Much will go up in smoke as ministers opt for fire sale of public land | Business

Much will go up in smoke as ministers opt for fire sale of public land | Business

A mix of enthusiasm and panic inside the government is set to produce a toxic trail of poor decision-making, probably just in time for the next budget. The enthusiasm flows from the potential for a broad and far-reaching revolution ministers can see in the worst health and economic crisis for several generations.

This could be the best opportunity since the second world war to reshape Britain’s way of life, recasting the relationship between citizens and state. From a Tory perspective, ministers can champion self-reliance and sideline collective organisations that put barriers in the way of change.

The panic relates to the way money is slipping through ministers’ fingers as dramatic spending to deal with Covid-19 flows out of the Treasury. With hundreds of billions earmarked for rescue schemes that run until at least October and probably into next year, the narrative gaining ground inside the finance ministry focuses on the enormous debts Britain will incur and the limit on spending this will bring.

What does a Conservative government that thinks it is running out of funds for a prospective transformation do? It turns to the private sector to carry out the heavy lifting.

What if the private sector responds that it, too, is short of funds? Them the focus switches to creating a framework that lowers the costs of private sector investment to the point where it becomes irresistibly attractive.

This way of thinking unites chancellor Rishi Sunak, Grant Shapps in transport and Robert Jenrick in housing. They are free marketers who set aside their “private sector is best” preferences to join a Boris Johnson government that put state power to the fore. Johnson was going to spend his way to greatness with a series of grand projects that would transform the UK and its standing in the world.

Now that the Treasury believes the nation’s spare cash will soon be spent protecting vital services and preventing mass unemployment, a different strategy is needed.

The tax system is an obvious candidate for reform, which is why ministers are weighing up how to persuade a sceptical public that cuts to corporate taxes can encourage investment. More immediately, these ministers are wondering how to force local government in affluent areas and publicly owned bodies such as Transport for London to begin a fire sale of public land.

Selling off collective assets cheaply is nothing new. Britain sold its public utilities in the 1980s and early 1990s. In the late 1990s and into the noughties, the nation’s mutually owned businesses – building societies and mutual insurers – were flogged off to City institutions. For decades councils have stayed afloat by selling playing fields and other assets to developers for a song.

Officials inside No 10 are working on ways to reform the planning system to allow for an explosion of housing and property development – without trashing the countryside or allowing developers to fill their boots. They would deny the uglification of Britain will be the result.

No doubt some of the experts drafted in by Dominic Cummings to plot yet another thrust to the heart of sclerotic England have noble intentions. Their problem will be that with no time or money left to develop a long-term and sustainable scheme, their plans will quickly be overtaken by the need to generate economic activity.

Nothing will bring land into play more quickly than forcing public sector bodies to sell what they have without regulations or rules determining what private developers must do with it.

A straw in the wind is Jenrick and Shapps’s coordinated attack on the mayor of London, Sadiq Khan. Jenrick rejected Khan’s housing plans as not ambitious enough – by which he meant they included too many affordable homes for rent and not enough units.

Shapps has put a block on funds to Khan’s main fiefdom – Transport for London – forcing the capital’s transport authority to furlough most of its staff. This manoeuvre must surely end any chance TfL has of preventing land it owns from being sold for development without strict rules. It amounts to a coup that Londoners cannot see, mainly because the mayor won’t admit he’s had his legs and right arm chopped off. Maybe it’s too humiliating.

What is more extraordinary is that other mayors – Andy Street in the West Midlands and Manchester’s Andy Burnham – haven’t reacted to this smash-and-grab and this undermining of local democracy.

Property developers are among the biggest donors to the Tory party. They can’t wait to get their hands on extra land at knockdown prices. A fire sale beckons.

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