Saturday, April 05, 2008

Flogging Hospitals

So our cash strapped government is now planning to flog off London's hospitals:

"In London the huge and ageing property portfolio comprises nearly 100 hospitals and hundreds of smaller sites, which together cost £700 million a year to maintain.

The most likely London options would include the Government selling off some of the prime hospital real estate in a process known as “sale and leaseback”, which would leave the NHS trust paying rent to the new owners for the continued lease of the building. Another option being considered is “securitisation”, where the Government would bundle together packages of buildings and use them as collateral to raise money in the markets, although that would leave the Government with a huge pile of debt."

Do we all understand? Sale and leaseback and securitisation are both means of borrowing money: Brown is proposing to use our hospitals to raise yet more debt finance, probably losing the sites into the bargain.

There are a number of points to be made immediately:

  • We're already hocked to the eyeballs- Brown has amassed £1.85 trillion of public sector debt, which is £74 grand hanging round the neck of every single household in Britain (see this blog)- we don't need any more
  • Expensive borrowing- just like PFI, sale and leaseback and securitisation would cost more than simply borrowing via traditional gilts; Brown's deceitful use of funding smoke and mirrors costs us a packet in higher interest rates
  • Abysmal timing- now is possibly the very worst time to sell London property since the last property crash; we may be in for another Brown bottom (see this blog on the world's worst gold trader)

And beyond all that, there's another point: these hospitals are not Brown's to sell. Because most of London's hospital sites were originally paid for by private benefactors or local authorities long before the NHS was even thought of. True, a previous socialist government confiscated them, but they were supposedly going to be held in trust for the nation. Not banged out cheap during a fiscal crisis to a bunch of who knows what property spivs.

Over the last decade Brown has frittered away mountains of cash and maxxed out his cards. According to all those personal finance progs, what he should do now is get a grip on his compulsive spending habit. But instead, he's selling the farm, figuring what the hell, someone else will be clearing up the mess anyway.

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