Are Tory bank ownership plans a gimmick?

Yet again, the Tories selling instead of improving and they are not even in government yet. The sale of all things to the private sector is the reason why we no longer have industry/skilled jobs in this country.

A positive move but I can't think that many 'small investors' will benefit significantly in the short term, from such a proposal, in practice.

Either the shares have to be rationed to protect small investors and/or the remaining shares would be as always, available in the market.

Well let's hope that there is something to replace the FSA or we may get another mis-selling scandal, if the stock market does not recover to give sufficient short/emdium term return. Some may try and buy for a fast buck - but the returns many not be there.

Apart from those that are already buying shares how many new small investors will enter the market for share buying in the middle of a recssion when 80% of the population are somehow worse off that they were in 1997 - Who else has the spare cash to buy shares when few even save or have a proper pension?

Stakeholdership is the key word - Much better, I think to award, shares for 'loyalty' over the medium term - say 5 years with options to purchase at a discount after a qualifying period?

The bbc's usual irresponsible news reporting on television.
Any fool would know that Labour also will sell the bank shares but at a time when maximum value can be gained for the taxpayer.
The Conservative promise to sell them at a discount is the most blatant, cheap, obvious election gambit, that the bbc should have pointed out clearly in all its t.v, radio and web news reports

Why am I expected to buy something I already own?

It is the privatisation scenario all over again which was not a case of `Tell Sid' but more a case of stuffing Sid by getting him to buy what he already possesses.

What is needed is that the shares are distributed to the taxpayers on a free of charge basis. Most will sell their holding whilst others will buy more.

The proposal is a gimmick out of the Great Tory Book of Dogma in which we all get stinking rich so that something trickles down on the poor. It is about as naive as the Great Labour Book of Dogma in which nationalisation means that the people own their industry.

What is needed is workers' control and loyalty to the customer base. These are concepts wholly alien to the modern British which is really odd as they are concepts the British helped to pioneer.

Robert,

Surely RBS share prices at 30p-50p is still 'bouncing along the bottom'? Is it now common knowledge, that there is no chance they will ever reach their pre-crises high... ever?

Or is it politicians can't plan beyond 5 years?

"helped if more of us had a direct stake in our productive enterprises"

You are correct...it would help...if only these organisations were productive. I have worked for the last 20 years in almost all FTSE100 companies as a consultant...and I am yet to see a productive enterprise.
I would'nt in my wildest dreams ever invest in a FTSE100 company...they are all essentially broke and unproductive...does'nt the stock market indices point you to anything? in the last 15 years people have made a big zero from investing in these so called productive enterprises....

A nation only benefits by people investing in there own small businesses and not by investing in other's businesses...nobody earns money for anybody else...

credit contraction is here to stay and will bring housing and the markets to levels even the most pessimistic bears could only dream of. blair and brown have been a disaster for this once great country but the worrying thing is cameron and osbourne could be worse. they wont need to worry about the share give away for years to come so the idea is only a pre election gimmick.

As Robert says...
"....there has been a collapse in individual ownership of shares".
No surprise at all.
The whole concept of share-ownership by individuals has been undermined.
Who are always the biggest losers in these "City events" or "downturns"?...private shareholders, of course.
The City will always have access to "unfavourable information" days, hours or minutes before the private investor.
That is enough to ensure that those fast City boys don't lose....you do.
And much of the private share ownership of the past was "blind faith", by members of the public who believed in the "expertise" of the government and the banks to manage the economy properly....that has been exposed as a myth.
This is a big problem for finance....the public no longer trusts it.
Too many rich bankers and City folk...too many poor ex-private shareholders, pension funds and "blind faith" investors.
The public have had their fingers burned.....these shares better be at "bargain basement" prices, or the public will not want to know.
PERHAPS THE TORIES SHOULD PUT THEM ON SALE IN "POUNDLAND"....
That should do the trick.

Robert

You did once tell us how much we had each invested in RBS & LTSB as taxpayers. So now having relieved me of said sum in tax I am generously being offered the opportunity to buy the damn shares again. So I pay twice for a 10% discount, sounds a great offer !

Give me a tax credit for like amount & I'll agree to buy the shares, otherwise count me out, I'll invest my money in a bank that makes profits i.e. HSBC or Barclays

Cheers

My immediate reaction to the idea was it represented a way of broadening the UK shareholder base. The mechanics could be tricky, but the free distribution to everyone is not the right way - all others things apart, consider the problem of managing the share register. In a sense, the shares are there already, Held by UK.Gov on our behalf; but the current structure is more manageable.

I would welcome any broadening of the UK shareholder base. I believe that the concentration of the holdings is not doing UK plc a lot of good. I still hold a small stake in Eurotunnel which I have had from the start - hobby money that I laid out due to an interest in transport, not for any sake of a return. GET's shareholder base is still wide, with some 18% held by "individuals" (and I suspect that some part of the 42% held by "custodians" represents smaller holdings).

