Clegg urges Treasury to hand taxpayers sell-off windfall
Every adult in Britain could be handed free bank shares worth ?1,000 when nationalised institutions are sold off.
Under the unprecedented give-away, the Government would hand over its stakes in Royal Bank of Scotland and Lloyds Banking Group to 46million voters.
The introduction of a ?People?s Banking System? would be the biggest distribution of shares since Margaret Thatcher sold off Britain?s nationalised industries in the 1980s.
Nick Clegg is currently in Rio de Janeiro where he visited a slum in the Prazeres district of the city
Deputy Prime Minister Nick Clegg has written to the Treasury asking them to look at the proposal ? which is also being backed by senior Conservatives.
Championing the move, Mr Clegg yesterday said it was right the public should enjoy the benefits of potential windfall profits when the banks are sold off.
He said during a trade mission to Brazil the ?imaginative and innovative? scheme would give the public a personal stake in the reprivatised banks.
The taxpayer owns 84 per cent of RBS and 43 per cent of Lloyds after pumping ?67billion into the lenders during the banking crisis of 2008.
As of yesterday?s closing prices, the value of the taxpayer?s investment was down by around ?11.9billion. Lloyds closed at 47p a share and RBS at 38.65p.
Under the plan, each UK citizen could receive about 1,450 shares in RBS and 440 in Lloyds ? worth up to ?1,000 at current market prices ? which would be deposited in individual trading accounts.
Each person in the UK could receive 440 shares in Lloyds TSB and 1,450 in RBS
A ?floor price? for the free shares would be set. This is likely to be in the region of 74p for Lloyds stock and 51p for RBS stock ? the level at which the government bail-out money was injected.
Individuals would only keep any gains made above that floor price.
Put simply, if the shares rose in value to ?1,500 and they decided to cash in, each taxpayer would make a ?500 profit after ?1,000 goes back to the Treasury.
David Cameron has previously said he supports the idea of ?widening share ownership? and has promised to ?look carefully? at the scheme.
Before last year?s general election, George Osborne floated the idea of selling off shares at a discounted price.
George Osborne said the 'people's bonus' plan would boost share ownership
The Chancellor said the ?people?s bonus? plan would boost share ownership and give taxpayers the chance to make a return on their forced investment in the banks.
At the time, the idea was knocked down by the Liberal Democrats.
The Government has said it aims to return the banks to private ownership but has not set out how it will do so, or when.
Most analysts had assumed it will sell its shares on the open market or to institutional investors such as sovereign wealth funds.
Mr Osborne has been privately banking on a windfall from the bank sell-off to fund vote-winning tax cuts in the run up to the 2015 general election.
But Mr Clegg 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.
?Psychologically, it is immensely important that the British public feel they have not just been overlooked and ignored.
?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.?
Both banks are trading well below the Government?s break-even price and any sell-off is likely to be some time away.
Critics are likely to point out that the scheme will be costly to administer and too complex for ordinary people to understand.
Mr Clegg?s decision to publicly push the idea of distributing shares to voters is his latest attempt to regain authority on the Coalition Government.
Bright idea that could go so wrong
Payback: Every adult could make money on shares, but will it work?
The idea of returning the bail-out cash for Royal Bank of Scotland and Lloyds Banking Group directly to taxpayers will no doubt have tremendous populist appeal.
But it is unlikely to please the Chancellor George Osborne and could meet fierce resistance in the City of London.
The biggest problem for the Chancellor is that he had been counting on the proceeds of a City flotation of the shares to help reduce Britain?s borrowing needs and perhaps create a ?windfall? which could be used to cut taxes ahead of the next election.
Under the proposed plan there would be far less certainty as to when the Government might collect its share of the proceeds.
Perhaps even more significantly for Whitehall ? which has such huge problems with its computer systems ? it could be an administrative nightmare.
Opening and managing share accounts for more than 46million would not only be expensive ? it could go horribly wrong.
It might also mean that foreign residents working here at present ? nine out of ten new jobs are estimated to have gone to non-British nationals ? would benefit from a windfall when they may not even have been in the country in the autumn of 2008 when the banks were recapitalised.
The biggest objection would almost certainly come from the Square Mile. If the Government runs the process, City firms could be deprived of fees which could total as much as ?1billion.
More importantly it would create banks with an uncertain hybrid ownership. Instead of governance resting with the large investment institutions such as pensions funds and insurers, it would largely remain with the Government.
The big institutions which contributed to big ?recapitalisation? issues of bank shares in the run up and immediately after the crisis would almost certainly feel they had been circumvented and might seek a legal challenge.
However disapproving one may be of the banks, the ?populist? route to distributing shares to all would mean the dead hand of Whitehall would remain on their shoulders.
It is only by cutting the banks loose ? with better regulation ? that one could expect them to fully return to the markets and propel business and enterprise forward.
