Clegg’s share plan just doesn’t stack up
On the face of it, Nick Clegg’s idea for everyone on the National Insurance register to receive shares in RBS and Lloyds, is a good one. The government owns 83% of RBS and 41% of Lloyds. Why not allow those who invested in these failing institutions a piece of the action?
As soon as you examine the idea you realise the folly. First of all, if shares were to be handed out, we would not receive any benefit until the government had received a return on its investment. Second how would you distribute those shares?
It would need some kind of mega IT project. And let’s face it; the government doesn’t have the best track record in this arena.
Just look at the Olympic Ticket fiasco and multiply that by ten! Then there’s the argument of “fairness” over which Nick Clegg is so keen to argue. What’s fair about giving shares to everyone? Just because the government acted on our behalf, that doesn’t mean we are all in this together.
Surely those who pay most tax should receive most shares? What about the shareholders (particularly in Lloyds) who, as a result of the previous government’s actions, got a pasting?
What about the employees who are working very hard to ensure these two banks get back on their feet? What about the customers who are facing higher charges and in some areas lower levels of service as a result of the bailouts?
In effect, if the government were to do some kind of deep discount to inject more capital into the banks with some kind of secondary share sell-off, that might make sense. I am all for wider share ownership but not if it takes the form of an expensive and somewhat hollow political gesture.
As soon as you start to unravel this proposal, the more ludicrous it becomes. Expensive, unmanageable, tax inefficient, unfair and as a result of it all, would we be any better off? Probably not.