Although it is not the purpose of the stake, GET is the only company where I feel like a SHAREholder - I own a tiny slice, I can vote my tiny slice, my management gets on and runs the company and if they do well I will do well.

In contrast, for all my UK stakes, I feel more like a peasant punter at a very high-rolling roulette wheel. When share prices regularly move 3% or more in a day - many fewer companies than it happens to change that fast - you know it is just the gamblers trying to tilt the wheel in their favour.

Perhaps we need a brand-new exchange for companies that only want real SHAREholders? The listing rules would require that only those on the register could vote; it would take at least seven days to get on the register, and evidence of an actual purchase with money changing hands would be required by the registrars...
... and the exchange would require that all shareholder votes were binding, including the remuneration report.

It wouldn't be right for all companies, but many might benefit.

They will end up selling the share on loss, that's guaranteed. Labour/Tory or Lib Dems it makes no difference.

This bail-out was conspiracy and if any one has any doubts about, they are simply fools.

“The Tories' unmissable offer is to sell them eggs rather more expensively than they can be had for ready money today.”

Well, that’s one way of putting it. Another way would be:

“The Tories' unmissable offer is to sell them eggs at a 10% discount against what they can be had for ready money at the time of sale.”

Not quite as exciting, but rather more accurate.

Re the possibility of selling certain bank shares in "Poundland"....
That may have to be "buy one... get one free".

Interesting comments, Robert, and any criticism of the lack of scale and ambition in ALL the political parties response to the present global meltdown (save for the Lib Dems perhaps) is good in my book. Both Labour and Conservatives still do not seem to "get" the extent of the revolution we need in the "money-changing" industry, to ensure it serves the people and is not its master.

The essential paradox which is the background to this all, though, you have not highlighted.

This is the fact that in the long term we need much more competition and a lot more transparency in banking, meaning that profit levels will be a lot lower, and so share prices will be lower. However in the short term, we want share prices to be higher (.... meaning should we let banks continue to rip off their customers for a while?).

If we had the ethics of a private equity house or an investment bank of course we would persuade the market that it is business as usual... let banks continue ripping off their customers and making enormous amounts of money, then sell our share stakes into this environment, and only once this had been done, turn round and say "right, increased capital requirements, split out the banks from the casinos, a transaction tax" etc etc.

But perhaps this would be irresponsible?!

Which means that the alternative idea of handing out stakes to "all the people" is an interesting one. But how would this be done?.... in proportion to the amount of tax each person paid last year?

PS It's really not surprising individual share ownership has declined, given the way the market has been hijacked by the casino banks, hedgies and interdealers etc via high frequency trading, use of inside information etc.
Simple question.... if the existence of "dark pools" does not indicate that the market is not functioning properly, then what on earth does?

#4. At 11:25am on 22 Feb 2010, stanilic wrote:

“Why am I expected to buy something I already own?”

You own these shares, any many other assets and services, subject to a huge amount of debt that the government has borrowed on our behalf. We need to pay this debt down, which means that somehow money needs to be transferred from us to the government and then to the lenders. We are going to have to pay this money back somehow; it’s just a question of how it is extracted from us by the government.

(Sadly, stopping bonuses in the City, taxing bankers, taxing non-doms, stopping MPs' expenses claims or cutting the salaries of BBC talent isn’t going to do it for us)

HA HA HA HA

It's good to see our next potential Government has got it's head in the clouds already!

So we can't stop bankers bonuses - so the next best thing is we all get paid bonuses

How are we going to finance that? - ah yes, I forgot we're printing money aren't we.

You might get a bonus as a tax payer - but it will be in worthless sterling - you may as well break open the Monopoly set and use the cash in there instead.

The desperation of the parties is becoming absurd.

(I hope this post isn't seen as 'bullying' - I would hate it if a fuss was made about nothing)

Media 0 - Spin Doctors 1

Don't you all feel a bit foolish?

The crisis is showing the major flaws in Government (as expected), but I didn't expect it to show the flaws in modern journalism quite so evidently.

There is no such thing as a free lunch.

If shareholders are going to profit by owning shares it has to come from the pockets of the customers of that business. If you are a small shareholder in a business, which has large shareholders as well, and a customer of that business, your share of the profit as dividends, is likely to be less than your contribution as a customer to that profit. Thus, for example, those who bought shares in BT and kept both the shares and their telephone account with BT are probably net losers.

The only people who made a profit were those who bought their allocation of discounted shares, sold them at a profit while the price was high, and moved their accounts to another telecoms provider, not hampered by the restrictions placed on BT to reduce its competitiveness and allow others into the market.

The same is true of other privatisations and demutualisations. It is amply illustrated by the outcomes of the large scale privatisations in the former communist states. The only people who profited by owning shares in former state enterprises were those who were able to acquire such a large stake that they were more than compensated for their loses as taxpayers and/or customers.

#1. At 11:14am on 22 Feb 2010, suzie127 wrote:

“Yet again, the Tories selling instead of improving and they are not even in government yet.”

