Osborne"s Fruity Idea - Selling Shares in Recently Nationalised Banks
Shadow Chancellor George Osborne has made an unpopular proposition - to sell state-owned HBOS/Lloyds shares at discount rates to the public. In an idea reminiscent of the Thatcherite privatisation of Britain in the 1980s when British Gas was sold off. Osborne said the cheap sell-off would be a reward for the 850 billion pounds of taxpayer's money which was used to prop up the failing financial institutions.
Business secretary Lord Mandelson dismissed the proposition as "headline-grabbing incoherence" insisting that it would not be in taxpayer's interest to reduce the amount of funds which can be generated from the public investment.
Liberal Democray treasury spokesman Vince Cable was similarly dismissive of the proposal, arguing it would be impossible for five to ten years, and echoed Mandelson's concerns that it represented very poor value for the taxpayer who bailed these banks out.
Osborne is proposing offering extra discounts to young people and those on low incomes, and coined it the "people's bank bonus". He says it is a "golden opportunity to start building a savings society so that more people have a stake in the future of our economy. I particularly want to help those on lower incomes and younger people."
The idea is bound to infuriate millions of private Lloyds and HBOS shareholders who lost a large proportion of their investments thanks to the global economic downturn and the forced merger and bailout.
Lloyds Bank shareholders have the right to feel particularly hard done-by, as the forced merger of Lloyds and HBOS was arguably completely unnecessary, and stock in Lloyds fell as a result of the joining. Both bank's shares plummeted as a result and arguably the government could have offered the same protection by simple nationalising HBOS without dragging down stock in Lloyds too.
Lord Mandelson also called the proposal a "silly little gimmick" and many commentators and journalists have suggested that the proposal was half-baked, opportunistic and completely unrealistic.
Somewhat obviously, as the banks are now largely publicly-owned, the stock needs to be sold when the shares reach a good price - to get the best return on investment for taxpayers. Selling them now at rock-bottom prices would simply allow many private investors to make a small fortune on taxpayer's investment.
Vince Cable seems to understand this, saying 'the nationalised and semi-nationalised banks should be reprivatised when the conditions are right to maximise taxpayer return. Selling shares off at a discounted rate will not achieve this.'
Business secretary Lord Mandelson dismissed the proposition as "headline-grabbing incoherence" insisting that it would not be in taxpayer's interest to reduce the amount of funds which can be generated from the public investment.
Liberal Democray treasury spokesman Vince Cable was similarly dismissive of the proposal, arguing it would be impossible for five to ten years, and echoed Mandelson's concerns that it represented very poor value for the taxpayer who bailed these banks out.
Osborne is proposing offering extra discounts to young people and those on low incomes, and coined it the "people's bank bonus". He says it is a "golden opportunity to start building a savings society so that more people have a stake in the future of our economy. I particularly want to help those on lower incomes and younger people."
The idea is bound to infuriate millions of private Lloyds and HBOS shareholders who lost a large proportion of their investments thanks to the global economic downturn and the forced merger and bailout.
Lloyds Bank shareholders have the right to feel particularly hard done-by, as the forced merger of Lloyds and HBOS was arguably completely unnecessary, and stock in Lloyds fell as a result of the joining. Both bank's shares plummeted as a result and arguably the government could have offered the same protection by simple nationalising HBOS without dragging down stock in Lloyds too.
Lord Mandelson also called the proposal a "silly little gimmick" and many commentators and journalists have suggested that the proposal was half-baked, opportunistic and completely unrealistic.
Somewhat obviously, as the banks are now largely publicly-owned, the stock needs to be sold when the shares reach a good price - to get the best return on investment for taxpayers. Selling them now at rock-bottom prices would simply allow many private investors to make a small fortune on taxpayer's investment.
Vince Cable seems to understand this, saying 'the nationalised and semi-nationalised banks should be reprivatised when the conditions are right to maximise taxpayer return. Selling shares off at a discounted rate will not achieve this.'
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