The stocks were sold, the press was squared,
The middle class was quite prepared . . .

No, not the sale of the Royal Mail (that’s more like a work in progress) but of Lloyds Banking Group. The state’s £20m-worth of shares is George Osborne’s get-out-of-jail card, and any day now we’ll wake up to find he’s played it.

He seems to have decided not to sell the lot, but today’s conditions may not recur: a rising market, a price where he can claim a profit for the taxpayer, and institutions wondering whether being underweight in banks still makes sense. As the smoke from the great value destruction clears, the attractions of a bank with a domestic market share it would never have been allowed to grab in normal times will become clearer.

The hits to the p&l from loan provisions and PPI are ending, and there’s the prospect of a return to dividends, perhaps as soon as next year. The signals from the heavy-hitting group led by Lord (Mervyn) Davies, that it could buy a sizeable chunk on its own, will also concentrate the fund managers’ minds.

Mercifully, the Chancellor has ditched the whacky idea of Russian-style coupons which yield the holder a profit if the shares are sold for more than the government’s 61p book price. He can still dream of selling the rest of the holding to Sid on attractive terms just before the election, but please don’t call it an attempt to bribe the electorate.

Short circuit

Trafficmaster was David Martell’s big idea, when satnav was a novelty and Google maps unknown. He sold in 2004, and now he’s back, with the suitably-named Chargemaster. This business provides the shovels for the electric car gold rush, and he hopes to put a charging point near you, or near enough to put your faith in battery power.

He’s floating the business, on a tide of state subsidy for the power points. There’s a string of bribes to encourage us to fall for the electric car, but the omens do not look good, since no subsidy can change the laws of thermodynamics. Generating electricity, wiring it into the roadside, pumping it into storage batteries and then returning it to motive power is never going to match refining oil to burn in an engine. Electricity isn’t a fuel, it’s a transmission mechanism. The power must come from a power station.

The business case for these vehicles rests on the EU diktat that by 2020 the average emission from each manufacturer’s fleet must not exceed that of a Toyota Prius today. This is pie in the sky, but the fines for breaching the limit would provide another hidden subsidy, and never mind that electric cars are hardly green at all.

Sensible car buyers are spurning these autos, perhaps fearing that if they forget to plug them in at night, they’re stuffed the following morning. The exception is the Tesla, the fashion car of choice for the cash-laden of California. However, today’s fashion is tomorrow’s out-of-fashion, as the buyers of Trafficmaster shares in 2000 discovered. Valued at £500m then, it was eventually taken private in 2010 for £100m, as Google Maps ate its market. The risks to Chargemaster are just as real. For all the billions being spent on it, the electric car looks like a dead end, even if there’s a charging point there.

Requiem for the FSA

A brewery is just the place for a wake, and that for the late-unlamented Financial Services Authority, on Thursday at The Brewery in Chiswell St, should be one to savour. The FSA bifurcated, and is no more. However, the niceties of the burial must still be observed, with a valedictory annual public meeting. In the past, these were grand affairs, replete with speeches and complaints. This time there may just be complaints. The chairman won’t be in the chair, nor the chief executive on the platform. They’ve dunregulatin’. “Red” Adair Turner has been given £252,000 and Hector Sants £300,000 plus a top job at Barclays following six months’ compulsory rest. Do remember that questions for whoever does turn up must be submitted in advance.

 

This is my FT coloumn from Saturday

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