All of the Labour Party, the Conservative Party and the Liberal Democratic Party have stated that if they are in government, they will sell these shares at some point.

“The Tories' unmissable offer is to sell them eggs at a 10% discount against what they can be had for ready money at the time of sale.

Not quite as exciting, but rather more accurate."

Isn't it more:

"Sell us eggs we already own at a 10% discount against what they can be had for ready money at the time we bought them in the first place."

?

And why should the public bother with shares anymore?
We can now gamble on the internet, on the TV, as well as at the track or the bookies.
Why do we have to wait five years to lose our money, while making a load of fat-cats fatter, when we can lose it in one afternoon?
Perhaps the City is now "too volatile" for private individual shareholders.
The "raison d'etre" of the City now seems to be self-enrichment, not serving the public.
Capitalism has shot itself in the foot.
Why bother with bank shares?.....stick it all on the 3.30 at Kempton, you'd probably get better odds.

By and large individual shareholders tend to be those with significant savings (no exactly a surprise). Individuals with those sort of savings will have been first putting money into PEPs, ISAs and pension funds because those are tax free. Therefore the comment that individual share ownership has declined may not be true - you have to add back all the "individual" money in PEPs, ISAs and pension funds first.

Small point - but may make a mockery of the article if it turns out that individual share ownership has in fact gone up once these are added back.

The next point is that I think Labour has gone out of its way to reduce individual share ownership through its attack on personal pension schemes. First it takes £5 bn a year from pensions (and has brass faced cheek to argue that does not discourage investment in pensions) and most recently completely revamped pension relief rules to effectively prevent the self employed with variable income investing in pension schemes at all.

For RBS and Lloyds shares to rise to a level Osbourne is willing to sell for will, I suspect take at least 3 years and every time the govt interferes with management decisions at those banks you can add another 3-6 months to that estimate. On that basis it will be a long time before any shares are sold.

When they are sold they are likely to be a good long term investment - TSB was privatised in the early 1980s and was an excellent investment

17. At 12:14pm on 22 Feb 2010, stanblogger

Oh stanblogger - please don't destroy those shareholders dreams.

If you let them into the secret that their dividends are in fact 'paid by themselves' - they will be distraught.

Even if you are not a direct customer of the companies in which you hold shares - you still suffer from increased costs to pay for regulating the markets (who pays for Ofcom?) - which are supposed to work by themselves - and yet in every case require a regulator or a overseer...

RP states

'All that said, the Tories are hoping to make that more serious political point, to which I alluded earlier. Which is that there has been a collapse in individual ownership of shares.

Over the past 20 years, the proportion of the stock market held by individuals has halved to not much more than 10 per cent.

And less than one in five households own shares, down from more than one in four when Labour came to power.

I think most would say that the Labour Government hasn't gone out of its way to undermine individual share ownership - but the trend of declining ownership is striking.'

Is it not the case that as monthly pension contributions at a % of salary have continued over the last 20 years it is almost inevitable that individual share ownership as a % must fall? After all apart from rights issues there are a similar amount of shares available.

Of course the share values increase constantly simply BECAUSE our monthly pension contributions need invested in something and therefore the price has to rise - demand and supply rules.

But unless individuals are buying up shares privately at the same rate as they are making pension contributions then the % is going to fall - and they aren't and they would be crazy if they were because it would be putting eggs into the same basket in two different ways.

As regards whether the Tories will give us shares at 10% discount or not - this is just a none story amongst a multitude of non stories - for example bullying - who cares about these things apart from the media trying to ramp up a story to fill some pages in the papers they sell and the time they have to fill in 24 hour news channels.

I'm having trouble with the this whole concept or 'recapitalisation of the poor'. When did the poor ever have capital? If a government wants to make the poor less poor they need to look at incomes ( low wages, unemployment ) and expenditure ( prices and inflation ). But this would be tinkering with the profits of capitalism and therefore is beyond the pale. Instead, give the poor some money, which they will no doubt 'fritter away; on some bill or other, and then wash your hands of them as being a hopeless case.

We seem stuck with the Victorian concept that the poor are poor because there is something wrong with them. And the rich are well off because they are deserving.

18. At 12:15pm on 22 Feb 2010, Dr Dave wrote:

"All of the Labour Party, the Conservative Party and the Liberal Democratic Party have stated that if they are in government, they will sell these shares at some point."

.....I don't think that's even up to debate - the real debate is whop are you going to sell them too?

RBS share price = 35.49
RBS BReak even = 50p (approx)
Lloyds Share price = 51.68
Lloyds Break even = 75p (approx)

It doesn't look far - but I've been watching these shares bounce around their current price for about 6 months now.

...and don't forget you'll need to issue Northern Bloc shares into a market which has much reduced lending activity and where the appetite for banking investment is at an all time low.

Bad investments - lesson 1 - UK Government 2008

It will be legendary in future Economic textbooks.

