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Ann McKechin MP: Royal Mail debacle has warned this Government off further sell-offs

BIS Select Committee member Ann McKechin warns now Vince Cable has backed down over selling off the student loan book the Government has lost its nerve over more sell-offs. Ministers feared a flop when they prepared for the privatisation of Royal Mail, so they priced it extra cheap to ensure a quick sale – hesitancy which may have cost the taxpayer up to £1bn, as both the Business, Innovation and Skills committee and the National Audit Office have now concluded in separate reports. This debacle has curbed the Thatcherite zeal this Government previously had for selling off state assets. Both the planned sale of the Land Registry, which records property and land data in England & Wales , and the sale of an estimated £12bn of pre-2012 student loans have been scrapped in recent weeks. In the case of the Land Registry, valued at £1.2bn, a recent 48hr strike by civil servants opposing the sale was what apparently led Ministers to reconsider turning it over to the private sector. The sale of part of the student loan book, however, was a far more serious proposition – indeed, the Coalition’s current policy on funding university study hinged on it going through. In uncapping the number of students able to go to university, George Osborne had pledged to finance the new loans “by selling the old student loan book, allowing thousands more to achieve their potential.” But Vince Cable has now announced that no sale will take place this Parliament. Speaking at the Social Liberal Forum last weekend, the Business Secretary said there is “no longer any public benefit” to proceeding with the sale. It is not clear what the Government plans to do about the £12bn black hole that the sale of the pre-2012 loans was supposed to fill. The uncapping of student numbers now looks like a reckless and unsustainable policy leaving Universities and their students with growing uncertainty. At a time when the Government’s student loan policy, particularly its ability to actually collect repayments from graduates, seems to unravelling, this U-turn is further evidence of ministerial incompetence and infighting. Now that the much-discussed clash of personalities between Lib Dem Business Secretary Vince Cable and Tory Minister Michael Fallon is a thing of the past (Mr Fallon having moved on to become Defence Secretary), we are likely to see a more risk averse approach until the end of the Parliament. The Tory push to privatise as much as possible as quickly as possible was what led to the Royal Mail fire sale, and now that the Department has lost its most senior Conservative, Vince Cable has more freedom to pursue his own agenda. The evidence that Mr Cable is coming round to the idea that something went wrong – very wrong – with the sale of Royal Mail, is stacking up. He has asked Lord Myners, former Labour City Minister, to lead a review into the way the Government conducts initial public offerings, including looking at how investor support is secured before any sale takes place. Lord Myners is not a man who minces his words, so we can expect a set of proposals that define clear and markedly different rules for how Governments sell public assets in the future. A review is long overdue. It’s just a shame that it had to come after the sale of Royal Mail shortchanged the taxpayer to the tune of up to £1bn, lining the pockets of a close cabal of advisors and ‘priority investors’ and not before. The student loan book U-turn may be signalling a more hesitant approach from Vince Cable and his Business department, but it offers no answers on what to do with the £12bn black hole, or how to get student loans policy back on a sustainable track. That now seems to have been kicked well past next year's General Election. Ann McKechin MP is the Member of Parliament for Glasgow North, and a member of the Business, Innovation and Skills committee.