Some of the criticism of the government on this issue is misplaced. It is the view of this blog that there is an ethical responsibility upon the State to sell assets to the public at true value, rather than speculator’s or market value. This means valuing shares at a PE ratio which will offer a yield of 3.5%. Once the yield drops below that figure it ceases to be an investment which is for the long term to provide an income; instead it becomes a speculation for potential capital gain in the short term. If the government had taken the speculator route and the inflated launch price had fallen back, ministers would have been accused of duping investors.
What is wrong, and badly wrong, in this affair is the fact that the firms who were advising the government were the same firms that were given special preferred investor rights and thus made a killing when they sold their shares shortly afterwards. Talk of Chinese walls and separate arms of the businesses not being party to this insider knowledge stretches credulity. Even if it were true the public would never accept it.
This is yet another Civil Service blunder at very senior level which shows officials thinking in a vacuum detached from public opinion and the democratic mood. It is another worry for the Establishment, now under very significant pressure.