Clegg calls for bank shares for taxpayers
DEPUTY Prime Minister Nick Clegg has given his backing to a scheme that would see Lloyds and RBS re-privatised by handing their shares to taxpayers.
Speaking during a trade mission to Rio de Janeiro, Clegg said that doling out the shares to the public would help to placate anger about bank bailouts.
“It is psychologically immensely important that the British public feel they have not just been overlooked and ignored,” he said. “Their money has been used to the tune of billions and billions and billions to keep the British banking system on a life-support system.”
Clegg says he has written to the Treasury to support the plan to hand its 83 per cent stake in RBS and its 41 per cent stake in Lloyds to taxpayers, who would pay back a “floor price” once they sold the shares on.
The floor price would be set at a break-even level to ensure that the state was not left more indebted after using £66bn to bail out the banks during the crisis. Any profits from selling the shares would go to taxpayers.
Clegg’s support raises the profile of the plan and could put pressure on the Treasury to seriously consider it.
Although it is understood that the Treasury has given positive feedback on the plan, it could prove reluctant to follow through on it because it would force the government to give up any potential profits on its rescue of the banks.
The scheme was put together by Portman Capital on the back of a speech by Lord Saatchi, chair of the Centre for Policy Studies.
Michael O’Connor, a partner at Portman Capital who worked out the details of the plan, says that one of its main benefits is that it rids the shares of their “structural overhang”, which depresses their price every time there is a rumour that the government could be preparing to sell a tranche of its holdings. He claims it could be executed for a cost of £250m.