The announcement in December 2006 in the Times that The Ministry of Defence is being asked to examine the scope for
privatising flogging off Government assets and a range of "other arm’s-length businesses ", makes the reasoning behind appointment of the new CEO at the Met Office yesterday clearer.
The Chancellor had announced in his December Pre-Budget Report, plans to flog off State Assets to the tune of £50BN to plug the looming and uncomfortable gaps in his income - reduced North Sea oil Taxes as production plunges £2-3 Bn. annually - fiucked up tax credits schemes £2Bn. - Carousel VAT fraud £4-5 Bn and the as yet unquantified costs of sorting out the Metronet collapse £XX Bn. ? writing off kit in Iraq, costs overruns in Afghanistan, extra MOD spending on equipment, building prisons etc., etc.,
The MoD’s UK Hydrographic Office, Defence Aviation Repair Agency (DARPA) and the defence engineering business, Abro, have along with the Met Office, been converted into so-called trading funds — arm’s-length businesses run on semi-commercial lines and expected to make a return on capital and contribute a dividend to the Exchequer.
All government departments are being ordered to come up with assets that could be sold. Those with trading fund status — the mapping body, the Ordnance Survey, is another — are considered closest to being ready for life in the private sector.
The Shareholder Executive (SE), the government body created in 2003 to exercise better stewardship of state assets, has already sold QinetiQ, the former MoD research arm, in a controversial flotation last year, raising £350 million.
It oversees a rag bag portfolio of 27 of the more (or less) commercial organisations including the Met Office, Channel 4, the Royal Mint, Royal Mail, the Forensic Science Service, the New Covent Garden Market Authority, and the Tote and amazingly Blackpool Airport, which together had a turnover last year of £20 billion. (full list here)
The Shareholder Executive? WTF?
The Shareholder Executive is a little known body that was created in September 2003 to "improve fundamentally the government's performance as a shareholder in government-owned businesses and to provide a source of corporate finance expertise within government."Ho.Ho.Ho.
Its specific objectives are to:
Ensure each business delivers sustained positive returns, and returns its cost of capital within the policy parameters set by Government;
1. Increase by £1 billion in the three years to 2007 the value of the core portfolio of businesses owned by Government, within a framework of clearly defined policy, customer and regulatory objectives;
2. To provide, corporate finance expertise across Government.
Chairman is Philip Remnant, a Senior Adviser in the European Investment Banking Department at Credit Suisse. He was previously a Vice Chairman of CSFB Europe and Head of the UK Investment Banking Department. From 2001-03, Philip was Director General of the UK Panel on Takeovers and Mergers on secondment from CSFB.
He is on secondent Credit Suisse to the Shareholder Executive for two years from 25 June 2007 and will work for the Shareholder Executive two days per week.
Acting Chief Executive is Stephen Lovegrove who used to be a partner at KPMG, he took over on June 27th 2007 from Martin Bryant who is leaving the DTI to spend time assisting his wife to recuperate after a serious accident.
The National Audit Office published a report on their performance in February this year
.."This report finds that the Executive has improved the way in which Government acts as a shareholder. Taking this into account as well as its annual budget of £9.9 million and the value it has already brought to the taxpayer, for example through its role in the sale of Westinghouse, the National Audit Office concludes that the Shareholder Executive has provided value for money."
Elsewhere the Department of Health has struck a deal with the Office of the Deputy Prime Minister to transfer a portfolio of former NHS hospital sites to English Partnerships to use for affordable housing. The 96 sites are expected to generate up to £1bn in private sector investment by 2010. Guradian March 2006