Thursday, 19 September 2013
Loss, not profit, from the Lloyds Bank sell-off
By flogging off Lloyds Bank shares at 75p when, in the 2008 rescue, it bought them at 73.6p the government claims to have made a profit for the tax payer of nearly £60m (actually, by long multiplication, since my calculator batter has run out, £58.8m)
However, since 2008 there has been inflation, not as much as in some five year periods but certainly some, and certainly more than wages have risen. A useful site http://www.whatsthecost.com/cpi.aspx tells me that, after accounting for inflation, the present value of the 73.6p today is 83.4p. In other words those shares, at 75p, have been sold off at a loss of 8.4p per share. Since 4.2 billion shares were sold, that's a real loss to the government /taxpayer of £352.8m.
This calculation is not rocket science so why aren't the media screaming that Osborne is lying and we, the public, are being robbed.
What's more, though perhaps not quite as costly to the public purse, the Chief Executive of Lloyds, Mr Antonio Horta-Osoria, stands to collect a bonus of more that £2.2m if the shares stay above the 73.6p value paid in 2008, rather than the present value of 83.4p. Those who make these contracts certainly know how to write them in favour of the "haves."