4. At 11:25am on 22 Feb 2010, stanilic wrote:
Why am I expected to buy something I already own?

It is the privatisation scenario all over again which was not a case of `Tell Sid' but more a case of stuffing Sid by getting him to buy what he already possesses.

What is needed is that the shares are distributed to the taxpayers on a free of charge basis. Most will sell their holding whilst others will buy more.

The proposal is a gimmick out of the Great Tory Book of Dogma in which we all get stinking rich so that something trickles down on the poor. It is about as naive as the Great Labour Book of Dogma in which nationalisation means that the people own their industry.

What is needed is workers' control and loyalty to the customer base. These are concepts wholly alien to the modern British which is really odd as they are concepts the British helped to pioneer.

Good post this, Many of us had a 'here hang on, don't we already own it moment' with the privatised companies. I do not think the voters will stand for that three card trick again. Ask Sid they told us when they were selling British Gas.....He never did tell us why we were buying what we already owned.

1 Why am I expected to buy something I already own?
You don't have to.
2 Yet again, the Tories selling instead of improving and they are not even in government yet.
The shares will be sold by which ever government is in.

3 Who else has the spare cash to buy shares when few even save or have a proper pension.
A number of people have money in the bank, but not earning any interest, and a number have Issa,s, which I think will buy these shares with.

5 they wont need to worry about the share give away for years to come so the idea is only a pre election gimmick.
They have said in the life time of the next Government, not in the first year.

Doesnt say much about deficit reduction being the be-all and end-all does it? I would rather the shares were sold at their full market price, to reduce the deficit.

#19. At 12:16pm on 22 Feb 2010, allan365 wrote:
"Sell us eggs we already own at a 10% discount against what they can be had for ready money at the time we bought them in the first place."

If I understand you correctly, the suggestion is that there is no distinction between the government and the people in terms of assets owned and liabilities owed.

So - the good news is that you already own all these shares (and lots of other things like hospitals and schools too).

The bad news is that you (personally, along with every other man, woman and child in the country) owe about £13,000 as your share of the government debt.

Of this amount, about £1,600 relates to the financial sector intervention and £11,400 does not.

(Office National Statistics from February 18th 2010 for UK national debt divided by 65m people in the UK)

the scary thing with all this... no more talk about regulations??? Or are they trying to offload those worthless shares before strict regulations finish them off (I am being sarcastic there... I just do not get the motivation/logic behind the idea... If anybody can shed some light on what was their train of thoughts (if any) to conclude it was worth announcing it, I welcome any help!)
Are they trying to sell to Jo public the 'nearly dead' banking gambling model??

On a more constructive note - I rarely see 'short term trading' as being named as a big part of the problem... I always understood the 'market model' was there to facilitate investment in a company... How does 'investing tons of money for a few seconds/minutes/days' in anything facilitate investment in a company/commodity?? All it does to me (if you are big enough) is to distort demand upwards... so they can then sell it in mass shortly after creating then a huge downward pressure (and tons of 'virtual profit' in the mean time). How on earth anybody can still see a link with 'investing in a company'???

I am convinced 'forcing' real investment (ie - if you buy a share, it implies you are gonna keep it for a certain amount of time (1 year?) / you can then sell it / or sign to keep them for another cycle) would really sanitise the whole financial system pretty quickly.

I know this is a big simplification - but short of this 'return to the source' for capitalism, I am afraid we are just tergiversating as the whole thing is soon to fall apart...

“...the trend of declining ownership is striking.

There is an argument...that the heroic task we face to rebuild the international competitiveness of our economy would be helped if more if us had a direct stake in our productive enterprises.”

The most significant reason why most people steer clear of direct investment (other than not having the spare cash) is because the stock market is a mugs game for most individuals.

A lot of the behaviour in share prices is counter-intuitive without a lot of investigation because of the influence of ratings agencies and analysts, shorting, hedging, options and so on.

Indiovidual shareholding is purely a gamble unless you have enough money to invest in a broad range of shares in order to even out risk over time. But then that is what funds are for so no surprise that most people who have the spare cash to actually invest are most likely to have an ISA rather than shares.

In addition, there are less reason to hold shares nowadays.

In the past many companies offered shareholders benefits (little things like 1% reduction on mortgage rate from HBOS if you owned 200 shares, discounted flights from BA etc) but I can’t think of a single FTSE350 company that offers any shareholders benefits any longer.

So where’s the incentive really?

(I do have shares in both RBS and Lloyds but that's because they are a really good long term bet not because I expect any immediate payback.)

To say we've paid for them twice isn't really true except to the extent that we borrowed the money and then ploughed it into the banks. With the deficit being what it is we'll need to sell off the bank stakes sooner or later. Osborne's plan involves selling them at a discount to those that can afford to buy in the first place. Surely it makes more sense for the state to hold them until the maximum value can be achieved which generates the maximum deficit reduction which then benefits all the citizens of the UK rather than just some.

A big factor in the value of the shares is the profits of the banks which are seriously dented by the huge bonuses to bankers. Every GBP1 billion paid over in bonuses is several times that off the value of the state held shares.

