Treasury faces election gag over Lloyds sale

Business & Economy 07 May 2017
Treasury faces election gag over Lloyds sale

Election mutes Treasury milestone as £21bn Lloyds sale completes

Purdah rules will prevent the Treasury from celebrating the sale of the UK's final Lloyds shares, Sky News understands.

Image: The most recent sale of Lloyds shares took the Government's shareholding down to just 0.89%

By Mark Kleinman, City Editor

It will be a major milestone in the British economy's efforts to move on from the 2008 financial crisis – but Treasury officials will be barred from publicly acclaiming it.

Sky News understands that rules dictating civil servants' conduct during election campaigns mean that the UK finance ministry may be barred from announcing‎ the sale of the Government's remaining stake in Lloyds Banking Group.

Sources said on Friday that the completion of Lloyds' re-privatisation could happen as early as the second half of next week, although the pace of share disposals to date meant an announcement was more likely the following week.

The most recent sale late last month took the Government's shareholding down to just 0.89% – worth more than £400m at Friday's closing share price of 70p.

Philip Hammond, the Chancellor, used a Treasury press statement on April 21 to trumpet the recovery of taxpayers' full £20.4bn investment in Lloyds.

That announcement came before the start of the purdah period, now in place, which means that civil servants are prohibited from "any activity that could call into question their political impartiality", according to official Government guidelines.

One insider said that some Treasury‎ staff were dismayed that they would be unable to formally mark the end of Lloyds' nine years in partial public ownership.

"There hasn't been much to celebrate here over the last decade," said one.

"It's ironic that we'll be gagged from doing much more than issuing a factual statement – and we may not even be able to do that."

A shield of arms adorns a wall inside the Treasury in central London
Image: Some Treasury‎ staff were said to be dismayed

The restrictions governing civil servants‎' conduct do not apply to politicians campaigning for re-election, meaning that Mr Hammond will still be able to claim credit for the sell-off in the weeks leading up to the 8 June poll.

He is expected to face fierce criticism from political opponents when he does so, however, with Labour likely to point out that it was Gordon Brown's administration‎ which determined the price of the bank's rescue.

Labour is also likely to point to the much larger loss on which the Government is sitting in relation to its 72% stake in Royal Bank of Scotland.

Lloyds itself is expected to say that the completion of the privatisation process will ‎not herald any change in its strategy.

Antonio Horta-Osorio, the chief executive since 2011, has overseen a significant turnaround in Lloyds' fortunes despite a £17bn bill for payment protection insurance mis-selling.

The sale of the Treasury's stake, which stood at 43%, has ‎taken almost four years since the first disposal in September 2013.

Lloyds and the Treasury declined to comment.

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