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Nick Clegg calls for public to get shares in bailed-out banks

Deputy prime minister proposes plan to create 46 million shareholders and allow collective ownership of banks

 

A giveaway of government-owned shares in RBS and Lloyds, worth hundreds of pounds to British taxpayers, is being proposed by the deputy prime minister.

 

Nick Clegg has set out his plan in a letter to the chancellor, George Osborne, in which he says such a move would create 46 million shareholders and allow a form of collective ownership of the banks.

 

Previous sell-offs of shares in state utilities attempted by the Thatcher administration were derided as gimmicks or short-term tax giveaways since the mass of shares were either immediately sold on or resold to the big pension funds within two years.

 

Conservatives are likely to argue that denationalisation of the banks, brought into semi-public ownership in the years following the banking crash in 2007, should either be used to reduce the deficit, provide tax breaks or even restore public spending. In practice, the shares are not likely to be sold in the short term since the banks' share prices have not yet recovered and they are not ready for sale.

 

Speaking during a trade mission to Brazil accompanied by an array of cabinet ministers, Clegg said: "Psychologically it is immensely important that the British public feel they have not been overlooked or ignored. Their money has been used to the tune of billions and billions and billions to keep the British banking system on life support and they have absolutely no say at all in what happens when normality is restored."

 

Critics will contend that people will have no more say if they own a tiny individual shareholding than if the government collectively owns a larger share. But Clegg claimed his plan would reduce public mistrust in the financial sector.

 

The mass distribution of shares could mean that everyone on the electoral roll or on the national insurance register would receive an estimated 1,450 shares in RBS and 450 shares in Lloyds. Such parcels would be worth £770 on the basis of current share prices.

 

The Treasury under George Osborne has not yet opposed such a plan, but might be critical if such a move meant its overriding plans to eradicate the deficit in this parliament were undermined.

 

RBS shares closed yesterday at 36.65p. The break-even price – in terms of the original purchase price for the government – is 50.4p. Lloyds shares were at 47p; the break-even price is 73p. No government would countenance selling the shares until they had reached the break-even price unless under huge pressure from banking management.

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The part in bold says it all... It's another gimmick if you ask me, all the privatisations of public utilities did was to sell off national assets to foreign investors, and now we're left with a legacy of being screwed by massive increases to energy bills every year that go way above the rate of inflation, while pretending that "competition" was being injected into the system... Really? Well, when was the last time you tried to switch water suppliers and I think we all know that when one energy company puts up prices the others follow suit... Not exactly "under-cutting" the competition is it..?

 

I mean, yeah, this sounds all nice and shiny and everything, BUT, personally, I think I would rather they ploughed the proceeds directly into plugging the Deficit... I mean, seeing as how the Deficit is allegedly this "big problem" and everything and is continually used as the caveat for public sector cuts... I think most people would feel less "ignored", Mr Clegg, if you took affirmative action in this instance to prevent cutting public services to the bone instead of just trying to buy everyone off with a few hundred quid.... Oh, but I forget most people in this country are Tabloid-reading Sheep who will likely fall for this hook, line and sinker just as they did when the Building Societies bought off their investors for a few grand... And look how well that turned out.....

 

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It all sounds very attractive in theory but, as you say, the money would be better spent in reducing the deficit. After all that is supposed to be the priority. It would be all very well if most people were likely to spend their windfall in the UK to give the economy a boost but the likelihood is that it will be spent on a short break overseas or on foreign-made electrical goods.
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It all sounds very attractive in theory but, as you say, the money would be better spent in reducing the deficit. After all that is supposed to be the priority. It would be all very well if most people were likely to spend their windfall in the UK to give the economy a boost but the likelihood is that it will be spent on a short break overseas or on foreign-made electrical goods.

 

On slightly closer inspection, the taxpayer would only actually make pennies in the pound from any sale, the lion's share goes back to the Treasury, so I fail to see how this would actually help anyone... So, any boost to the economy is likely going to be pretty insignificant....

 

My grandad got a letter this morning asking if he wanted to buy New Option Shares in Halifax for EUR0.10 this morning, so it looks like other banks are attempting to get in on this as well. The only problem there is, my grandad died last July.

 

*edit* Halifax are owned by the Bank of Scotland, didn't realise that.

Edited by Brett-Butler

Yes, the taxpayer would only make a significant amount if the share price rose significantly above the price the government initially paid for the shares. That's fair enough but the share price isn't going to get to that point any time soon.

There is one significant advantage to this plan. One of the problems the government faces is deciding how many of its shares to place on the market at any one time. If they put too many on the market that could cause a sharp fall in the price as supply outstrips demand. If all the shares are handed to individuals they will be sold off over a period of many years.

 

The downside is that the government will have to wait a very long time to get its money back. It could also prove very difficult to administer. However I do think it is an idea worth exploring.

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There is one significant advantage to this plan. One of the problems the government faces is deciding how many of its shares to place on the market at any one time. If they put too many on the market that could cause a sharp fall in the price as supply outstrips demand. If all the shares are handed to individuals they will be sold off over a period of many years.

 

The downside is that the government will have to wait a very long time to get its money back. It could also prove very difficult to administer. However I do think it is an idea worth exploring.

 

So, they do it in increments over a period of time if that's likely to be an issue...

 

I still say it's a gimmick and likely to be used as a tool to get us all believing that the banking institutions are all "nice and fluffy" and make us all forget how much they dry-humped us, the Greeks, the Spanish, the Irish, the Icelanders and the Portuguese....

So, they do it in increments over a period of time if that's likely to be an issue...

 

I still say it's a gimmick and likely to be used as a tool to get us all believing that the banking institutions are all "nice and fluffy" and make us all forget how much they dry-humped us, the Greeks, the Spanish, the Irish, the Icelanders and the Portuguese....

I'm sure they would do it in instalments but they've still got to make sure they get the size of the instalments right.

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My grandad got a letter this morning asking if he wanted to buy New Option Shares in Halifax for EUR0.10 this morning, so it looks like other banks are attempting to get in on this as well. The only problem there is, my grandad died last July.

 

*edit* Halifax are owned by the Bank of Scotland, didn't realise that.

 

It was Royal Bank of Scotland that got bailed out, so, your point still applies...

 

It was Royal Bank of Scotland that got bailed out, so, your point still applies...

But Halifax became HBOS and is now part of Lloyds - the Lloyds that was bailed out by the taxpayer.

I actually would like Shares in the banks. I'd hold on to them for quite a number of years until they reach the point where they are actually worth something :heehee:
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I actually would like Shares in the banks. I'd hold on to them for quite a number of years until they reach the point where they are actually worth something :heehee:

 

What, maybe 10p each.....? :P :lol:

 

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