Today I launched my proposals for the distribution of shares in the state owned banks to the public. Since the government stepped in to save Royal Bank of Scotland and Lloyds Banking Group in 2008 the Treasury has owned about 118 billion shares in the companies. They cost us all about £66 billion to acquire and at some point the government will want to recover the money.
When the banks are stable and trading at a full profit (both have just reported operating profits) the Treasury is likely to return them to the private sector. Everyone is expecting a conventional privatisation or even sales to sovereign wealth funds of other countries. That would get back the £66 billion but the public would see no future benefit.
My proposal is much more radical. It would enable the Treasury to recover its debt AND for the public to enjoy the future growth in value of the companies. I propose that the Treasury transfer ownership of the shares to every UK adult citizen. That’s roughly the 46 million people aged 18 and over who are eligible to vote. If people want to sell their shares they would have to give back the acquisition cost (51p per share for RBS, 74p for Lloyds) to the Treasury but any proceeds above that would be theirs to keep. In the meantime of course they would be entitled to dividend income and votes as shareholders.
I’ve launched these proposals as Co Chair of the Lib Dem Parliamentary Committees on Treasury and Business. The next step is to have formal discussions with my Coalition government ministerial colleagues. I’m grateful to Portman Capital for technical advice and for the think tank Centre Forum for publishing the pamphlet. You can read it here and let me know what you think!