Small investors lost in post

GEORGE Osborne is hoping that a miniwave of privatisations, along with his Help to Buy scheme, will recreate some of the Thatcherera’s enthusiasm for share and home ownership.

But it seems unlikely that the Chancellor’s version of popular capitalism will have anything like the power to transform the economic landscape, or the electoral fortunes of the Conservative party.

Back in the 1980s, the standard left-wing critique of the privatisations was that it was ‘selling off the family silver’.

This time around the Labour party is criticising the Government for selling off Royal Mail at too low a price and short- changing the taxpayer.

Given t hat t he shares are expected to go to an instant premium when dealings commence, there is some substance to the charge.

To add insult to injury, small investors are unlikely even to be able to make much by ‘ stagging’ their shares – selling them for an instant profit – as their allocations look set to be scaled back. The winners will be the big City institutions and the banks advising on the sale, led by Goldman Sachs and UBS, along with the Royal Mail employees who will receive 10pc of the shares for free.

Large investors are also first in the queue in the re-privatisation of Lloyds Banking Group, recently snapping up more than £3bn worth of stock in a discounted share placing, half of which went to UK buyers and the remainder to overseas institutions.

Private investors will have to wait until next year for the possibility of joining in sales of subsequent tranches of Lloyds shares and in the float of TSB.

A shareholding democracy is a laudable aim.

It would mean individuals gain control over their own financial future and would have more of a say on how companies operate, if only by haranguing the chairman at the AGM.

For all her efforts, a true democratisation of the stock market eluded Mrs Thatcher, who may well have been horrified to see the rewards showered on certain managers, not to mention some of our key national assets falling into overseas hands.

Small investors now own just over 10pc of the UK stock market, compared with 54pc some 50 years ago. Osborne’s share sales may generate a pre-election feel-good factor, but they will not reverse this long term trend.

It is a shame, after ordinary savers and investors have borne the pain of the financial crisis, that they are not being given a chance to take a bigger stake i n the recovery.

Home a loan

IT is a tenet of Tory thinking that one of the best ways to voters’ hearts is through the housing market.

In the 1980s, Mrs Thatcher’s Right to Buy policy, which offered council house tenants the opportunity to buy their home at a discount, probably represented the biggest transfer of assets from the state to the people this country has ever seen.

Help to Buy, the second phase of which has been brought forward to this week, is designed to fulfil a genuine need – for high loan-tovalue mortgages for people who c a nnot raise an e normous downpayment.

However, even with base rates at their current rock- bottom level, the interest on Help to Buy loans is expected to be around 5pc.

So what happens to this hopeful band of borrowers when rates go up, as inevitably they must?

And what if the scheme, as many economists fear, fuels another housing boom and bust?

At this point the less happy memories of the 1980s and early 1990s property market come to mind: arrears, negative equity and repossession, with the taxpayer on the hook for lenders’ losses.

Crossroads for Ineos

THE time machine is going back even further at the Ineos petrochemical plant in Grangemouth, where industrial relations seem to be stuck in the confrontational mode of the 1970s. Management says the facility is effectively worthless, having lost money for the past four years, and that it will have to be shut in 2017 if the staff will not agree to surrender their final salary pension scheme, among other changes to work practices.

The company is in a Mexican stand- off with the Unite union, which is immensely powerful on the site because even a short strike can put the plant out of action for a couple of weeks, at enormous cost.

To add to the woe, the toxic row over the selection of a Labour candidate to replace the pugnacious Eric Joyce is casting a shadow over the dispute ( see Focus page 97).

If the UK is to become a modern, high value manufacturing powerhouse, industrial disputes of this kind need to be consigned to the history books.