"Over the past 20 years, the proportion of the stock market held by individuals has halved to not much more than 10 per cent.

And less than one in five households own shares, down from more than one in four when Labour came to power"

but isn't this a false quoting of statistics - most of us own shares through are pension schemes?

Isn't the real issue the lack of accountablility to me as the investor by the pension fund manangers.

Cadbury's was sold for instance because either Pension Funds sold their shares to Hedge Funds during the bidding process or voted the deal through. From the wider public reaction after the sale if the underlying investors had been casting the vote the future on the company might have been somewhat different.

The wider public seem to have been disenfranchised.

What's the hook for the RBS shares ad campaign going to be, ''Tell Sir Fred'' ?

You would have thought that after the railways and utility companies the Tories would have had enough of privatising essential services with the result that the ordinary person gets ripped off.

#26 AudenGrey,

"What is needed is that the shares are distributed to the taxpayers on a free of charge basis. Most will sell their holding whilst others will buy more."

That is surely the most equitable solution. However, we need to ensure that whichever party is in power, is forced to distribute the shares at a time when it is in the best interest of the taxpayer to take posession and not the banks, the government or potential buyers.

Best to float UKFI actually giving people preferential redeemable shares earning a coupon. Once the Market improves UKFI would start on market sales of the Ordinaries in LBG and RBS and dispose by trade sale it's NR and B&B holdings. This would fund the income and eventual redemption on the 'Free' UKFI investments.

UKFI's PRS would be tradeable and could be used as tokens to limited direct to public sales of the LBG and RBS shares it holds, rather than offering major direct public discount offerings of the group shares directly.

This actually seems pretty simple to me. At the moment, the taxpayer (ie, you and I) own the shares. If the government sell them off at a discount, then the taxpayer gets shafted.

Doesn't seem like a great plan to me.

Well yes! Have money and you will prosper .... a little. How many 'little' investors still exist post 'Thatcher' asset stripping? The main reason the small investor was 'invented' was to absorb the largest share issues ever seen and make people want to vote Tory ..... so gimmicks and bribes ..... they are at it again, any other brilliant ideas, like tax havens for the rich!?

Does the number of owners of a horse entered in the 2:40 at Ascot have any relationship with the chances the horse will win?

1. Put your money on deposit in a bank.
2. Subsidy bank in form or tax credits in order that they can pay low wages thus creating a profit
3. Banks get in trouble so you hand over more cash to help them survive via future taxes, lose your job, house etc and rebuild your life
5. Continue with paying welfare to the bank in form of subsidising staff on low wages via taxes.
5. Buy shares in said bank thus handing over money you've earned at a new lower-paying job!

Does that sound in any way rational?

The Tories are signalling their intent should they win the election. They will continue selling to you the things you all ready own.
What will be next? Would they dare? Probably.

What worrys me is that this time last year they were saying there was a need to break up Lloyds Group into smaller components when millions of pounds were already committed to integration of HBOS and LTSB
It may or may not be a gimmick but it is the consistency of their arguements which is worrying!
The shareprice is not likely to recover until the banks are returned to private ownership and that is scheduled to take 5 years. Can't see people buying into this when they are more likely to be servicing their debts with banks

Oh come now Robert.

It's unfair to say this is a 10% discount in the future from something that can be had at a 30% discount now. It's about risk. A 10% discount on an established market price if recovery is reasonably well established against a punt against the market now.

The idea that bonuses cost us net money at multiples of the bonus amount, which other posters have suggested, is equally silly. Let's recognize envy for what it is. If we believe the banks are making excess profits with downside risk, then the sensible thing to do is not to complain about it but to participate.

And we participate how?

By owning shares.

And what are the Conservatives offering us again?

Look, this is outright fraud and they should all be jailed, probably for life so they can't ever get their hands on the wheel again. They've already bankrupted the state anyhow. These bank shares have been bought with the MONEY OF THE TAXPAYERS - and now they're meant to pay once more fr them? And that's called a discount? Why, Russia privatised the "public" enterprises by giving every citizen their share FOR FREE!

31. At 1:01pm on 22 Feb 2010, AgeTheGod wrote:

"The most significant reason why most people steer clear of direct investment (other than not having the spare cash) is because the stock market is a mugs game for most individuals. "

I must make a slight correction:


"The most significant reason why most people steer clear of direct investment (other than not having the spare cash) is because the stock market is a mugs game for allindividuals. "

Those who think they're winners - are merely kidding themselves in a show of arrogance over intelligence. For anyone with an ounce of sense can see that success in the Capitalist world has nothing to with skill or talent, but all to do with GREED.

I would advise everyone steers clear of the stock market, to think you can 'earn' money from nothing defies the logic of sustainability. The profit has already been taken - and now we might see a very long period of zero, or very small dividend payouts from most companies.

The bounce in the FTSE at the moment are the speculators - not the investors hoping for a long term investment. The price may be low, but not as low as it should be considering the dividend levels.

