BEWARE politicians bearing pre-election ‘gifts’
After eight years, two bank bail-outs and a massive financial crisis, the government is preparing to sell its Lloyds Bank shareholding and return the group to the private sector. This, of course, has been previously announced. The added twist from Prime Minister David Cameron is that there will be a “special offer” enabling small investors to buy up to £4 billion of the £9bn worth of shares on offer at less than the market price. It evokes memories of the “Tell Sid” privatisation of British Gas.
It is thus unfortunate – indeed, troubling – that the timing of this share sale, and in particular the envisaged price, should feature in a general election campaign. Politicians are long adept at seeking to bribe taxpayers with their own money. In this particular case, there is special cause to look critically at what is being offered.
Given the long period of public support – and the circumstances surrounding the government rescue of Lloyds Bank in 2008 – taxpayers have particular reason to be sure that when a politician comes bearing a gift shortly before a fractious general election, that they are really receiving one. And Scottish voters, in particular, have good reason to subject this proposal to keen scrutiny.
Mr Cameron is set to assert that, with Lloyds shares closing at 78.75p last Friday, the mooted share sale will be above the taxpayer acquisition cost of 73.6p a share paid by the Labour government in late 2008, thus ensuring a profit for the taxpayer.
But it is a nominal gain only, bearing in mind the opportunity cost of the £20 billion bail-out and that Lloyds has not paid any dividend to holders of its shares since that time.
Moreover, if a 5 per cent discount to lure small investors is then applied to the current price, this would reduce the “profit” to just 2p a share, a gain more than wiped out by inflation over the eight-year period.
There is merit to the argument of Liberal Democrat Treasury Secretary Danny Alexander that a better price may be had by waiting. At the very least, the timing of such share sales should not be determined by political considerations.
As for Scottish voters, it is painful to recall that HBOS was the product of a tie-up between Bank of Scotland and the Halifax and that shares in this group were changing hands prior to the collapse at 600p.
The shotgun “merger” of HBOS with Lloyds was only possible by a suspension of Competition Commission rules by Labour ministers. As a result of these deals, the once-proud Bank of Scotland now exists in name only – a loss that cannot be made good by gimmick.
Shareholders who suffered a 90 per cent loss will hardly cheer an offer to buy back the collapsed shares at a 5 per cent discount. “Tell Sid”? There is surely more than a facile discount that Sid needs to weigh up.
Stop this humanitarian catastrophe
News of the latest migrant ship disaster in the Mediterranean has appalled the world. It brings the death toll among desperate migrants fleeing North Africa so far this year to at least 1,500.
Whatever the arguments over EU immigration policy, this is a humanitarian catastrophe flowing from an EU decision last October not to replace the Italian-run Mare Nostrum search-and-rescue operations in the Mediterranean. This was reckoned to have saved around 100,000 lives last year.
EU opposition was driven by fears it was encouraging smugglers and migrants to organise more trips to Europe. But without any attempt at the rescue of boats in trouble, it has resulted in a dreadful death toll.
Withdrawing emergency rescue with consequent heavy loss of life cannot be allowed to stand as the policy of the EU.
Two actions now need to be taken, and with the greatest urgency. The first is to reinstate the Mare Nostrum operation with appropriate facilities and crews experienced in mid-sea rescue. The second, running parallel to this, is co-ordinated action to stem the flow of migrants by hunting down the gangs responsible for this inhuman trafficking, as they bear ultimate responsibility for this toll of deaths. They cannot any longer be allowed to go unidentified and unpunished.
The UN and aid agencies can provide vital help in this regard. But the EU has major responsibilities here. And it is not short of the wherewithal to mount life-saving operations, even if those rescued are subsequently repatriated. The present series of tragedies cannot be allowed to continue.