Accounting Magic

I would forgive you for thinking that the Government never seems to get value for money from privatisations or the sale of investments it holds. You need only look at the runaway share price of Royal Mail to understand that someone’s miscalculation of the launch price cost us……significantly.

 

Which leaves me intrigued on our 6% stake in Lloyds Banking Group that the Government sold on our behalf…..and for dramatic effect…… ‘our stake’ that was sold on ‘our behalf’.

 

At face value, the £3.2 billion raised from the sale represents a £61 million profit since 2008. And in case you were wondering, that is a 1.9% return. Now I appreciate that is not a great return over 5 years but it is a near miracle we didn’t lose money.

 

Or did we?

 

Wipe the make-up off that ‘face value’ and the real figures are exposed……the National Audit Office (they regulate all Government income / expenditure) have stated that there was a loss on the sale of £230 million (7%). This is all due to the interest costs for the Treasury of borrowing money to buy the stake in the first place.

 

Those costs are real, very real.

 

The next time your MP has an open surgery you might want to ask why the £230,000,000 loss has to be made up by us through higher taxes and / or a reduction in public services.

 

Or we could just simply let it continue to happen.

 

Just a thought.