First sale of government stake in Lloyds is a success

But can private investors cash in on the deal?

Just a few days ago the government formally announced the imminent stock market flotation of state-owned British postal stalwart Royal Mail, as discussed by Spear’s last week.

In a move reminiscent of the mass privatisation of the Thatcherite era, this week the sale of another major organisation – albeit only part-owned by the state – has begun. Earlier this morning it was announced that the initial sale of taxpayer-owned shares in Lloyds Banking Group to institutional investors has raised £3.2 billion for the Treasury, representing a small profit (but not after inflation).

However, unlike the case of Royal Mail’s whopping 378-year-long history of complete state ownership, the government has only owned just over a third (38.7 per cent) of Lloyds Banking Group for the past five years, following its £20bn bailout of the failing bank in 2008 as a result of the Lloyds’ disastrous acquisition of Halifax Bank of Scotland.

The government is selling a 6 per cent share of it stake, reducing its ownership of the bank to around 32.7 per cent. While this may appear to be a small chunk of its holding, the Coalition can hope to cash £3.3 bn for the benefit of taxpayers on breaking the deal.

In a statement the Treasury said: "We want to get the best value for the taxpayer, maximise support for the economy and restore them to private ownership. The Government will only conclude a sale if these objectives are met."

Shares in Lloyds closed at 77.36p on Monday, which is well above the price of 61p that Chancellor George Osborne regards as the break-even level. During Lloyds' bailout the government bought shares at an average price of 73.6p.

Since the average market price at the time was 61p, the government booked the difference as a loss and added it to the national debt. BBC business editor Robert Peston says that based on Monday's share price the taxpayer should "more-or-less" get its money back.

The sale of this banking giant, laid low by the credit crunch, has been hailed as the UK’s second biggest share placing ever. It is, according to the Financial Times, not only a milestone in Lloyds’ recovery but also the sign of a momentous turnaround in the UK’s fortunes in the wake of the financial crisis, which brought the banking industry to the brink of collapse in October 2008.

The FT also reports that Lloyds’ shares, which are expected to be sold at 75p, have soared more than 90 per cent in the past 12 months, racing past the government’s 73.6p "in-price" for the first time in three years last month. It came as no surprise, therefore, that the government set the wheels in motion for the reprivatisation process.

And, naturally, investors are keen to muscle in on the action. The Capital markets bankers involved in the transaction reported a swift take-up of Lloyds shares, with one US hedge fund said to have submitted a $1bn order.

"Investors are making a call on the UK," said one banker on the deal. 'This level of demand would not be there if people weren’t confident in the UK’s broader economic recovery.'

The good news is that individual investors could also soon get their hands on some Lloyds shares, since the initial placement is expected to be followed by a second sale – potentially involving retail investors – in the first half of 2014.

Royal Mail’s flotation has created some interesting private investment opportunities through publicly traded shares, so let’s hope we can bank on getting access to some Lloyds stocks, too.

This piece first appeared on Spear's Magazine.

Lloyds TSB. Photograph: Getty Images

This is a story from the team at Spears magazine.

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Jeremy Corbyn's fans must learn the art of compromise

On both sides of the Atlantic, democracy is threatened by a post-truth world. 

Twenty years ago, as a new and enthusiastic Labour MP, I wrote an article for The Observer in praise of spin. I argued that if citizens are to be properly informed and engaged in their democracy, politicians - and in particular governments - have a duty to craft their messages carefully and communicate them cogently. It was a controversial notion then but less so now that we have entered the era of post-truth politics. In the old days, we used to "manage" the truth. Now we have abandoned it. 

We’ve probably come further than we think, for when truth is discarded, reason generally follows. Without a general acceptance of the broad "facts" of any matter, there can be little basis for rational debate nor, therefore, for either the consensus or the respectful disagreement which should emerge from it. Without a commitment to truth, we are free to choose and believe in our own facts and to despise the facts of others. We are free too to place our faith in leaders who make the impossible seem possible. 

We condemn the dictatorships which deny their citizens the right to informed and open debate. But in our own societies, unreasoned and often irrational politics are entering the mainstream. 

