Failures in public finance are often attributed to weak institutions, opaque markets or ideological excess. The UK fits none of these descriptions. Its public accounts are among the most transparent in the world, its capital markets are deep and liquid, and its privatisation programme is one of the most extensively studied in modern economic history.
Yet despite these strengths, the UK presided over one of the largest and least examined transfers of public wealth in recent decades: the systematic disposal of public real estate at prices that implied a substantial and irreversible loss to taxpayers.
The reason was not a lack of transparency. It was a lack of visibility.
For more than 40 years, debates about privatisation in the UK have focused on utilities, transport and telecommunications. Water, rail and energy dominate the narrative. By contrast, the sale of land and property –offices, depots, housing, development sites and surplus land held by central and local government –unfolded gradually and with far less scrutiny. Transaction by transaction, the process appeared orderly and fiscally prudent. Taken together, it amounted to a profound reshaping of the public balance sheet.
‘Economically misleading’
The official numbers never fully captured what was happening. The UK’s Whole of Government Accounts record public sector land and buildings at a little over £400bn – largely on the basis of historic cost, depreciated replacement cost or current-use value. These figures are transparent, audited and published. They are also economically misleading. They tell policy-makers what assets once cost, not what they are worth, what income they could generate or what opportunity cost is incurred when they are sold.
As a result, a large part of the public real estate portfolio –accumulated over centuries, often at negligible book value –appeared on the balance sheet as marginal or surplus. When fiscal pressure mounted, particularly at the local government level, selling such assets looked like a sensible way to raise cash. Proceeds improved short-term budgets and reduced borrowing requirements. In accounting terms, transactions often showed gains. In economic terms, many represented losses.
This is the distinction between transparency and visibility. The UK disclosed what it measured, but it did not measure what mattered. Assets were visible administratively, but invisible economically. Decisions were taken with a clear view of cash flows, but with little understanding of long-term value, development potential or alternative use. Liquidity problems were treated as if they were solvency problems, and asset sales became a substitute for balance-sheet management.
Price-value confusion
Research on British privatisation, echoed by later critiques from the National Audit Office, shows that a substantial share of public assets was sold at prices that bore little relation to their long-term economic value. This was not because information was hidden, nor because markets failed to function. It was because the state lacked a framework for assessing whether a sale increased or reduced public net worth. Without such a framework, price was confused with value, and cash proceeds were mistaken for fiscal improvement.
The consequences were cumulative and largely irreversible. Once assets were sold –often without consolidation, repositioning or development –the upside accrued entirely to the private sector. In many cases, governments later leased back properties they once owned, worsening long-term fiscal positions while improving short-term optics. The depletion of public net worth occurred quietly, without the political controversy that accompanied utility privatisations, precisely because the losses were never made visible as losses.
What makes the UK experience particularly instructive is not that it is unique, but that it occurred in a country widely regarded as a benchmark for institutional quality. If a government with transparent accounts, strong audit institutions and sophisticated markets can systematically misprice public real estate, the problem is not ideological or administrative weakness; it is structural.
Visible value
Many governments today face similar pressures. Cities declare effective bankruptcy while sitting on valuable land. States sell assets to stabilise budgets. Sovereigns recycle infrastructure to meet fiscal targets. In each case, the danger is the same: when assets are not visible as economic resources, transactions are judged on cash impact rather than net worth. Value destruction is disguised as fiscal discipline.
The lesson is not that governments should never sell assets. It is that selling assets without economic visibility guarantees poor outcomes. Private investors would never dispose of a portfolio without understanding its composition, income potential and development options. When governments do so, they transfer wealth quietly and permanently from the public balance sheet to private ones.
A more disciplined approach begins with visibility. Governments need to know what they own, where it is, how it is used and what it could be worth under realistic scenarios. This does not require perfect valuation or immediate accounting reform. It requires asset discovery, consolidation of information and an explicit focus on opportunity cost. Transparency follows from visibility, not the other way around.
As fiscal pressures intensify across advanced economies, asset sales will return to the policy agenda. The UK’s experience shows that transparency alone is not a safeguard. Without visibility, even well-intentioned systems can destroy public wealth in plain sight. The real risk is not privatisation itself, but balance-sheet blindness –especially in countries that believe they are immune to it.
Dag Detter is Principal of Detter & Co.
Interested in this topic? Subscribe to OMFIF’s newsletter for more.