Gordon’s asset car boot sale

In terms of cost-saving initiatives, its hardly going to tip the country’s debt balance. Regardless of this, the Government has announced it is to sell off some of its remaining assets. Or perhaps all of them. In fact anything that isn’t already privatised (or indeed, nailed down) could be heading for a private section auction sooner rather than later.

Two of the more prime examples of assets the Government is planning to hand over to the highest bidder include The Student Loans Company and the M25 Dartford Toll Bridge and the rights to charge for it (though it was supposed to be toll-free by 2003). These high profile assets for sale could potentially raise a tidy sum of money if sold in the right circumstances.

Yet these aren’t the right circumstances. Indeed, when selling such items as a way of inspiring confidence in the current government’s fiscal status, this is a move more likely to have bank advisors running for their red pen to but an ‘X’ through any future loan applications by a Mr A. Darling. The sale of various assets is estimated as being able to raise an up to £16bn, said to be around 10 percent of the current Government spending deficit. In terms of gains compared to what is being sold off, it really is a case of checking the mouth for gold fillings to sell only to find tin. While most people will gasp with exasperation at how low things have got, the right investors should be looking hard at what’s available from Gordon’s asset ‘car boot sale’. Because what could be yielded-up could be some seriously profitable investment opportunities in some very prime locations.

Despite its generally cashed-strapped depiction in the media, the Ministry of Defence is still in ownership of a large amount of land and property across the UK. It is this that is first to be targeted by the Government in an attempted to refill the vault (or just cut down the burgeoning debt) over at the Treasury.

In particular, the logistics arm of the MoD is being examined to see what can be sold off. The Defence Storage and Distribution Agency (DSDA) is the arm in charge of this particular section of looking after army resources and supplies. It currently operates across 11 sites in the UK and one in Germany to store and when required, transport all the necessary army kit to the various fields of operations throughout the world where British soldiers are situated. Yet with a property network worth over £430m, it is this area that the MoD and Price Waterhouse Cooper are reportedly examining carefully to find out what can be sold.

Sites suggested for sale are said to be located around DSDAs HQ near Bicester in Oxfordshire. It’s far from an unattractive part of the world. Surrounded by rolling fields, prospective sites are situated just off the M40, a 20 minute car journey from Oxford and would have direct train line access to London running from Bicester. Given the millions of square feet of land that could potentially be put up for sale here, this is the type of opportunity that should have any housing developer with half a mind reaching for their cheque book and counting their pennies.

If conditions were made that the development of such a site were to have a reasonable percentage of low cost-housing and that all new homes constructed there were to have good environmental credentials, the Government could well turn this financial disaster into something of a policy triumph.

Spokespeople at the MoD have been quick to say that such a sell-off would be a long process and not be rushed or pressured. Yet if such an occurrence were to happen, it is likely that the Government might take another look at what else the MoD has hidden up the sleeves of its combat jacket.

While parts of rural Oxfordshire provide one potential asset to sell, there are others a little closer to Number 10. Promises have been made that sections of Whitehall, as of yet unidentified, are also to be put up for sale. This is likely to go down very well with investors from overseas given the current desirability of property in London. As many recent property purchases in the capital have been made by the investment arms of other governments, it would not be surprising to see a few countries buying Whitehall properties, perhaps as an upgrade to their London embassies. The US, for example, have already arranged to sell their current embassy in favour of a new development in Nine Elms.
For the clever investor with deep pockets, the Channel tunnel rail link is the option to buy. This package of assets would likely include the English side of the tunnel, the recently completed high speed rail link through Kent as well as rights at St.Pancras station. This deal would be particularly attractive as, sometime in the future, Eurostar’s exclusive license to run trains on the line will come to an end. When this happens, it is likely that other train operators will want a stake in the trans-continental rail market; as much for prestige as for the proof that a profit can be made from the line. At this point, whoever is holding all the cards (or the licenses at least) is likely to receive more than a few euros.

It’s not only cross-continental train lines that could be up for sale under the Government’s plans though. It has been suggested that the UK’s various ports authorities might be sold off as well; compromising the docks, infrastructure and licenses connected with shipping and cross-Channel boat travel.

This, perhaps, is a less bright idea by Mr Brown. Already having a rather shaky hand on the control of the current immigration system, the privatisation of this area would most likely lead to less stringent controls over those people entering the country, providing political ammunition for any party with a strong anti-immigration stance.

Equally, like most industries, shipping has been hit by the recession. Reduced consumer sales has meant less to transport. Rising fuel costs have only exacerbated the situation. Any new owner of a port would most likely look for a quick return on their investment by placing new or higher levies on ships arriving into their respective ports. Profitable for the owner, yes; good news for the shipping, no.

Given the level of criticism voiced by economists and the media already over the asset sale plans, the Government is most likely to take very tentative steps over any potential sales. And there is a chance, given an impending general election, that some of these ideas will simply be scrapped if another party comes to power. Yet with such a gap in finances a reality for any incoming government, sale opportunities such as those connected to the DSDA aren’t likely be ignored by whoever is making their home at Number 10 in six months time. Therefore, while it might not be Gordon’s ‘car boot sale’, someone will be putting the state’s cast-offs up for investors to browse over.