Headlines: April 27th, 1997

Privatisation row – Blair moves boundaries

Privatisation of the National Air Traffic Control System could raise £500m. The Conservatives have included this amount in their sums for 1998/99. Labour were fiercely opposed to the sale at the start of this year and pledged to fight tooth and nail against it. Their case was based on safety and the military’s need to link up with the civilian radar systems. Gordon Brown has now made it clear that ‘the sale of the air’ cannot be ruled in or ruled out at this stage.

The reason for this change of position is thought to be the Conservative charge that there is a black hole of £1.5b in the Labour sums. The three options open to a Labour Chancellor to resolve this are: to tax, to borrow or to privatise. The Labour response was privatisation. They will look at all public assets in a root and branch review.

This shift in Labour policy on privatisation is claimed by the Conservatives as a U- turn in the heat of the election battle. Labour claim that it originates from the re-writing of Clause 4. What has now become clear is how far Labour have moved from their original position. Decisions on ownership will be taken on the basis of what is in the public interest and not on ideology. Tony Blair said: “We are not in the business of reversing reforms of the 80s. I certainly believe that where there is no overriding reason for preferring the public provision of goods and services – particularly where those goods and services operate in a perpetual market – then the presumption should be that the economic activity is best left to the private sector with the market forces being fully encouraged to operate.”

Labour have given an assurance that they will not privatise London Underground or Channel 4.The Labour response to the accusation of making a U-turn should be viewed in the light of the size of the ‘black hole’. The budget total for 1998/99 is £319b. The uncertainty of budget projections at this distance in time is legend. In 1994 the Treasury projected government receipts for 1996/97 at £300.6b. Actual receipts were £280.9b. A shortfall of £1.5b in 1998/99 would cause a very minor ripple. The response might be seen as more to do with a message to those involved in and concerned with public services, rather than budget numbers. Sell Off Options
Road network – £5b
Mobile phone licences £1b
Government land & offices £1 – 122b
National air traffic control £500m
Radio spectrum £400m
Parcelforce £300m
National Savings £200m
Municipal airports £200m
Public Records Office £50m
Met office £25m
Companies House £25m

There is an expectation among unions and many in public service that a Labour government would curtail private sector involvement. John Monks, TUC general Secretary said: “I wouldn’t expect a Labour government to go down the direction that the Conservatives have been down – which is to clear out every potentially lucrative bit of the public sector.” Tony Blair’s statement now makes it clear that changes from public to private ownership would be considered on their merits. The statement also makes it clear that there will be no bar to the expansion of private sector contracts for public services. Re-tendering for existing contracts will go ahead and where service level agreements are in place, competition will decide whether they are renewed. Tony Blair has moved the boundary between the public and private sectors well beyond what many expected.