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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An unlikely alliance of Hollywood razzmatazz and UK construction workers is exposing the impact of blacklisting

When the secret operation of blacklisting British builders was uncovered six years ago, the prospect of a film like Trumbo making blacklists a talking point was laughable.

“Scores of people lost their homes, their families disintegrated . . . some even lost their lives.” So says Bryan Cranston in the title role of Trumbo, the new film about the blacklist of communist sympathisers that gripped Hollywood for over a decade from the late 1940s.

The screenwriter Dalton Trumbo, a Communist party member, won two Oscars for his work under wraps during the blacklist era. But he spent almost a year in prison for his defiance of the US Congress’s inquisition into “un-American activities”.

Fifty-six years after the effective end of the blacklist and 5,500 miles from Hollywood, Cranston’s words are too close to home for a group of workers from a rather different demographic. In 2009, a government raid on a shady outfit called the Consulting Association discovered a database of over 3,000 builders in an unassuming office in the West Midlands.

With the sponsorship and co-operation of the likes of Balfour Beatty, Skanska, Carillion and Sir Robert McAlpine, the company worked to systematically deny employment to political activists and workplace safety reps who had raised grievances with bosses. Some files contained information that activists believe could only have been supplied by the police.

This week, 71 blacklistees were paid £5.6m by the firms. Hundreds more are fighting on to face the company chiefs in a High Court trial in May.

Some lost their homes, their families, their lives, as Dave Smith and Phil Chamberlain chronicle in their book Blacklisted. In 1995, Roy Bentham, a joiner from Merseyside, was added to the list after taking part in a strike, and soon could not find work anywhere in the northwest. “Being apart from my long-term girlfriend also put a strain on me and her emotionally,” he says. “We have subsequently split up. It does impact on your home life – and it’s still impacting now.”

In Trumbo, the title character clashes repeatedly over resistance tactics with fellow blacklisted writer Arlen Hird, a composite character played by Louis CK. After both men are released from jail, Hird first proposes to sue production companies for lost earnings, but later slams Trumbo for seeing revenge purely in financial terms – and forgetting the politics.

Blacklisted builders face similar dilemmas. Initially unions entered into talks with construction firms over compensation – but these broke down after the firms unilaterally launched their own scheme, branded “cut-price” by reps.

Some of the legal claims now due for the High Court were served as long ago as 2013. But in the past few weeks the litigants have come under immense pressure to withdraw. If they refuse to accept bosses’ offers and the courts subsequently award them less, workers will be forced to cover the firms’ legal fees.

Campaigners say the companies have already spent £20m fighting the claims, and are using this threat to “buy themselves out” of the embarrassing spectacle of having to testify in court.

Trumbo, however, offers a ray of hope. When the secret operation was uncovered six years ago, the prospect of Hollywood making a talking point of blacklisting was laughable. Activists are annoyed their own cases have been met by a “radio silence”. But the Blacklist Support Group wants to take advantage of the buzz around the film, and is encouraging its members to write to their local papers and speak up at public events about the impact of the Consulting Association database.

They will be helped by the fact that Trumbo, in spite of its Hollywood razzmatazz, is a fundamentally political film. Pride, the acclaimed 2014 picture about Lesbians and Gays Support the Miners, did not mention the Communist affiliation of key character Mark Ashton – reportedly to avoid alienating American audiences. Not so in Trumbo. The film even makes a compelling case that the relative comfort of Hollywood is no reason to withdraw our sympathy – and reminds us that scores of poorer and less powerful communists suffered too. “It shows that blacklisting is not a one-off aberration – it’s part and parcel of how capitalism works,” Smith, himself on the construction database, tells me.

It’s hard to imagine blacklists in Britain have been confined to the building trade. It shouldn’t take a blockbuster to make such flagrant human rights abuses a hot topic – but it’s unsurprising it has, given the decline of industrial journalism and the bias of our legal system. Three cheers for Hollywood.

 Conrad Landin is the Morning Star's industrial correspondent. Follow him on Twitter @conradlandin.