Just before the Easter weekend, the Department for Business, Innovation and Skills somewhat cynically slipped out a proposal to privatise the UK Land Registry.
On the surface, it is not clear why the Land Registry was selected as a candidate for privatisation. Public services that operate with a 98% satisfaction rate, return a yearly profit to the Treasury, and have drastically reduced the size of their workforce over the past decade are not the typical target for those espousing the virtues of private sector management.
Even disregarding the net contribution to the Treasury, the Land Registry is a vital public service with trust and impartiality at the core of its role. Transferring its functions to a private entity diminishes these qualities and undermines its fundamental adjudicatory purpose.
Privatisation will also exempt the Registry from freedom of information requests, which have so far allowed Private Eye to catalogue and expose the scale of foreign ownership of UK land and property, which often takes place through shell companies and tax havens. With the Prime Minister supposedly committed to tackling foreign investment in British property for money laundering, less transparency in this area would seem like a step in the wrong direction.
Nevertheless, in the face of almost universal opposition, the Chancellor has chosen to press ahead. Clearly the Chancellor has an agenda. George Osborne has already sold off £37 billion of public assets, putting him on course to sell more than any Chancellor since Nigel Lawson in the 1980s. He is forecast to sell an additional £20 billion by the end of the next financial year, eventually reaching the staggering total of £98 billion by 2020.
However, the scale of privatisation has less to do with an ideological belief in its merits than it does with another of Osborne’s political projects; ending the budget deficit.
George Osborne has staked his political reputation on the pledge to deliver a budget surplus by the end of this Parliament. In the wake of a poorly received budget and a rejuvenated challenge from Boris Johnson, achieving this target is more important now to Osborne than ever before.
Eliminating the budget deficit has become synonymous with Osborne’s favourite catch phrase: the ‘long term economic plan’. But with the grand conclusion of the ‘long term’ plan just four short years away, will eliminating the budget deficit by 2020 at any cost really guarantee long term security for the UK economy? It is hard to see how selling off the UK’s assets at an unprecedented pace can really be building long-term resilience into the economy. While the sale of assets can confer an immediate and often substantial gain, they can only be sold once. If the large scale sale of public assets is crucial to the UK’s recovery this time, what will the government have left for the next crisis and recovery?
The proposed sale of the Land Registry is a manifestly political move; it is part of a wave of privatisation that is only necessary to meet the shortfall between achieving a budget surplus by 2020 and the OBR’s projections. However, as long as Osborne learns from a certain former chancellor’s mistakes and keeps his hands off the gold, he will continue to get away from it.