Undertaking 'Heroic tasks' requires the heroes to take risks that may endanger their well being/life-style, whilst the results benefit the wider community.

With great power/wealth comes great responsibility

With great power/wealth comes greater ability/opportunity to recover from set-backs

Politicians and high earners/wealth holders have the power and the wherewithall to provide the kick-starts. The problem is that the changes required will be so drastic that no politician will endanger their job by implementing them, and few higher earners/wealth holders will sacrifice their life-styles to support them.

Selling off a few shares cheaply to promote 'retail' shareholding neither increases the personal level of ownership of the required rebuild, nor does it provide the stimulus for the reform of our economic/social fundamentals that are required to make us internationally competitive.

A 52*37.5hrs 16 year old on minimum wage gets around £6000pa after tax/NI (and costs the employer around £8000). After very basic survival costs (living on 'own') this leaves around £25/wk for anything else.
The upper minimum wage band gives a post tax income of around £10000 and costs the employer around £13000. Is this enough for somebody to live with in a 2+2 family? If not why not? Why is minimum wage a national figure? Similar surival level accommodation is up to 60% higher in London than many parts of the country, and yet on a region-by-region basis London and the SE continue as employment magnets.

Economies that we want to be competitive with (ie the ones that have jobs we want returned to the UK) run at 40-60% of same job costs (let's assume that we are technology/business process efficient for the sake of simplicity).

This can be acheived by:
lower wage rates;
regional rates of minimum wage & employers costs
decrease the amount of NI/tax paid at low income;
decrease employment taxes (employers NI etc);
decrease the amount of paid time off for sickness etc;
reduce the cost of surivial living (housing/food & clothing/shelter
fuel/local access transport).
reducing amount of management required to run company
reducing non-wage costs (land, energy, local taxes, governance, H&S,
materials etc)
reducing cost of public sector services
reducing the supply of public sector services that are 'free to all'
reducing the supply of benefits that are open to all regardless of
income

It is going to take a combination of all 11.

Income should not be taken away from the low paid only to pay it back in subsidies/benefits cos this is grossly inefficient.

Wage rates should not be allowed to fall such that survival is only possible through subsidy/benefits.


I know this is all too simplisitic in our complex society, but we do need to overturn some established principles and 'rights' in order to really get to grips with the rebuild.

More of the same is only going to plaster over the cracks.

34 At 1:11pm on 22 Feb 2010, U14313657

A good point about the trains...

Lets remind ourselves off who is now profitting from the sale of the railways shall we?
All rolling stock from BR was sold (or handed over to) to 'leasing companies' (ROSCO) - they are owned by the following:

* Angel Trains - owned by a consortium of private equity investors, mainly comprising pension funds and insurance companies, and has 4,400 vehicles in the UK.
* HSBC Rail - a lessor of domestic passenger rolling stock, owned by HSBC.
* Porterbrook - owned by Abbey National, which leases some 3,500 locomotives, trains and freight wagons.

...so you can see the banks are profitting from our previous privatisations. I bet you won't find that blatant rip off in any Tory manifesto....

"And less than one in five households own shares"

Shouldn't that be 'fewer' rather than 'less'?

10% discount would mean at least £7bn to the taxpayer. Would it not make sense to reduce the governament borrowing by that amount because the taxpayer is going to fund the borrowing somehow anyway.

If the Tories sell these shares to the public -who already own them- at a 10 percent discount, then won't the members of the public who don't buy the shares -but who also own them- end up subsidising the ones who do?

Won't everyone have their public services cut and their tax raised in order to make up the difference in the discount?

So some people have to pay twice for something they already own, and we all lose out because we all end up paying for it anyway. It won't be the Government giving the discount, as it will be the rest of us that pick up the bill!

All this will do is remind people why they haven't voted Conservative for the last 13 years. Its a con, anyone want to buy some snake oil?

41. At 1:38pm on 22 Feb 2010, tjl2010 wrote:
Let's recognize envy for what it is. If we believe the banks are making excess profits with downside risk, then the sensible thing to do is not to complain about it but to participate.

You can't mean that can you? When you see something that is unfair, the way to address it isn't to join in and behave in a similarly unfair way. Didn't you mean to say something else?
Otherwise you could end up with a situation as follows:
If someone is envious of a drug baron and his riches would you say the appropriate action to take is to participate?

15 Dr.Dave

You are correct to a point. However the debts incurred by the government are separate to the ownership of the banks in question. This is where Gorgeous George's argument breaks down as he seeks to relieve the taxpayer of even more hard-earned so that the banks can once more become independent businesses.

On balance I think he is more concerned about shrinking the debt rather than recognising public ownership. This raises the question often voiced by St Vincent of the Cable that RBs should have been nationalised from word go. I must confess to having been agnostic on this matter but have slowly come to see some value in this argument.

