The government’s Lloyds sale ignores its primary duty: The public
Say what you like about Margaret Thatcher, but she knew how to say thanks. Critics will crow about the poll tax – but they are the same people who were given the chance to own a slice of British Gas as part of the Tell Sid campaign.
Today’s Treasury leaders could learn a thing or two from from that. Almost eight years to the day since it spent £20.5bn on a 43.4 per cent chunk of Lloyds Bank, yesterday it began the selloff of its final tranche of the lender, taking its interest to below nine per cent.
Shareholders seemed satisfied: shares closed 1.5 per cent higher, at 56.7p. You can see why: in many ways, the Treasury’s ownership has gone as well as it could have. Careful restructuring has put it back in the black, and shares hovered around the Treasury’s 73.6p break-even point after its privatisation – until June this year, when they fell back after the Brexit vote.
But in its last days as Lloyds’ proprietor, the Treasury has neglected its duty to the public. Earlier this month it was announced retail investors were to be left out in favour of institutions as the government sold off its last holdings in the lender. Such was the disappointment, Hargreaves Lansdown launched a petition this week, which last night had just shy of 25,000 signatures.
The Treasury – and, indeed, companies – have good reasons for doing private offerings like this. When it sold more than a fifth of Royal Mail shares to 16 “priority” investors, it argued institutions would provide stability to the company. But a year later, analysis showed their shareholdings had fallen more than 90 per cent.
Taxpayers were on the hook for £850bn following the government's emergency measures, including bank bailouts, in the aftermath of the financial crisis (according to a National Audit Office report in 2009).
The public has waited for its chance to claw something back. Leaving retail investors out of the final share sale ignores the government’s duty to taxpayers, who are still suffering the aftershocks of the recession. It’s time to reward them for their patience.