The case for privatising Manchester airport Graham Brady MP says
Mancunians, unlike Londoners, are proud of their airport, but that its municipal ownership is a socialist anachronism — so why not sell it off?
1 t is 12 years since Tony Blair did battle with the socialist dinosaurs and forced them to abandon their commitment to nationalisation with his celebrated 'Clause 4 moment' — the very birth of New Labour. Now that Blair has been and gone, you would struggle to find a serious politician in any party who would advocate state ownership of any industry as a 21st-century model. Indeed, the idea of the state running our utilities, airlines or railways now seems archaic and even faintly ridiculous. Under both Conservative and Labour governments we have transferred everything from telecoms to road haulage and defence research to the private sector. Yet next door to my Greater Manchester constituency there is a thriving modern plc worth £3 billion which remains in the public sector without anyone batting an eyelid.
Manchester airport is a magnificent gateway to this resurgent city and a powerful motor for the economy of the whole northwest of England. While Heathrow is increasingly vilified as a 'third world' travel experience, we Mancunians are actually rather proud of our airport. It is at the forefront of efforts to achieve environmentally sustainable growth in aviation and has plans to make its entire ground operation 'carbon neutral' by 2015. Passengers consistently vote Manchester one of the world's favourite airports and it is the third busiest in the country after Heathrow and Gatwick. This is a modem, profitable business — but its anachronistic ownership structure stands as a monument to old-fashioned municipal socialism.
Shares in Manchester Airport Group (MAG) are owned by the City of Manchester (55 per cent) and by the other nine Greater Manchester boroughs (45 per cent). This arrangement would be hard enough to justify even if only our own local airport was involved. Bizarrely, MAG is also the owner of East Midlands, Humberside and Bournemouth airports. At a push, you could make a case for taxpayers holding an indirect stake in the ownership of their local airport, but you might still struggle to find an argument for them having such a stake in an airport 200 miles away.
So who really benefits from the current form of ownership? No one does. In return for their stake in a multi-billion pound asset, local councils receive an annual dividend that is far from generous: the £25 million paid out this year represents a yield of just 0.8 per cent. If the councils sold the airport and put the money in the bank, it would bring in interest payments of £150 million a year. We have a golden goose that lays very small golden eggs. Meanwhile, the company — even though it is well led and run at arm's length from its local authority shareholders — labours under residual public-sector controls on its commercial activities. It would be better off flying free to take on the competition.
We derive huge benefits from having this magnificent transport hub so near at hand. But local people get virtually no benefit from the fact that we actually own it. For the population of Greater Manchester, this amounts to an enormous wasted asset. The privatisation of MAG would realise up to £3 billion. John Whitaker of property giant Peel Holdings has suggested that this sum could then be used as collateral to borrow a further £4 billion, generating a total of £7 billion to fund a world-class public transport system for the city.
In doing so he argues, incidentally, that we would effectively buy off the government's attempts to blackmail Manchester into adopting a congestion charge. I think this would be a mistake, however. Britain's second city is already paying enough taxes: why should we sell the airport simply to relieve the government of its responsibility to deliver investment in the transport system? The Manchester congestion charge proposal should stand or fall on its merits and so should the entirely separate question of airport privatisation. Instead of tying up our money in runways and terminals, our £3 billion could be put to some exciting alternative uses. By investing all or part of the revenue raised in a 'Fund for Manchester', we would exchange a barren goose for an annual cash injection of perhaps £200 million a year for investment in Greater Manchester. This kind of money wouldn't quite put us in the same league as the investment funds held by oil-rich Kuwait or Norway, but it would buy a lot of youth clubs, all-weather pitches and skate parks. We could use it to give free bus travel to our kids, and new resources for our already impressive cultural scene that would leave other regional centres in the shade.
Or how about giving free shares to every household — some £1,200 for each of the two and a half million men, women and children in the conurbation? For some this would be a welcome nest egg; others might put it into Child Trust Funds to help support their children through college or use it to top up their pensions. It might fall short of the old Clause 4 commitment to 'common ownership of the means of production, distribution and exchange' but it would certainly meet the aspiration of the new Clause 4: that power, wealth and opportunity 'in the hands of the many not the few'.
A combination of both approaches would fund continuing benefits for the community as well as giving millions a real stake in a successful local enterprise. Conservatives might see in this a unique opportunity to spread popular capitalism and the experience of ownership in some of the more deprived communities. For Labour, now that Gordon Brown has pulled the rug from under Manchester's proposed super-casino, this could be just the ticket for delivering alternative sources of investment and kick-starting regeneration in the less prosperous parts of town.
Today Manchester's residents get all the convenience of proximity to a major regional hub airport. The airport and its associated businesses provide thousands of jobs, but for owning the airport we get a pretty poor deal. Whether the proceeds of a sale go directly to the people or are held in trust to fund good works, privatisation would allow us to have our £3 billion cake and eat it.
Graham Brady is MP for Alaincham & Sale West.
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