky News that he found the process for infrastructure development frustrating. He said: "It is frustrating sometimes that we can't do things faster in Britain but we have a planning system, we have democratic accountability for that planning system, we have a need for everyone to have their say and make their point.

"That's very important in the British system.

"I think we can keep that system and that democracy but at the same time accelerate things and make them go faster.

"If you look at what this Government's done in terms of planning policy, decisions are now being taken faster, including on major infrastructure projects."

However, critics will question whether it is sensible to look to sell off the public's stake just as the Eurostar's fortunes seem to have turned a corner.

Sales revenue for the period July-September 2013 reached £207m - a 10% increase on the same period last year - and passenger numbers in summer 2013 rose 5% to 2.7 million.

The new national infrastructure plan will also see a commitment by six major insurers - Legal and General, Prudential, Aviva, Standard Life, Friends Life and Scottish Widows - to invest £25bn over five years in UK infrastructure projects.

The planned infrastructure investment has increased from £309bn last year to more than £375bn, with 291 of the 646 projects and programmes already under construction.

Shadow chief secretary to the Treasury Chris Leslie said: "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."

Other measures being announced include:

:: The scrapping of plans to create the UK's first toll road for a decade. Motorists will not be charged to use the A14 between Cambridge and Huntingdon once the improvement scheme, due to start in 2016, is completed.

:: A further £50m will be allocated to redevelop the railway station at Gatwick Airport.

:: A Government guarantee could support finance for the development of a new nuclear power station at Wylfa on Anglesey.

:: The £1bn Northern Line extension to Battersea in southwest London will also be guaranteed by the Government.

:: Watch live coverage of the Autumn Statement throughout Thursday on Sky News HD

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