Government sell assets for many reasons. To ensure the taxpayer receives value for money from privatisations and asset sales, government first needs to assess the value generated through holding onto an asset versus selling it. If government does decide to sell, it is important to consider a range of factors, including: its valuation approach, whether any restructuring of the asset is required to maximise sales return, market conditions at the time of the proposed sale, the design and management of any sale process, bidder dynamics during a sale process, and the benefits versus costs of any reasonable alternatives to the sale.
Following the 2015 election, the government has announced plans to divest of a number of assets, which the Office for Budget Responsibility estimates (at July 2015) will result in proceeds of £62.6 billion. These assets are: a portion of the student loans portfolio; the remaining shares in Lloyds Banking Group; a portion of the mortgage portfolio in UK Asset Resolution Limited and a proportion of its Royal Bank of Scotland shares. We have reported on privatisations and asset sales after they have completed and we may return to this theme as the divestiture programme unfolds.
This examines whether the Department for Business, Energy & Industrial Strategy has achieved the objectives of the UK Green Investment Bank intervention, and whether UK Government Investments has achieved value for money in the subsequent sale of the Bank.
The NAO has carried out an investigation into whether government bodies are achieving market value prices from property sales. This investigation looks at a small sample of government property sales of £1 million or less from 2014-15 and 2015-16.
18 September 2017
The first sale of government shares in the Royal Bank of Scotland in August 2015 was well planned and organised and represented value for money.
The sale of Eurostar generated proceeds of £757m. The government prepared well for the sale and achieved its objectives to maximise proceeds. The sale illustrates some general lessons for government as it embarks on its asset sales programme.
Since privatisation, Ofwat and Defra have overseen major improvements in water quality and service quality. Customers have seen a marked rise in bills but not the benefits of companies’ unexpected financial gains.
The government is selling assets on an unprecedented scale but, given the equally large scale of its new loans and other initiatives, the overall projected net effect is a £200m increase in borrowing.
A programme to sell enough government land by March 2015 to build a potential 100,000 homes did not collect information on the amount of money raised or how many homes have actually been built. In future land sales, responsibility for monitoring what happens to land after disposal should be made clear.
The Department was successful in floating Royal Mail. But its approach was marked by deep caution, the price of which was borne by the taxpayer.
The Government’s first sale of shares in Lloyds Banking Group was managed very effectively by United Kingdom Financial Investments Limited.
MyCSP has the potential to be good value for money with a projected saving of 50 per cent on costs, but the Cabinet Office and MyCSP still face many large challenges in transforming the service.