The deficit needs to be paid down but in a constructive way which improves our economy thus ensuring it does not happen again or at least until another bunch of illiterate economists (ones that don't write letters) decide they have found the Philosopher's Stone and dob us all deep in the smelly stuff all over again.

I would rather see a separation of retail from casino banks. The taxpayer gets to keep the useful, retail banks and the funny stuff is flogged off to Goldman Sachs in the hope they will find the requisite gap in reality into which they can vanish complete with the vampire squid into Never-Never Land to form a corporate entity along with Captain Hook and the Lost Boys providing much needed financial services to the misunderstood crocodiles.

#33 - Martyn Owen makes an interesting few points.

My own reaction to this Tory idea was that it simply didn't go far enough. I would like to see the power and influence of the fund managers significantly reduced in relation to small shareholders.

Small shareholders tend to think more strategically (long term) than fund managers and are certainly more likely to be industrially patriotic.

In these particular cases (RBS and Lloyds) enabling small shareholders to have greater influence than institutional shareholders could result in a pair of banks that work for our benefit rather than the City.

Of course it also goes without saying that hedge funds would be banned from ever owning shares in either bank.

The Tory proposal rather suggests there's good news and there's bad news.

The bad news is that there's so much debt we don't know how to repay it.
The good news is, there's no flood damaged stock, (for a change!)

And as for, "And another thing: if the Tories think they're bribing voters with their plan, it's the most hopeless bribe of all time.

The point is that a Tory government would offer retail investors a 10 per cent discount or so on the eventual selling price of the shares."

Is that right....politicians might actually try and bribe the electorate? Isn't that a bit shameful? Would people fall for it, surely not, not in Britain?

#1
You must be a banker, a politician, an arms dealer or a property developer. Because everyone else has either lost out already or will over the next 4 years when public service, education, the NHS and benefits get slashed to bits to pay for Labour's deficit.

Whether they give my share to me or sell them to lower my taxes or put the money in education or the NHS, I benefit.
And as for the ides that we don't live in a share owning democracy, what else is a pension.

Robert,

Not for the first time, your arguments are simplistic, ill thought through and miss key points that either show a lazinessin your journalism, political bias or a lack of understanding.

First, by transferring ownership to individuals through the endowment of shares to taxpayers, you are in effect asking all tax payers to individually take-on the risk and reward of ownership. Many of those tax payers will not choose that option. Many others will not be experienced enough investors to fully understand what to do with those shares, how to sell them, when to sell them, whether to but more.

In effect, the Tory proposal offers those members of the public who wish to remain exposed to the risk of share ownership the opportunity to do so. These individuals will therefore help reimburse the Treasury (and therefore us the taxpayer) who no longer wish to hold those shares. Only the people who want shares end up with them.

Second, the point of the discount is to provide those taxpayers who take up the offer with an instant (almost risk free) return as a reward for the period in which the taxpayer funded the banks. By investing now, there is no guarantee of upside and there will potentially be a significant time lag before any investor were to realise the 10% of upside the Tories are proposing (let alone the full 30%).

All in all a sensible plan. What is an interesting question however is 'when should the government sell its stake in the banks'? Arguably the price at which it bought shares is irrelevant. The government either does or does not want to be exposed to the risk of share price volatility.

If it does not, then it should sell at the earliest possible opportunity where it considers there to be sufficient liquidity and appetite in the market to divest its stake without suffering from needing to discount the sale too heavily.

If it does wish to be exposed to the risks and rewards then it should surely hold at least some of the shares in the longer term. Why have an arbitrary exit price driven off the emotive notion of having to make a profit on the original investment? Any savvy investor will tell you that is no way to invest.

41. At 1:38pm on 22 Feb 2010, tjl2010 wrote:

"It's unfair to say this is a 10% discount in the future from something that can be had at a 30% discount now. It's about risk. A 10% discount on an established market price if recovery is reasonably well established against a punt against the market now."

...and what % chance are you assigning to there being an 'established market price' in the future - considering inflation is at 2-3% - what 'value' will that future hold?
You seem to be banging the old drum of 'recovery soon' - which people are no longer listening to.

"The idea that bonuses cost us net money at multiples of the bonus amount, which other posters have suggested, is equally silly."

...but only half as silly as the suggestion you can 'generate wealth' merely by moving quantities of wealth around - and then pay yourself handsomely from the future profits (which have not yet been earned) - don't worry about concience, if those future profits don't come then it will be another bankers / Governments / Publics problem.

"Let's recognize envy for what it is."

Spoken like a true Tory - of course we're all jealous of the wealthy - why wouldn't we be jealous of such charm, wit, wealth, superior intelligence and of course great looks.

"If we believe the banks are making excess profits with downside risk, then the sensible thing to do is not to complain about it but to participate."

yes, so every farmer, cleaner, dustman, toilet attendant, nurse etc. should abandon their careers and gamble on the stock market instead.

There really is one born evey minute...

33. At 1:04pm on 22 Feb 2010, Martyn Owen wrote:
”Cadbury's was sold for instance because either Pension Funds sold their shares to Hedge Funds during the bidding process or…”

This is an area that for a long time has needed some legislation to protect the “real shareholders”.

