Tories bank shares sell off criticised

Monday, 22 February 2010 12:44

By myfinances.co.uk staff

The Conservative Party's proposals to sell off bailed out banks to the public at a discount have been criticised for being ill conceived, while the Tories were also accused of electioneering.

Shadow chancellor George Osborne said he hoped to use the example of the Conservative government's sell off of nationalised companies in the 1980s as the model to dispose of the government's £70 billion stake in Royal Bank of Scotland and Lloyds Banking Group.

The Tories hope a populist share sell-off will breathe life into an election campaign where all parties admit tax breaks are not likely in the forseeable future.

The public would be offered the chance to buy up to a few thousand pounds worth of shares at a discounted rate. Further discounts could be offered to the poor, the young and parents investing for their children.

The share purchases could be handled through the government's existing Isa saving scheme, making any profits tax-free.

"The bankers have had their bonuses," said Mr Osborne. "We want a people's bank bonus for the people's money that was put into these organisations.

"All individuals in our society will have a chance to own some shares in the future of these banks."

But critics said it might be several years before RBS and Lloyds were ready for sale because both are still losing billions.

They also pointed out that shares in both were already available on the open market at a 30% discount to the price paid by the government when it rescued them.

Liberal Democrat Treasury spokesman Vince Cable said the plan represented ""Dangling this prospect. is Tory electioneering at its most cynical.

"They have no understanding of the economy they are aspiring to run.

"Actively encouraging people on very low incomes to invest in a volatile share market beggars belief and shows just how removed the Tories are from everyday reality.

"A young couple on low income is more concerned with putting food on the table than speculating on the stock market."

Details of how the share sell off would work in practice are also unclear. The Conservatives were unable to say whether they would simply sell off the taxpayer owned part of the banks or issue more shares.

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