The politics of unreason

In the UK, the Leave campaign blithely wedded brazen falsehood to the fantasy that Brexit would cure all ills – and millions of voters enthusiastically suspended their disbelief.  “We want our country back” was a potent slogan - but no less vacuous than the pledge to “make America great again” on which Donald Trump has founded his election campaign. On both sides of the Atlantic, people want to take back control they know they never had nor ever will.

Both campaigns have deliberately bypassed rational argument. They play instead to the emotional response of angry people for whom reason no longer makes sense. Since the time of Plato and Aristotle, democracy’s critics have warned of the ease with which reason can be subverted and citizens seduced by the false oratory of charismatic leaders. Trump is just the latest in a long line of the demagogues they feared. He may not make it to the White House, but he has come a long way on unreasoning rhetoric - and where he leads, millions faithfully follow. He has boasted that he could commit murder on Fifth Avenue without losing votes and he may well be right.

But if Trump is extreme, he is not exceptional. He is a phenomenon of a populism of both right and left which has once more begun to challenge the principles of parliamentary democracy.

Democracy in decline

All over Europe and the United States, consumer-citizens are exasperated by democracy’s failure to meet their demands as fully and as fast as they expect. If the market can guarantee next day delivery, why can’t government? The low esteem in which elected politicians are held is only partly the consequence of their failings and failures. It is also evidence of a growing disenchantment with representative democracy itself. We do not trust our politicians to reflect our priorities. Perhaps we never did. But now we’re no longer prepared to acknowledge their unenviable duty to arbitrate between competing political, social and economic imperatives, nor ours to accept the compromises they reach - at least until the next election.

We have become protesters against rather than participants in our politics and, emboldened by hearing our chosen facts and beliefs reverberating around cyber space, have become increasingly polarised and uncompromising in our protest. 

The Trumpy Corbynites

Which brings us to Labour. Despite the obvious political differences between Jeremy Corbyn and Donald Trump, there are striking similarities in the movements which have coalesced around them. For many of their supporters, they can simply do no wrong; each criticism provides further evidence of a corrupt establishment’s conspiracy against them; rivals, including those who share many of their beliefs, are anathematised; unbelievers are pursued across the internet; inconvenient facts are reinterpreted or ignored; rational, civil debate is shut down or drowned out. 

There are other similarities in these insurgencies: both mistake slogans for policies and mass rallies for popular support; both are overwhelming and quite possibly destroying their own parties – and both, ultimately, are movements without practical purpose.

Trump may give vivid expression to his followers’ grievances but, other than building a wall along the Mexican border, his plans for government are obscure. Similarly, while Corbyn and his supporters know what they’re against, they have not yet articulated a clear vision of what they’re for, much less how it can be achieved. For many of them, it is enough to be "anti-Blairite". 

But in disassociating themselves from a Labour prime minister’s mistakes, they are also dismissing their party’s achievements under his leadership. Their refusal to acknowledge the need for compromise may well enable them to avoid the pitfalls of government. But government’s potential to bring about at least some of the change they want does not come without pitfalls. In wanting it all, they are likely to end up with nothing.

The art of compromise

Democracy cannot be sustained simply by what passionate people oppose. And though movements such as Momentum have important roles to play in influencing political parties, they cannot replace them. Their supporters want to be right - and they often are. But they are rarely prepared to test their principles against the practical business of government. The members of political parties want, or should want, to govern and are prepared, albeit reluctantly, to compromise – with each other, with those they seek to represent, with events -  in order to do so. Parties should listen to movements. But movements, if they are to have any practical purpose, must acknowledge that, for all its limitations, the point of politics is power.

We have to trust that the majority of American voters will reject Donald Trump. But closer to home, if Labour is to have a future as a political force, Corbyn’s supporters must learn to respect the historic purpose of the Labour party at least as much as they admire the high  principles of its current leader. There isn’t long for that realisation to take hold.

In the UK as in the US and elsewhere, we need to rediscover the importance of common cause and the art of compromise in forging it. The alternative is a form of politics which is not only post-truth, post-reason and post-purpose, but also post-democratic. 

Peter Bradley is a former MP and director of Speakers' Corner Trust, a UK charity which promotes free speech, public debate and active citizenship.