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October 12, 2009    

Government orders £16bn asset sale to reduce public debt

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by Kay Murchie

In an effort to tackle Britain’s spiralling public debt, the Government has today unveiled proposals that will see it raise £16 billion via asset sales.

In order to reduce the budget deficit, which is set to hit a record £220 billion (the equivalent of 12% of GDP), the Government has taken action by ordering sale of assets worth £16 billion over a two year period.

Prime Minister Gordon Brown said: “We’ve listed a number of assets that we are determined over the next period of time to put into the marketplace.”

“That includes of course the student loan book, the Tote, the Dartford Tunnel, plus the Channel rail link, it includes Urenco subject to security issues being addressed,” added the Prime Minister.

It is hoped this will raise around £3 billion while a further £13 billion will be raised through asset sales from Whitehall and local authorities.

According to the PM, the sales were key to Labour’s “clear and credible” plans for cutting the deficit by half over the next four years.

However, the proposals met with criticism from Liberal Democrat Treasury spokesman Vince Cable, who said: “What worries me about the Government proposal is that they’re proposing to sell off in very depressed markets, under very depressed markets for land and for shares.”

Meanwhile, the proposals come just a week after Shadow Chancellor, George Osborne, announced the Conservative Party’s plans for tackling UK deficit if it won the next election.

The Tories unveiled plans which included a radical overhaul of Britain’s welfare system, as well as raising the state pension on a more rapid scale.

However, Business Secretary Lord Peter Mandelson described the cuts as “savage”, while Mr Brown said premature cuts risked “snuffing out” the economic recovery when the task of fixing the global economy was only mid-way through.

Mr Brown compared the Conservatives’ proposals to a doctor forcing a patient out of bed just after coming out of a coma.

In a speech later today, the PM is expected to reiterate his comments made in an interview with The Daily Telegraph last week, stating that the Conservatives’ proposals would result in the same problems experienced by Japan in the 1990s, when it experienced its ‘lost decade’.

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Tags: asset sales, , Conservative, , , lost decade, , public debt, raise, , spiralling