Eurostar sale could be last privatisation before the general election

Eurostar Image copyright PA

This morning, George Osborne officially started the process for the sale of the government's 40% stake in Eurostar.

Now, it might be a criticism too far to suggest that the Treasury is hunting down the back of the sofa to see what loose change it can find.

But to put it in context - the £300m or so that might be raised from the sale is not going to put much of a dent in the UK's public sector net debt load which stands at around £1,432bn, or 75% of gross domestic product.

If that debt were the equivalent of the price of a journey from London to Paris, then this sale wouldn't get the Treasury much further than the end of the platform at St Pancras.

In fact, even that isn't quite right. A sum of £300m will simply slow the increase in the debt, rather than actually cut it as, of course, the Government is still running a deficit - that is, its receipts are lower than its spending.

Royal Mail sale

The Government has given itself a target of raising £20bn from asset sales by 2020. I am told that publicly owned corporations such as the Met Office, the Post Office, Ordnance Survey and National Air Traffic Control are not presently targets.

The big kahuna of asset sales this Parliament was the sale of 70% of Royal Mail which raised £2bn.

Certainly, the Conservative part of the Coalition was keen to sell the rest of the stake, as I reported here earlier this year.

But after the controversy over the pricing of the Royal Mail's shares, Vince Cable, the Business Secretary, was not much minded to have another slew of possibly negative headlines.

Despite much enthusiasm, the Government has also struggled with the sale of its 1/3rd stake in Urenco, the nuclear processing business which enriches uranium for electricity production.

'Last look rights'

In such a delicate area, it is maybe understandable that an agreement with the two other governments that own Urenco, the Germans and the Dutch, would be difficult.

Indicative bids for a possible sale of all three stakes are now not expected until the end of the year at the earliest. The Government could realise as much as £3bn from the sale, but no-one in Whitehall is holding their breath.

As well as the government stake, Eurostar is 55% owned by the French state rail company, SNCF, with its Belgian equivalent, SNCB, owning the other 5%.

Whitehall sources tell me that SNCF is unlikely to bid for the Treasury's holding and will not take up its "last look rights" which would allow it to outbid any final offer if it pays a 15% premium.

Looking at the broad numbers, the Treasury is keen to take what jam it can today rather than wait for small dollops over the next few years. With Eurostar now performing well as a business, the Government received a £7.4m dividend last year after the high-speed rail line made a £52m profit.

Chinese interest

It would take a lot of £7.4m payments to get to £300m.

The government is hoping that pension and infrastructure funds will be willing bidders. Singapore, Kuwait and Qatar have made it clear that their sovereign wealth funds are interested in European projects where there is the potential for long-term, sustainable gains.

Chinese banks are also interested, keen as they are to gain a foothold in Western-facing businesses.

October 31 is the deadline for bids. Labour and the rail unions have signalled their opposition, with Labour saying a value-for-money audit should be undertaken by the National Audit Office before any sale.

The party also argues that the Government should wait for the results of the review into the Royal Mail sale by the former City minister, Lord Myners, before any more asset stakes are privatised.

The Government is impatient, though, and the Conservative element of it instinctively pro-privatisation. When all said and done, £300m, it argues, is better than the state-owned alternative.