Could George Osborne be in line for a genuine windfall? The Chancellor is getting quite good at conjuring fake ones (Post Office pensions, raiding £35 billion from the Bank of England) but he has yet to sell the 4G licenses. This could be more significant than next month’s mini-Budget. The stunning success of Ireland’s 4G auction (here) suggests that the UK auction may yield a lot more than is currently expected.
A decade ago, governments world over pocketed massive windfalls auctioning the 3G licenses to mobile operators. This time Ofcom has put a reserve of £1.3 billion. But the Irish government expected to get just €170 million from its licenses. In the end, it raised €482 million in upfront fees with €373 million more to come by the end of the next decade. The Office for Budget Responsibility has penciled in quite a startling range for the UK: between £1.4 billion and £6.7 billion. If Ireland is anything to go by, it will be at the upper end of this — and perhaps beyond.
Osborne will need it, because he’ll get sweet nothing from the banks. In 2008 when Alistair Darling was snapping up all these toxic assets, it was said that whoever wins the next election may be in for a great time when the economy has recovered and these assets will be sold at a massive profit. If only. The Americans are doing things properly: it looks like they’ll offload AIG at a profit. But the UK taxpayer has not much chance of recovering its investment in RBS and Lloyds. The years ago, the OBR estimated that Osborne would be £2 billion in the black from selling all those supposedly detoxified assets. It’s now forecasting a £14.3 billion loss. (Not that anyone noticed – Osborne is lucky that his critics haven’t quite got into the habit of looking for stories in the OBR document published on Budget day).
And how much of the destruction in RBS and Lloyds’ value is due to the proposed bank regulation plans? That’ll be a sum you won’t find anyone keen to calculate, but senior figures in the City believe that Osborne’s bank regulation has cost the taxpayer billions in damage to RBS and Lloyds’ market value. So the 4G windfall may be the best news he can expect.
PS CoffeeHousers rightly point out that every penny paid to the Treasury in 4G license fees will be recouped from the public in higher bills. So another tax, in other words.
PPS OfCom is already talking about 5G. At this rate, we’ll have the deficit paid off in no time…