A claim by the chancellor that the government profited from the sale of Lloyds have been questioned by Whitehall’s spending watchdog, which calculated a loss to taxpayers of nearly £6bn.
In the lead up to the general election, Phillip Hammond claimed the taxpayer had made a profit of £900m in bailing out the bank.
The national audit has examined the sale of the bank and in a report stated that the government has lost £5.9bn in the bailout and sale.
The report was commissioned so that the government could learn lessons to be used in the privatisation of RBS. The government is set to make a £26bn loss on the sale of RBS and the taxpayer has already made a loss of £2bn when the chancellor sold some of the government’s shares in June. Despite this the chancellor plans to continue the sell off of the bank.
The report detailed that the chancellor did not account for financing costs of running Lloyds stating:
“This gain included the dividends from owning the shares but did not include an estimate of its financing costs. We estimate that the government received between £3.2bn and £5.9bn less than it paid for the shares if the cost of finance is included in the calculation.”
George Osbourne stated that the government would make a profit on the acquisition of the banks but with this information, it has bee made clear the government has failed to make a profit on either Lloyds or RBS.
Gordon Brown’s government took a 43.4% in the bank in 2008 in an attempt to save the banking sector using £20bn of public money to bail out Lloyds and RBS.
Analysis from Iwan Doherty- Editor in Chief
Further losses mark failure in the government’s privatisation agenda. It breaks more Conservative Party promises and worse still means the taxes of hard-working Brits are being funnelled into the hands of rich via these bail-outs and corrupt sell-offs.
Hammond states that the government should not be in the business of owning banks, I imagine the electorate would disagree when they look at Lloyds’ accounts. The news marks another failure by this government on fiscal credibility and another story the mainstream media has failed to cover properly.