Election '97: Labour expands scope of sell-off scheme

A Labour drive to privatise surplus public assets and services caught the Conservatives - and at least one member of the shadow cabinet - by surprise yesterday.

But John Major and Michael Heseltine promptly exploited the policy change to argue that it provided further evidence that the Labour Party could not be trusted.

Mr Major told BBC1's Breakfast with Frost programme that Tony Blair had used the word "trust" 20 times during his manifesto launch.

"Well, in the three days since then they've had three years to prepare the manifesto for the Labour Party and in three days it's begun to fall apart ...

"After all they've said about privatisation, you now see stories that they're going to privatise."

The Prime Minister said the policy should have been in the manifesto, "or the Labour Party are slithering around and have changed their policy; it must be one or the other".

But Gordon Brown, the shadow Chancellor, told BBC Radio 4's The World this Weekend that the policy had been contained in the manifesto.

Under the "iron grip" that he would maintain on public spending, all government departments would be given a November deadline to draw up a national register of their pounds 122bn of assets.

"We will then make a decision about whether assets are best kept in the public sector - property, land and buildings - but if they are of no further use to the public sector, we will take the decision to use our assets properly and we will take the decision to get rid of assets that are of no further use to us," Mr Brown said.

That policy of "rooting out waste and inefficiency" was indeed included in the manifesto - but it was restricted to assets, and not services. In a speech in the City today, Mr Blair will go much further and speak of the privatisation of services.

There is no reference to that in the manifesto, which says instead: "We will ensure that self-financing commercial organisations within the public sector - the Post Office is a prime example - are given greater commercial freedom to make the most of opportunities."

Today the Labour leader will say: "Where there is no overriding reason for preferring the public provision of goods and services - particularly where those services operate in a competitive market - then the presumption should be that economic activity is best left to the private sector, with market forces being encouraged to operate."

Mr Blair writes in today's edition of the Sun newspaper: "As far as commercial activity is concerned, it is best left to the private sector.

"That does not mean, as one headline ludicrously claimed yesterday, that 'we'll privatise everything'. It does mean, however, that we have no dogmatic objection to services being run in the private sector."

In a statement of Labour's "wobbly weekend", Mr Heseltine said last night: "Faced with difficult questions on privatisation, Blair promised everything, despite commitments to the contrary.

"If he could have, he would have privatised the kitchen sink. But where was privatisation in the manifesto?"

Earlier, on Sky News Sunday with Adam Boulton, Mr Heseltine said: "I've spent my political life fighting the Labour Party over privatisation. Now they suddenly say because they've got their economic policy into a thundering mess with a pounds 12bn black hole, they say, 'Well, we'd better have a bit of privatisation'."