I thought governments had learnt from the economic disasters of the 1980s. Obviously not. Selling off British Rail piecemeal has done nothing for the travelling public, except put up fares and reduce services.
The next mistake will be to privatise the property arm of Network Rail. In other words, the small businesses who rent railway arches will be facing imminent rent hikes and may have to cease trading. Hedge funds will be keen to snap up anything with guaranteed income at a time when profits and interest rates are low.
The MOD sold off a lot of property that had been earmarked for service personnel’s families. The squeeze on budgets has led to a dwindling military workforce. The new owners wanted to knock down the properties develop the sites and make a killing on new houses. Unfortunately, under the terms of their deal with the MOD they were prevented from doing so.
With some creative legal thinking, they lifted the roofs up by crane and put in new walls. A batch of houses were sold off cheaply and people camped out to be first in the queue. If you had rented the house from the MOD for your family, tough luck. They had to repaint all their walls the original magnolia, vacate the premises and queue up like everyone else if they wanted to buy their own homes.
The new owners soon realised that they could trade the rental income side of the business and retain ownership.
If private investment companies can see the merit of retaining ownership of income earning assets, why can’t the government? Here’s the full story
Our care homes were sold off in a similar attempt to slim down government and council budgets, resulting in some care homes being so poorly maintained that they were shut down by inspectors. More wrangling by investors and creditors is described here.
The asset stripping portrayed by the character Gordon Gecko in Wall Street has been replaced by a more sophisticated way of exploiting the wealth and income-earning potential of publicly owned assets.
Rail companies don’t have to be subsidised to make a profit. Here’s how the Japanese do it.
odespinner 