Labour puts money on Tote

ROBIN COOK, the cabinet tipster as well as the Foreign Secretary, angrily dismissed reports before the election that the Tote would be put up for sale.

"The Tote's place is inside racing, not in a firm outside racing," he said in February, last year. Charlie Whelan, the Chancellor of the Exchequer's personal spin doctor was blamed for the reports, which provoked the row.

Yesterday, the Foreign Secretary followed the Chancellor at the despatch box in the Commons after Gordon Brown had announced that the Tote would indeed be put up for sale. One up for Mr Whelan against Mr Cook.

It does not augur well for Mr Cook who is now reported to be engaged in the final round of a difficult battle over his budget for foreign embassies, and is making it clear he will not hear of cuts in the diplomatic grace- and-favour establishments. In fact, he is spending pounds 900m on upgrading the British Embassy in Tehran.

Mr Brown, the so-called "Iron Chancellor", has his sights on the sale of all surplus goods and chattels, and a realising the asset value of a few foreign mansions might ease the foreign budget.

The privatisation of the Tote demonstrated that when it comes to asset sales, the Treasury has the upper hand. The Chancellor told John Prescott last week that he accepted the Deputy Prime Minister's case for "asset sweating".

The Chancellor confided in Mr Prescott that Treasury had been unable to get any return from him out of the London Underground - a complicated deal will inject pounds 7bn into the Underground rather than the Treasury coffers.

He suggested to Mr Prescott that they should sell the National Air Traffic Service (Nats). This was a step that Margaret Thatcher had refused to take. Mr Prescott took the select committee report on the safety of Nats with him on Concorde to New York on Monday to study the implications, but he wanted a deal: sell Nats, in return for boosting investment in airports at Manchester, Newcastle, and Leeds-Bradford. Along with Norwich, the local authority airports will be given market freedom to raise private finance for investment.

The Chancellor had prepared the ground for yesterday's announcement by ordering Whitehall to produce a register of all its assets.

Treasury sources made it clear he has his sights on the Ministry of Defence which is refusing to cut more than pounds 500m off its pounds 22bn budget but retains vast tracts of valuable land, including farm land, in the West Country and the north of England, in addition to its own stock of housing, and grace -and-favour residences.

The National Heritage is also up for grabs. Even the Treasury may draw the line at selling off the National Portrait Gallery but the sale of Channel 4 (an estimated pounds 2bn) must be tempting.

Tony Blair said before the election "Labour will retain Channel 4 as a public-sector broadcaster". But after Mr Cook's remarks on the Tote proved unsound, all bets must be off.

Most of the attractive council house property was sold off under Margaret Thatcher's right-to-buy legislation, which changed voting habits in the early 80s. Councils have been told to sell more property. The Government halted the sale of school sports fields and could not go back on that pledge, but some land could go along with surplus council buildings.

The biggest change could come with the Treasury rules which have so far stopped councils from borrowing on the money they raise from rents.

Private landlords and housing associations are free to do so, but not councils. Mr Prescott is pressing for that to end, so the councils can start rebuilding their housing stock.

That could lead to the biggest council housing programme since the 60s, and it could come from Thatcherite principles.

The alliance between Mr Prescott and Mr Brown is set to become one of the most important factors in the Blair government's delivery of promises after the euphoria of the election victory.

They are agreed that the estimated pounds 4bn a year proceeds of the asset sales should be reinvested in public services, and the four priorities that will be announced in July with the Chancellor's comprehensive public expenditure review: health, education, transport and housing.

Central government disposals are expected to raise pounds 1bn a year; a further pounds 2.75bn a year is expected to be raised from local authority asset receipts.

The central government "private partnerships" include the Commonwealth Development Corporation, worth an estimated pounds 500m with plantations in Sri Lanka and land around the globe. Selling it off could raise more money for Clare Short's budget for the developing countries.

The Treasury is proposing "new commercial opportunities" for the Royal Mint and the Tote. It could mean the Royal Mint being given greater financial freedom with its licence to print money for the Chancellor.

Next year could see a further tranche of student loans; the sale of debt in British Energy, the sale of the port of Belfast; and licences to operate the new generation of mobile telecoms services.

Further down the line, there could be other asset sales to finance more public spending - the sale of Scottish forests would raise an estimated pounds 800m.

There would be an outcry if that was proposed but the Scottish Office could sell off some of the logging rights, and invest it in improvements to the countryside. After yesterday, almost anything is possible.

Government's grand auction

Royal Mint

Worth around pounds 100m. Employs 1,000. Thirty-eight acres at Llantrisant, South Wales, and holds priceless collection of coins/medals.

National Air Traffic Services

Worth an estimated pounds 600m. Employs 5,100. Runs air traffic control; 51 per cent will be sold off to City investors and employees; Government will keep a golden share and 49 per cent.

Commonwealth Development Corporation

Worth about pounds 500m. Employs 500. Holds worldwide estates, soft loans from Colonial days and plantations in developing countries.

The Tote

Worth around pounds 400m. Employs 1,700. Runs betting on racecourses and in 400 high-street shops.

Possible future sales: Radio spectrum pounds 1bn; Scottish forests pounds 800m; the Met Office pounds 800m; Crown Estates pounds 5bn; Coastguard Agency pounds 50m; Central Office of Information pounds 20m; Channel Four TV pounds 2bn.