George Osborne's claim that the taxpayer made a profit on a £3.2bn sale of Lloyds Banking Group shares has been contradicted by the National Audit Office.
The taxpayer lost more than £200m on the state’s first sale of shares in Lloyds Banking Group, undermining the Government’s claim that the £3.2bn deal had made a profit for the country.
Analysis of the disposal by the National Audit Office (NAO) found that, taking into account the state’s funding costs, the sale of a 6pc stake in Lloyds actually resulted in a loss to the UK of £230m.
George Osborne, the Chancellor, said at the time of the September 17 deal that the 75p sale price represented a “profit for taxpayers” and that the money raised would be used to pay down the national debt.
The NAO cast doubt on Mr Osborne’s claim and said that, while the price was above the 73.6p “break-even price”, correcting for the cost of the debt incurred by the state to fund Lloyds’s £20bn 2008 bail-out, the taxpayer had lost money.
Amyas Morse, head of the NAO, said that despite the loss the reduction of the state’s holding in Lloyds from 39pc to 33pc represented a “good start” to the process of cutting back the taxpayer’s holdings in the banking industry.
“The sale took place when the shares were trading close to a 12-month high and at the upper end of estimates for the fair value of the business [Lloyds]. Furthermore, the share price in trading after the sale has remained steady,” said Mr Morse.
The government is expected to continue the privatisation of Lloyds next year, with insiders expecting a further disposal of the shares soon after the bank releases its full-year results in February. Mr Osborne has committed to selling at least a portion of the remaining stake to the general public through a full retail offer.
Sajid Javid, Financial Secretary to the Treasury, said the NAO report showed the “high price” the UK had to pay for the debt it took on during the financial crisis to rescue Lloyds and Royal Bank of Scotland, which together required a direct injection by the taxpayer of £66bn.
“The government’s long-term economic plan is dealing with this: we have put in place a new regulatory system to create a stronger and safer banking system and have reduced the deficit by more than a third,” said Mr Javid.
A sale of the state’s 81pc holding in RBS is reckoned to be some years off as the lender continues to struggle with legacy problems, in particular its old fashioned computer systems.
Stephen Hester, who left as chief executive at the end of September, said over the summer that the full privatisation of the bank could be a decade away, while the government has guided that there is unlikely to be any sale of RBS shares before the next election. Share in the bank remain at 319p well below their break even price of 500p, meaning any sale would result in a large loss.
Lloyds shares closed at 76.03p on Tuesday, valuing the bank at £54.7bn.
LINK
My thoughts on the subject
Why the feck did the tax payer give all that money to private LTD companies when these companies through their own mismanagement failed.
This is not capitalism,it's the opposite to capitalism,rewarding catastrophic failure.
