Having sold RBS shares for £1bn less than they were bought for, George Osborne the economic genius strikes again

Perhaps his next venture will include buying Kit-Kats for 45p and selling them straight back to the man in the shop for 30p

Mark Steel
Friday 07 August 2015 13:03
George Osborne appearing on the BBC's Andrew Marr Show on Sunday, 5 July 2015
George Osborne appearing on the BBC's Andrew Marr Show on Sunday, 5 July 2015

It’s lucky George Osborne can be trusted on the economy, understands business and can repair our finances that were wrecked by Labour. Because it’s through such sound judgment that he’s succeeded in selling off Royal Bank of Scotland shares for £2.1bn, after the Government bought them for a mere £3.1bn in 2008.

Good business sense like this is extremely rare. That’s why few people appear on Dragon’s Den saying, “My plan is to buy shares to stop companies going bankrupt, then sell them back to the people I bought them off, who ruined everything in the first place, for two-thirds of the price. I’m looking for an investment of £3.2bn, and confidently predict I can quickly reduce it to £2.1bn. Then I hope to branch out into other areas, such as buying Kit-Kats for 45p and selling them straight back to the man in the shop for 30p.”

Osborne would be even better on The Apprentice, boasting, “You asked me to make money out of selling cleaning products, Lord Sugar, so I bought 50 bottles of Jif and gave them away to the chief executive at Goldman Sachs, losing all my money. Because I’ve got business in my spit.”

As this is apparently a marvellous deal for Britain, we must hope that in a few weeks Osborne does it again. Once all the shares have been sold, he should buy them back again for twice as much, then sell them back again at half price, losing another billion, and before long we’ll all be living like Saudi princes. You won’t get that under Jeremy Corbyn.

To be fair, Osborne didn’t come up with this scheme on his own. He sought advice, he assures us, from Rothschilds the bankers. It must have been hard to find anyone without a vested interest in a decision about banking, but he did well in finding someone as neutral as possible: Rothschilds the bankers.

Because it’s important to listen to the advice of experts before selling something, and no one’s more of an expert than the people you’re selling to. That’s why, if you’re trying to sell your car, the shrewd method is to meet the person who wants to buy it and ask their advice on what price you should sell it for.

But Osborne went further than this, because bankers not only advised on the sale, they organised it. Contracts went to Goldman Sachs and Morgan Stanley, as no one could know more about the banking crash than the people who caused it, so it’s only ethical if they’re rewarded for such knowledge.

The Government should insist on the same rules when the people who lost their diamonds in the Hatton Garden heist get their insurance money. They should be made to buy replacement diamonds off the thieves who organised the Hatton Garden heist, as they obviously know lots about diamonds. To make sure it’s all above board, the sale can be organised by the thieves who organised the Hatton garden heist, for a reasonable fee.

The result of all this trading in Royal Bank of Scotland shares is we the people have had all the fun of owning those shares for a few years, and it’s only cost us £1.1bn.

The only problem is certain elements of the press can be touchy about public money being wasted. Some newspapers scream on their front page when a council wastes £3 on Custard Creams for a housing meeting, when they could have got them for £2.69 on special offer from Lidl in the next door town. The lazy ignorant sloths were too idle to walk 15 miles to save 31p, which is exactly what caused the mess in Greece or even Somalia, so is it any wonder they’ve been ordered to save money by turning each of their fire engines into a branch of Starbucks?

So it’s surprising that none of these newspapers that usually yell about waste of taxpayer’s money have complained about this lost £1.1bn. It must be that they’re so angry they’re saving it up for a huge 64-page special pull-out furious edition that just goes “AAAAAAAAAAAAGH” on every page.

But whereas most of the savings imposed are on frivolities such as care homes, at least those benefiting from the sale of RBS shares are the truly needy. Over half the shares have been bought by hedge funds and investment bankers; it’s about time something was put their way for a change. They’ve even made an extra £20m on the sale, through a practice known as short-selling, in which traders “gamble” on a share price falling.

This is especially heartening, because it fits the theory that those people in our society who work really hard are the ones who get rewarded with a bit extra. If you want to be richer, instead of lying around teaching or nursing or driving trains, do some graft and sell short for an afternoon.

We shouldn’t underestimate how courageous this sale has been, because a character such as Ian Gordon, an analyst with Scottish banking consultants Investec, said he was “perplexed by the timing of the sale”. Other bankers have agreed, suggesting the share price was ridiculously low, allowing the hedge-fund managers to make easy money. So even bankers are saying, “Don’t make it that easy for us to rob the country. That takes away the element of sport.”

But this radical approach to public spending will surely be extended to all of us. If you’re on housing benefit with a spare bedroom, the council will buy it off you for £50,000, then sell it back to you for £80. If you’re unemployed and get caught doing a window-cleaning round on the sly, they’ll bail you out by buying the mop off you for £300, then let you have it back for a jar of pickled onions.

Because they can be trusted with the economy.

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