Wednesday, August 5, 2015

Crown Jewels for Sale

One of the contentious issues between Westminster and Holyrood of late has been the future of the Crown Estate in Scotland.  UK-wide, the portfolio of property and other investments brings in £285m a year to HM Treasury and pays for HM herself and any hangers-on who, unlike the Duke of Cornwall, aren’t funded from other public assets.  Control of the Crown Estate is vital to a government like that of Nicola Sturgeon that wants to tap the potential of offshore renewables, because it’s the Crown Estate that owns most of the seabed and takes the rents from the use of it.

If the Crown Estate has now become something of a devolutionary football, there’s a clear way out for a Treasury that doesn’t want to see its share of the cash cut.  That’s to sell anything territorial and re-invest the cash somewhere safer, like London.  If the money’s left your area, it’s no longer your government’s to demand.  That’s a principle that can be applied in anticipation of any similar devolution of power to the English regions.  Sure enough, the Crown Estate Commissioners have started to sell off the rural portfolio, turfing out the tenants without a second thought.

The 4,700-acre Bryanston Estate in north Dorset has just been offloaded to Viscount Rothermere, non-dom owner of Blackshirt-backing rag the Daily Mail.  Private Eye reported last month that its 14 farms class it as a “working” country estate, meaning it can be passed on entirely tax-free.  No wonder “working” estates are going for record prices, in this case a rumoured £65m.  Meanwhile, ownership of the Portman Hunt Kennels will add an open door into rural high society.

The Crown Estate Commissioners manage that part of Crown property held for investment purposes but much more is held for operational purposes by Government departments.  And they’re under constant pressure to sell.  The last administration made a number of attempts to sell the Forestry Commission but failed to take public opinion with it.  The present administration may feel it’s safe to ignore that now.

Last month it was the Ministry of Defence’s turn in the spotlight.  There’s talk of selling surplus land for housing, especially in the south-east of England where housing demand outstrips supply.  (Because successive governments have put money into developing London’s economy at the expense of everyone else’s.)  There’s nothing new about releasing land for housing though.  The MoD has huge holdings around Aldershot that have been picked at for years.  According to the MoD, work continues to scope opportunities to significantly reduce its estate by up to 30% over the next 10-15 years, which would seem to signal some major facility closures.

Will a series of sales at the margin be ambitious enough for Osborne and his chums?  It’s unlikely.  His ‘Productivity Plan’ envisages Government property being put on a commercial basis, handed to one or more new bodies that will charge departments the market rate for it.  But if you’re going to ‘go commercial’, why not ‘go private’?  HMRC have already sold their offices, to a company based in a tax haven.  (You couldn’t make this up.)  Osborne’s plan recalls the former Property Services Agency – which even earlier was the Office of Works – that used to do facilities management for central government.  Since the PSA’s break-up and privatisation, many government departments have taken back management of their own property, presumably at higher cost than when the PSA provided an integrated service.  Such is the price of ideology.

Generations of governments have promoted owner-occupation – first of farms, then of homes – because it’s paid for by loans that enrich the financial services industry, based in the City of London.  Now Government is volunteering to return itself to tenancy because rental income benefits, well, well, the financial services industry.  Find the pattern, spot the inconsistency, then follow the trail and you’ll discover who really rules Britain.  Paid-for freeholds are dead property – nobody else can make money out of them and that’s why they’re under attack.  And the best time to offload them is at the start of the economic cycle, so that private owners can maximise the uplift in value in a rising market.

Sale-and-leaseback comes at a cost in terms of lost flexibility – it was one of the reasons given for the collapse of the Woolworths Group, which had tied itself into a deal with its new landlord that looked good enough at the time.  And how do you – or rather, how do highly paid consultants – value some of the land uses the Government operates, for which there is no market equivalent?  Military activity might look like one of those but in fact not all MoD land is freehold.  Three-quarters of the Dartmoor Training Area, much used by the Royal Marines, is held under licence from Devon’s largest landowner, the Duchy of Cornwall.  Salisbury Plain Training Area – one-ninth of Wiltshire and as big as the Isle of Wight – is mostly MoD freehold but for how much longer?  What might Arab or Chinese investors offer for it?

The ground is shifting beneath our feet.  Not literally, but certainly in the sense that Wessex is changing hands.  With cash-strapped local authorities selling off smallholdings and other property, more and more of Wessex is being turned into opportunities for new money made in London to sink itself into the countryside and settle-in to a post-democratic new feudalism.

Osborne’s challenge to the public is to ‘re-imagine the State’, although only imaginings in a downward direction will be accepted.  Nothing new here though; it’s part of a process of progressive plunder that’s gone on regardless of party colour for the past 36 years.  It comes down to whether there’s nothing left but the coercive core – armed forces, police and judiciary – or whether anything more attractive is added, and why.  Note well that a smaller State does NOT imply lower public spending, just the routing of more of it through the plunderers’ hands in the form of one subsidy or another, from agriculture to housing to railways.  Taxes certainly won’t fall if governments sell off productive assets that provide an alternative revenue stream.

Selling assets to pay debts is false economics if the economy itself depends on the existence of debt as its driving force.  Banks will force governments into debt over and over again, so long as governments fail to govern.  It’s when there are no more assets to sell that the full force of austerity comes to be applied.  New Labour, the bankers’ friend, was taken for a merry old ride over privatisation, with John Prescott quoting Aneurin Bevan – ‘the language of priorities is the religion of socialism’ – to justify the sale of municipal enterprises.  Selling productive assets to finance non-productive expenditure is more accurately the language of the madhouse.

What isn’t often appreciated is that to shrink the British State is to shrink Britishness itself.  As fewer folk have a stake in it, so it becomes less worth defending.  The contrast with Scotland and Wales is striking.  There the democratic sector has been defended, innovative ways round EU rules have been found and some privatisations have even been reversed.  While Scotland and Wales have a will to survive against the forces of globalised plunder, the UK – and therefore England – has only a death-wish, a will to liquidate itself and disperse the proceeds to the super-rich.

An example of this is the desire to pull down the BBC, ‘because the BBC is doing too much’.  (Rupert Murdoch’s empire, naturally, isn’t, though it could hardly do a worse job of airing the views of parties critical of the BBC’s vision of Britain.)  The BBC reduces opportunities for the private sector, which is obviously a Bad Thing.  Except that it isn’t.  In a democracy, there should be no presumption that the job of Government is to create private money-making opportunities out of public services.  That’s the issue that goes to the heart of the demolition job.  It’s not about efficiency or inefficiency, because no investor will buy an asset and no entrepreneur will offer to take over a public service unless the deal is structured in such a way as to make money for them.  They call the shots.  We end up paying.  And by the time we figure out that we didn’t get what we were promised it’s too late to go back.

It’s not about efficiency.  It’s about democracy.  That’s where the Left has let us all down.  It has failed to defend public ownership and operation on democratic grounds, because too much of its thinking is managerialist and so fundamentally hostile to any real democracy, political or economic.  Radical politics is democratic politics and it’s up to radicals to make the case for more democracy, not less.  Freedom to do your own thing is laudable; making off with the common wealth is not.  We all need to be clear about the difference.