Headlines: December 1st, 1997

Publication of the National Asset Register, the 1990s Doomsday Book, has revealed the size and variety of the wealth of the nation. A report by the National Audit Office following closely on the heels of the Register carries a cautionary message about what can go wrong with an asset sale.The National Asset Register has been compiled as an essential part of the Comprehensive Spending Review and its primary purpose is to allow departments to get the best value for money from their assets. In many cases, however, recording an asset will be the first step to its disposal. For example, there appears to be little benefit to the taxpayer from the Inland Revenue ownership of a carpark in Ipswich.

The NAO report on the sale of Property Service Agency projects to Tarmac Construction Limited makes it clear that selling assets is a hazardous business.The projects were sold in 1992 for £60.2m as compensation for future losses, risk, net debts and to provide funds for investment and working capital. Following court action and the appointment of an independent expert Tarmac have now repaid £19.9m to the Department.

The NAO is concerned to limit the possibility of future significant undervaluations of net assets as well as substantial loss of interest on disputed sums of capital over a period of years. Its message to asset sellers is ‘get professional’. The sale to Tarmac was an example of the amateur in the land of the professional. The NAO says that the first step is to recognise that the traditional public sector body is not sufficiently commercial to achieve value for money, and then to do something about it. Where substantial sums are at stake there is a role for additional specialist advisors or at least, a need to get second opinions on key sale provisions.