by Stephen Tall on June 25, 2011
Nick Clegg’s very public call for the British public to be given shares in the bailed-out banks — creating 46 million shareholders and allowing collective ownership of banks — has garnered acres of coverage the past couple of days.
It’s three months since Lib Dem MP Stephen Williams first proposed the privatisation of its 83% stake in RBS and 41% in Lloyds by distributing shares to the public. Here’s what my co-editor Mark Pack said about the idea at the time:
Giving everyone shares in the banks: Stephen Williams’s proposals examined (7th March, 2011)
Stephen Williams’s plan is to give shares owned by the government in the banks to everyone on the electoral register. A floor would be set so the shares could not be sold until they had passed the price paid by the government and individuals would only keep any gains made above that floor price. In other words, as the shares rise in price and get sold the government gets back the funds it put into the banks and, if the banks do well, the public gets to profit from that. … there are plenty of questions that the scheme raises, but as this is a proposal designed to help set the political agenda rather than a finely worked out imminent piece of legislation, that is as much a compliment as anything else. It’s a good contribution to the debate. The Facebook page to support this proposal is at www.facebook.com/supportpublicshares.
Toby Fenwick of Portman Capital Partners LLP explained the technical aspects of the scheme further here:
The proposal to distribute the shares to the UK people is innovative, and as the British people will participate without having to provide cash up front, it has fairness at its core. Over time, the scheme is likely to deliver a profit for recipients, over and above the repayment of the £66bn that was spent to rescue the banks in the first place. The press has understandably been focussing on the individual’s profit, with some critics suggesting that the Government should simply sell the stakes to fund additional debt reduction, tax cuts or additional public spending. This is based on the assumption that the amount of money generated by the share sales would be equal under both scenarios. We think this is inaccurate. We believe the act of distributing the shares will significantly increase the total receipts to the taxpayer.
It’s been quite amusing to see the Cleggphobic right-wing press work out how to attack the Lib Dem leader without appearing to be wanting to deprive their readers of the shares the taxpayer has paid for.
The Guardian has had fewer compunctions in dismissing the idea out-of-hand, instead advocating that the state ‘hold on to these banks and use them to foster a sustainable recovery’: because of course governments can be trusted so much better than individuals. Though even the Grauniad has hedged its bets by opening a poll to ask readers whether they back the plan: so far, there’s a slim 53%-47% majority in favour.
What do Voice readers think of the propoal to give away shares in the state-owned banks? Feel free to show your working in the comments thread, below…