§ 2.49 p.m.
§ Lord Haskel asked Her Majesty's Government:
§ How much public finances benefited from the privatisation of the Property Services Agency.
The Minister of State, Department of the Environment (Earl Ferrers)
My Lords, the sale of the five Property Services Agency building management businesses saved the taxpayer over £100 million by comparison with the alternative of closure. The sale of the Property Services Agency projects business in December 1992 also saved money over the alternative of closure.
§ Lord Haskel
My Lords, is the Minister aware that according to the National Audit Office the Government spent nearly £220 million, including £18.4 million alone 6 on consultants, to privatise the Property Services Agency? Has the Minister taken that expenditure into account when calculating the income which has been received from the privatisation?
My Lords, it was decided that civil servants were not the best people to do the work which the Property Services Agency did. Therefore, either it had to be closed or it had to be sold. The cost of the closure would have been somewhere between £195 million to £310 million—the mid-point of that was £251 million—whereas the cost of the sale was £141 million. Therefore, the taxpayer has benefited.
§ Lord Ezra
My Lords, the noble Lord, Lord Haskel, in asking this Question referred to the important report of the National Audit Office. Is the noble Earl aware that paragraph 4.26 on page 35 of that report refers to the estimated indirect costs of closure? It states that a large part of the costs of closure were subjective and that,The National Audit Office were, therefore, unable to validate these figures".Therefore, is it not a little surprising that the noble Earl spoke with so much certainty about the benefits of selling as opposed to closing?
My Lords, I am surprised the noble Lord, Lord Ezra, should say that because I said that the costs of closure would be somewhere between £195 million to £310 million. I should have thought that I had not described those figures with pinpoint accuracy and that I provided a certain range. Of course, it is perfectly true—I am not hedging—that these figures are difficult to get at because some of the payments were made over a period of years. It is difficult to discern how much one would have saved had the PSA been privatised earlier. However, I can tell the noble Lord, Lord Ezra, that over the six years from 1990 to 1996, if the privatisation of the Property Services Agency had followed the pattern of other privatised businesses, there would have been a saving of about 20 per cent., or £1,500 million to £2,000 million, over the six years.
§ Lord Haskel
My Lords, is the Minister aware that in order to maximise the proceeds of the sale the Property Services Agency was divided into five units and each one was sold separately? Can the Minister explain why W. S. Atkins was paid £11.5 million to acquire the Manchester division? Noble Lords will not be surprised that the National Audit Office in its report considered this to be,an unusual way of effecting a sale".
My Lords, the noble Lord, Lord Haskel, will be the first to appreciate that it is not every day that one sells an organisation such as the Property Services Agency. We therefore took advice from consultants and they suggested that it would be best to split the organisation into five parts. Having done that, one then has to obtain the best possible price, or the least possible cost. We took their advice and that is why that part of the PSA was sold in the way that it was.