Government sell-off a pain in the asset

Last week the Treasury published what it claimed was the world's first government asset register, showing the valuation of everything the state owns. We now know that, if it privatised the entire state, the government would raise £274bn and wipe out 90% of its net debt.

Some assets would struggle to find a buyer, like the Millennium Dome, valued at £510m. Others would attract a long queue. Last week CJ reported that the part-privatisation of NHS Estates' £400m surplus property portfolio had drawn expressions of interest from 135 companies, including construction, property and FM businesses.

But the richest government department is the Ministry of Defence, with £86bn-worth of assets, not least of which is Chelsea Barracks - 4.5ha of prime real estate in the heart of London. It seems the Treasury became jealous of these riches and hatched a plan. In what was described as the most profitable property-based PPP, when it went to tender 55 months ago, a contract was drawn up to transfer the Chelsea Barracks site to the private sector in exchange for the relocation of the troops to another, cheaper London location.

However, the Treasury hadn't figured on the MoD's resentment of its interference, its suspicion about the destination of the contract's proceeds and its senior soldiers' vanity about their SW1H postcode. And now the scheme is in doubt.

The lesson in all of this seems to be that the state owns many of its assets for good reason - they are not all there to be plundered to fund improvements in public services, however badly needed. But, as ever, this was not a victimless demonstration of asset mismanagement. Two PPP consortia have been dragged into the fray - promised the earth, but left with something rather less impressive. This government should come with a health warning, not a price tag.