Nick Clegg’s call for taxpayers to be given shares in the nationalised banks has been welcomed by the think-tanks that proposed the plan.
The deputy prime minister has written to Chancellor George Osborne in support of the proposal for each person on the electoral roll to be given free shares in the two banks bailed out by the government in 2008, Royal Bank of Scotland and Lloyds Banking Group.
The idea for ‘people’s shareholdings’ was developed by both Centre Forum and the Centre for Policy Studies, with financial advisers Portman Capital. Under the plan, the government’s holdings in the banks would be distributed to the public, and the Treasury would get its money back through a fixed amount paid when the shares are sold.
Clegg said it was ‘psychologically immensely important’ that people didn’t feel ‘overlooked and ignored’ after the government invested £65.8bn to take control of 83% of RBS and 41% of Lloyds. ‘Their money has been used to the tune of billions to keep the British banking system on a life-support machine and they [currently] have absolutely no say at all in what happens when normality is restored,’ he said.
‘You are giving the Treasury an assurance that they will break even but you are not giving the Treasury the freedom to grab the windfall if there is one.’
Centre Forum said in March that individuals would be able to sell their shares when they exceeded a set value, with this ‘floor price’ payable to the Treasury to recoup the cost of the bank bailout. The government's break-even price is around 51p for RBS shares, and 74p for Lloyds.
Chief executive Chris Nicholson said: ‘This plan will ensure that everyone has the chance to benefit from the taxpayers' investment in the banks. It would show what good capitalism looks like.’
The CPS proposal, published in May, argues that the size of the government's shareholdings in Lloyds Group and RBS make a conventional share sale impossible at a price that represents value for money, and therefore a large-scale distribution is the best way of getting the Treasury's money back.
Tim Knox, the acting director of the Centre for Policy Studies, said that Clegg’s move was ‘most welcome’ and represented ‘the best economic solution to a financial problem’.
