Thursday, 5 May 2011

Selling England by the Pound

You may know it as the title of a 1973 album by Genesis. It's also a potentially bizarre solution to the country's debt crisis, but one with a serious point. The premise is simple: instead of such massive cuts in public expenditure, why don't we sell off more assets?

Private companies facing debts would consider just such an option, and some companies make their living by buying and asset-stripping others. Of course this only works if you can continue to balance the books afterwards, but that's a great deal easier if you're not having to pay huge amounts in debt interest.

What assets? Well, have you ever thought what the entire country might be worth in cash terms? Don't get this confused with GDP, which basically represents the value produced by the country as a whole in one year. This is a bit like turnover on a balance sheet, where national debt would appear under liabilities. But surely such a balance sheet should show assets as well?

There's the land for a start: the Barclay twins paid £2.3m for the Channel Island of Brecqhou in 1993 - less than 1/3 of a square mile, so extrapolate that for the whole of the UK at 2011 prices. And the value of buildings and other constructions: the old London Bridge went for $2.46m way back in 1968, so what might all our public buildings now be worth? And works or art, public institutions, transport infrastructure? I can't begin to estimate the value of the whole UK on this basis, except to say that it must run into thousands of trillions of pounds.

Against these kind of figures, the UK's GDP of around £1.5 trillion (£1,500bn) and government debt of £1.1 trillion pale into insignificance. Of course, most of the nation's assets are in private hands, hence not available for government sell-off. But just the value of publicly-owned assets must run into many trillions.

The government has indeed done some modest selling, mainly through privatisation. But it recently reversed its plan to sell 258,00 hectares of state-owned woodland, and even moving organisations has met strong resistance ("wholesale outsourcing" of public services to the private sector would be politically "unpalatable", the BBC reported recently). Meanwhile hedge fund manager Jonathan Ruffer has donated £15 million to save three paintings "for the nation" - so the national asset base continues to grow.

In practice, the notion of solving the national debt by selling off, say, the Isle of Wight is preposterous and would never happen. But it's worth reflecting on why this is so. The answer has to be that we value national assets way beyond their material cost when considering what they mean to us. These intangible considerations could include the environment, well-being, leisure opportunities, even heritage or national pride, as well as  individual happiness.

Winston Churchill once responded to a suggestion that arts funding should be cut to support the war effort by saying "Then what are we fight for?" Sad that we are now cutting arts funding in peacetime, but someone has decided that it's less painful to cut ongoing funding than it is to sell off national assets (artistic or otherwise). What troubles me is that this may not be a conscious policy decision; who has decided that a precious painting adds more to our national life than subsidising theatre companies for example?

Like it or not, we could if we had to convert all of the intangibles that create value in our lives to a monetary equivalent. SROI (Social Return on Investment) does in the relatively limited field of social impact, and the principle could be extended as widely as we choose. As an extreme example, if it came down to a choice between the complete abolition of the NHS and the sale of Lindisfarne (Holy Island), then for me Lindisfarne would have to go.

For the moment at least Lindisfarne and the Isle of Wight are quite safe; that's not the point. The point is that we should start understanding value - including assets as well as services - as a common currency that embraces all aspects of our lives. If you're not happy with the financial proxy, then call it 'happiness points' or 'valunits' or whatever. Intangible it may be, unmeasurable it should not be, because we can only make effective policy decisions if we understand - and can measure in some way - what it is we are trying to improve.

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