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Nick Clegg urges Treasury to hand taxpayers sell-off bank shares | Mail Online
Every adult in Britain could be handed free bank shares worth ?1,000 when nationalised institutions are sold off.
Under the unprecedented give-away, the Government would hand over its stakes in Royal Bank of Scotland and Lloyds Banking Group to 46million voters.
The introduction of a ?People?s Banking System? would be the biggest distribution of shares since Margaret Thatcher sold off Britain?s nationalised industries in the 1980s.
Nick Clegg is currently in Rio de Janeiro where he visited a slum in the Prazeres district of the cityDeputy Prime Minister Nick Clegg has written to the Treasury asking them to look at the proposal ? which is also being backed by senior Conservatives.
Championing the move, Mr Clegg yesterday said it was right the public should enjoy the benefits of potential windfall profits when the banks are sold off.
He said during a trade mission to Brazil the ?imaginative and innovative? scheme would give the public a personal stake in the reprivatised banks.
The taxpayer owns 84 per cent of RBS and 43 per cent of Lloyds after pumping ?67billion into the lenders during the banking crisis of 2008.
As of yesterday?s closing prices, the value of the taxpayer?s investment was down by around ?11.9billion. Lloyds closed at 47p a share and RBS at 38.65p.
Under the plan, each UK citizen could receive about 1,450 shares in RBS and 440 in Lloyds ? worth up to ?1,000 at current market prices ? which would be deposited in individual trading accounts.
Each person in the UK could receive 440 shares in Lloyds TSB and 1,450 in RBSA ?floor price? for the free shares would be set. This is likely to be in the region of 74p for Lloyds stock and 51p for RBS stock ? the level at which the government bail-out money was injected.
Individuals would only keep any gains made above that floor price.
Put simply, if the shares rose in value to ?1,500 and they decided to cash in, each taxpayer would make a ?500 profit after ?1,000 goes back to the Treasury.
David Cameron has previously said he supports the idea of ?widening share ownership? and has promised to ?look carefully? at the scheme.
Before last year?s general election, George Osborne floated the idea of selling off shares at a discounted price.
George Osborne said the 'people's bonus' plan would boost share ownershipThe Chancellor said the ?people?s bonus? plan would boost share ownership and give taxpayers the chance to make a return on their forced investment in the banks.
At the time, the idea was knocked down by the Liberal Democrats.
The Government has said it aims to return the banks to private ownership but has not set out how it will do so, or when.
Most analysts had assumed it will sell its shares on the open market or to institutional investors such as sovereign wealth funds.
Mr Osborne has been privately banking on a windfall from the bank sell-off to fund vote-winning tax cuts in the run up to the 2015 general election.
But Mr Clegg 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.
?Psychologically, it is immensely important that the British public feel they have not just been overlooked and ignored.
?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.?
Both banks are trading well below the Government?s break-even price and any sell-off is likely to be some time away.
Critics are likely to point out that the scheme will be costly to administer and too complex for ordinary people to understand.
Mr Clegg?s decision to publicly push the idea of distributing shares to voters is his latest attempt to regain authority on the Coalition Government.
Bright idea that could go so wrong
Payback: Every adult could make money on shares, but will it work?The idea of returning the bail-out cash for Royal Bank of Scotland and Lloyds Banking Group directly to taxpayers will no doubt have tremendous populist appeal.
But it is unlikely to please the Chancellor George Osborne and could meet fierce resistance in the City of London.
The biggest problem for the Chancellor is that he had been counting on the proceeds of a City flotation of the shares to help reduce Britain?s borrowing needs and perhaps create a ?windfall? which could be used to cut taxes ahead of the next election.
Under the proposed plan there would be far less certainty as to when the Government might collect its share of the proceeds.
Perhaps even more significantly for Whitehall ? which has such huge problems with its computer systems ? it could be an administrative nightmare.
Opening and managing share accounts for more than 46million would not only be expensive ? it could go horribly wrong.
It might also mean that foreign residents working here at present ? nine out of ten new jobs are estimated to have gone to non-British nationals ? would benefit from a windfall when they may not even have been in the country in the autumn of 2008 when the banks were recapitalised.
The biggest objection would almost certainly come from the Square Mile. If the Government runs the process, City firms could be deprived of fees which could total as much as ?1billion.
More importantly it would create banks with an uncertain hybrid ownership. Instead of governance resting with the large investment institutions such as pensions funds and insurers, it would largely remain with the Government.
The big institutions which contributed to big ?recapitalisation? issues of bank shares in the run up and immediately after the crisis would almost certainly feel they had been circumvented and might seek a legal challenge.
However disapproving one may be of the banks, the ?populist? route to distributing shares to all would mean the dead hand of Whitehall would remain on their shoulders.
It is only by cutting the banks loose ? with better regulation ? that one could expect them to fully return to the markets and propel business and enterprise forward.
----------------------------------------------------
Nick Clegg urges Treasury to hand taxpayers sell-off bank shares | Mail Online
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