I am not letting you off the arguments about nationalisation, as they are central to getting out of the financial mess the government is in. Most of you agree government is spending and borrowing too much. Many commentators openly worry about how the government goes on borrowing so much, and official sources talk of more…
I am not letting you off the arguments about nationalisation, as they are central to getting out of the financial mess the government is in. Most of you agree government is spending and borrowing too much. Many commentators openly worry about how the government goes on borrowing so much, and official sources talk of more tax rises to come. I have talked before about migration control and benefit changes to help curb spending.
Your wish to reduce spending and borrowing makes it odd that many of you want more nationalisation. Nationalisation means more public spending and borrowing . Heavy loss makers like the Bank of England and the railways send huge bills to government who have to borrow more to pay these bills. Profitable nationalised industries usually need access to state borrowing to pay for their large investment programmes.
Privatisation cuts public spending and borrowing in two main ways. There is a capital receipt, accounted as negative public spending. There is the removal of all the costs of capital investment and any losses from public accounts.
I agreed with the current government selling the remaining Nat West shares. It was an obvious way to cut spending and borrowing I had long recommended. If there is no follow on asset or share sale this year the spend and borrowing level goes up to adjust for this on top of all the planned spending increases. Tomorrow I will look at the high costs and financial risks of the growing nationalised portfolio.
