The aim behind the flotation of Royal Mail was to enhance populist capitalism by maximising the number of individual shareholders. It hasn’t worked out that way. As in the heyday when 750,000 persons bid for BT shares when the former telecoms monopoly was sold off in 1984, this time round more than 700,000 individuals applied for the Royal shares. But exactly as happened 30 years ago, the great majority of these individuals quickly sold on their shares in order to realise the capital gain as the price rose two-thirds above the IPO, valuing the company at £5.5bn far above the the £3.3.bn original price offer. Furthermore the Royal Mail offer has hardly opened up share ownership to new investors at all, since around 90% of the applications came from existing clients. But there are deeper lessons to be drawn from the overall pattern of share ownership which are even more sobering.
In 1963 individual ownership of UK shares amounted to 53%, while overseas investors totalled only some 7%. Since that high point in personal ownership, the proportion held by individuals has been in persistent decline for half a century till today it amounts to no more than 10%. The election of Mrs. Thatcher in 1979, with the first tranche of BT shares offered to the public in 1984 followed by British Gas shares offered in the Tell Sid campaign in 1986, made no perceptible change in the pace or momentum of decline whatever. There is no sign that this time round it will be any different. Whereas half of all Americans own a share or fund and in Sweden it is 80%, in Britain the proportion of share-holders remains as low as 30%.
The obverse of this is that the proportion of UK shareholdings held overseas has increased 8-fold over the last 50 years. In 1963 foreigners held just 7% of UK shares, and that proportion actually declined till 1981 after which it started to rise slowly in the 1980s, but then accelerated sharply between 1994-2000. It then plateaued off, but began to rise sharply again in the late 2000s till it reached 53% today and still climbing. When this is combined with the huge sell-offs and privatisations in the in the post-1980s period, most of which introduced a high degree of foreign ownership of major industries and companies, this has fundamentally changed the face of UK industry away from its British base and made Britain dependent on foreign co-operation in terms of investment, jobs and restructuring to a degree unprecedented in British history.
Look at we are the Immigration country people love, we are loved by foreign millionaires even buying up football clubs the fact is Labour and the Tories love money from these people but what will happen when TATA for example decide that maybe Jaguar or Land Rover or Steel would be better made in a country which has cheaper labour prices. Today TATA has cut 500 jobs in the UK but no cuts in the steel industry in India.
It’s been one hell of a mess we are selling off Royal mail soon and somebody will buy it abuse it and then flog it off after they have asset stripped it.
Tories and Labour will say it will be a benefits to the public, as for labour nationalizing anything you give Miliband and his minister heart attacks.
I have to smile at MIliband cap on energy prices he was the minister when prices went up one year by 30% what did labour do about it sod all.
Now he’s going to cap it capping seem to be the new vote winning but then telling us they will do something about it but what well that it’s really nothing.
I think caps are supposed to make us all happy of course once the cap is over the prices will go up and up and we will have new highs, but Miliband of course hopes to be in charge by then.
Agree it seems all UK companies of a certain size perhaps FTSE 100 are foreign owned (and probably more) but does this make a difference to how successful they might be? I think overall it adds more to the UK economy than not. Unfortunately it seems they pay very little UK tax…
means a lot if you end up with more steel making plants in India and less in the UK or they decide that building new factories and removing them from the UK would be cheaper.It was not to long ago some bright spark thought moving MUFC to Asia would be a better deal and make more money.