Let’s halt the great public asset fire sale and create a public ownership fund

Guest blog by Stewart Lansley, a visiting fellow at the University of Bristol and author of A Sharing Economy: How Social Wealth Funds Can Reduce Inequality and Help Balance the Books. He is also co-author of Breadline Britain, The Rise of Mass Poverty, and author of the Cost of Inequality.  

Rarely does a month go by without the Treasury casting a covetous eye over another publicly owned asset. Last year alone, the rolling privatisation juggernaut brought the Exchequer over £30bn in sales.

Privatisation was originally sold as the route to Mrs Thatcher’s much vaunted ‘popular capitalism’.  Yet far from spreading wealth, decades of sell-offs have merely skewed the  economy even more heavily in favour of a few private owners.

Today the government has a new defence: sales will help pay down the deficit. Yet such sales offer a one-off windfall - the family silver can only be sold once. They mean the permanent loss of collectively owned public assets, many highly profitable, built up over many decades, and the end of future income streams.  

Instead of being sold off and the proceeds disappearing into the Treasury black hole, a new book – A Sharing Economy -  argues that all publicly owned assets, land, property and public companies,  should be brought together into a single ring-fenced fund to form a giant pool of commonly held wealth.

Such a Public Ownership Fund – Britain’s first social wealth fund - would preserve the public asset base and provide a new route to the socialisation of capital, with the returns from the better management of such assets used to fund public projects that benefit society as a whole.  By improving the overall balance sheet of the public finances, we could also fret a good deal less about the national debt!

Imagine the shape of the British economy today if, instead of the £200bn succession of sell-offs since the mid-1980s, public assets had then been pooled into a protected fund and managed to generate clear returns. With the revenue paid back into the fund – and an agreed proportion of it spent - it would have grown to represent a significant part of the economy, providing a powerful balance to the entrenchment of private capital.

Most other countries are much less fixated about the virtues of private ownership. Fifteen nations - in Europe, Asia and the Middle East – have already created such funds. Singapore established the public holding company, Temasek, in 1974. Managing all state owned commercial assets apart from property, it is worth more than half the country’s GDP, and has achieved a higher annual return than the private sector.  In Europe, both Austria and Finland have established funds that pay annual dividends to the government.

Although privatisation can reduce the cash debt at a given moment, it aggravates the problem of public indebtedness as the asset base which once helped to balance the debt shrinks away. On today’s course, Britain will soon be all debt and no assets.  The state is the custodian of these assets on behalf of citizens yet seems intent on mindless short-termism that will be paid for over and over again by subsequent generations. 

A Public Ownership Fund would end Britain’s ‘jam-today` approach to the nation’s collectively owned assets and would directly tackle Britain’s over-dominance of private capital, one driven by decades of rolling privatisation, de-regulation and an antipathy to collectivism. By ensuring the fruits of economic activity are more evenly shared, this strategy would be a force for equalisation.  Such a fund would be a powerful new tool in the progressive policy armoury and would ensure that a higher proportion of the national wealth is held in common and used for public benefit and not for the interests of the few.