THE Government is to stage a £16 billion asset sell-off as part of moves to stabilise the public finances, Gordon Brown will announce today.
The Prime Minister will give details of an initial round of disposals that could raise £3 billion over the next two years - including the Tote, the Dartford crossing, the Channel Tunnel rail link, and the Student Loan book.
Much of the rest of the funds will be realised by encouraging local authorities to exchange assets for cash.
The plan comes as Mr Brown seeks to persuade voters that he has a better alternative to the immediate spending cuts proposed by the Tories.
At a seminar in London this morning, he will warn that premature curbs risk "snuffing out" the economic recovery before it has got under way, and insist strong growth is the best solution to public debt.
"We need a deficit reduction plan that supports growth and jobs not one that snuffs out recovery before it has started," the premier is to say.
Outlining his plans to sell a "portfolio of non-financial assets" held by Whitehall and local authorities for some £16bn, Mr Brown will indicate that he wants government to focus on "what it does best".
He is to say that such action is key to Labour’s "clear and credible" plans for halving the deficit over the next four years.
Aides said the sell-off marked the beginning of a "radical programme" to identify "non-core government business activities" that could be done better by, or in partnership with, the private sector.
But shadow chief Treasury secretary Philip Hammond said Mr Brown was merely spewing out "headline figures" in a bid to save his own electoral skin.
"We think that selling down assets in order to pay off debt, when you are in the sort of state that we are in, is a sensible thing to look at," he told Sky News. "But this is about saving the Prime Minister. It is about trying to get some headline figures that he can feed in to the election."
The premier will take a swipe at the Conservatives, claiming that no serious economic experts back their calls for spending cuts to start immediately.
However, Mr Brown will concede that the "growth of overall spending" must be reduced after April 2011, by "cutting back on low priority programmes, increasing efficiency and productivity and unwinding the programmes that have been put in place to support demand over the last year".
Mr Brown is to insist: "A vital contributor to sustainable public finances is growth. Restoring public finance sustainability must be done in a way that supports growth not destroys it. The failure to do so is the real risk of a lost decade of austerity.
"A reduction in growth of 1% next year would raise the deficit by 0.5% next year and even more in subsequent years, adding to the future debt burden. The resulting impact on the debt burden could be more than 5% of GDP after 10 years."
The Prime Minister will say that although the lowest point of the financial crisis is past, the task of fixing the global system is only "half done".
There are "major risks" to the international and domestic economic recovery, including a lack of lending. He will urge banks to concentrate on building up their balance sheets rather than giving big payouts to staff or shareholders.
Lib Dem Treasury spokesman Vince Cable said that, given the state of the public finances, asset sales made sense "at least in principle".
But he added: "Attempts to sell off large amounts of government land into a very depressed market such as we have now would be frankly barmy.
"These asset sales should be based on a financial calculation not a political one."
Business Secretary Lord Mandelson suggested that airports could be among the local council-owned assets which could be sold off to reduce debt and avoid "savage" public sector spending cuts.
"Market conditions, frankly. have somewhat improved a bit more quickly than I think people were expecting at the beginning of this year," he told the BBC Radio 4 Today programme.
"That’s opening up possibilities and therefore the scope for selling off these assets, not just central government but local government as well, where there are business parks, industrial estates, leisure centres - even local airports - which could and should realise asset value which will mean that we can both pay down debt but also not make the sort of savage across-the-board cuts in services and government investment that the Conservative Party is advocating."
Lord Mandelson told the BBC: "If you can sell off these assets in order to, as you say, plug the hole in our national finances, then that’s a much better thing to do than savagely cutting public expenditure on schools, hospitals and other frontline public services.
"I think, in a choice between these two things, I am pretty sure what the public would want us to do."
Lord Mandelson rejected Conservative arguments that swift public spending cuts are needed now to balance the books.
"We don’t have to plug that sort of gap now, thankfully. We can do that over years and into the medium term, as the Government has set out.
"We have said that we will halve the Government’s financial deficit over four years and introduce legislation which compels us to reduce that deficit in an appropriate, but also timely, way.
"The last thing we want to do now is to cut public spending and Government investment in the economy in a way that wrecks the economy. That’s the difference between us and the Conservatives.
"The Conservatives have a one-track mind. They think that Government’s the problem in everything and therefore the solution is to cut Government spending, cut what Government provides in public services, which would produce the very age of austerity that David Cameron was talking about last week. We want to avoid that."
Speaking on GMTV, Mr Brown said: "The important thing is we will maintain frontline public services, we will have an economy that is growing with jobs to maintain frontline public services. Now that is the big division between us and the opposition.
"We are doing everything to make sure we maintain our health, our schools, our policing services. That is not the case with our opponents."