In a lot of cases the investment management company receives a fee when they lend out shares they are holding in a portfolio and this fee goes to the investment management company and not to the people who actually own the share.

The only reason anyone would want to borrow a share (or anything really) is because they are going to do something with it that will make a profit through some sort of deal that the real shareholder normally wouldn’t contemplate. In many cases means that they intend to short-sell the share in the expectation that the share price will go down.

I’ve always been gobsmacked that someone is legally allowed to lend an asset they are looking after on behalf of the owners to someone else knowing that the other person intends to significantly damage the value of the asset being loaned.

That hardly meets the most basic definition of custodianship does it? But all perfectly legal nonetheless.

Well... If only our government would allow the part-nationalized banks to hire and retain the best talent in the market and to allow the banks to make as much money for the shareholders as possible, then the share price of RBS and Lloyds would not be where they are now. If the performance of other banks are to go by, profitability and share prices would both be stronger than where they are today and we won't be looking at a loss.

But George Osborne, the shadow chancellor, has made it clear that no shares would be sold till the share prices of RBS and Lloyds had risen above the price at which the Treasury bought its whopping stakes in both banks.

So it is not "now"; rather and very likely "never"?!

In times where the banks refuse to work as such but want to strike it (back) rich by gambling on various investment markets which are nothing else but commodity gambling halls I find it very odd to expect anybody being interested in taking a share and paying for something that he owns anyway. I would not call that a plan and it won't help with getting the votes in you want. To increase that share of ownership it simply lacks the seriousity of being a sustainable business model.

The Tory idea strikes me as half-cooked as the Lord's idea to copy the business-model of kfw bank(Germany).

#50. At 2:24pm on 22 Feb 2010, stanilic wrote:

"The taxpayer gets to keep the useful, retail banks..."

If I understand your point correctly, then I agree.

We have public debt at a level which seems widely acknowledged to be unsustainable. The main source of repayment is going to be UK citizens, one way or another.

One way of raising the funds required is to sell the UKFI holdings and I believe that all three main political parties are committed to selling.

I see some value in a state run banking service, like the old girobank, providing relatively straightforward banking services through a branch network, and I certainly agree that knowing that we need to repay public debt is not the same as knowing that we have to sell the UKFI holdings in the banks.

Re splitting up the banks. This seems a logical step and yet seems to have fallen off the road map.

This leads me to wonder - why has it not happened?

My conclusion is one of three things (but there may be more..)

1) Somehow the two sides of banking are not as effective without each other so there is a business case.
2) It is too complicated to split them up.
3) For some reason the powers that be do not want to split them up.

1 and 2 are both weak arguments which leaves 3.

So could it be that during the cosy dinners shared in the City top restaurants and at Davos etc that the investment bankers have pointed out that if they are separated from the rest then they could be allowed to go bust for taking their disproportionate risks when they go wrong, hence removing their safety net and hence meaning they wouldn't be able to take the risks any more.

Meaning they wouldn't be able to cream off huge bonuses any more, which menas the UK tax take would reduce. Nudge nudge wink wink.

Oh and of course every 5 years or so the government wouldn't have to bail them out but lets not worry about that - more nudges and winks - another glass of wine Rupert?

Individual share ownership was artificially boosted during the Thatcher privatisations. With the FTSE index well below its 1999 high, which its never challenged since, it's not surprising that individuals are reluctant to own shares directly.

What do you mean, Robert? Sell the shares in the nationalised and part nationalised banks? Why?

We all currently own parts of these banks and therefore should have had the share certificates plopping onto our sumptuous doormats by early 2009 at the latest, when the per share price was sorted out.

We've been given the figures by the government and the opposition parties and so these shares are ours now anyway.

Not paying twice, or it will fit into the 'how many times can we pay tax on our income?' question that comes up so frequently.

However, it is better for us to be collective shareholders, and would be good if the assets were put into a form of escrow so that the government could not borrow against it or spend it further in currency speculation, like selling Sterling short...

However, there is the usual problem if lots of little investors get involved because the admin costs grow exponentially. Much better, I say, to let the institutional investors buy the shares in bulk, and pay all of us tax payer's back too.

What fun, eh?

The government-in-waiting wants to sell us stuff we already own - what a rubbish policy! We could perhaps be given the shares in RBS, but to ask us to buy them, at any price, is an absolute joke!

54. At 2:57pm on 22 Feb 2010, sizzler wrote:

"And as for the ides that we don't live in a share owning democracy, what else is a pension."

Classic - I love to hear all those who think we live in a 'joint stock Democracy' when anyone who was a small banking shareholder will no this is certainly not the case.

Do you tell your pension manager what to invest in then? Do you call him frequently to discuss investment decisions? Do you even know what his name is?

I meet the fund managers - and I can assure you they have no idea who you are.
Most are struggling to stay within their mandate - let alone give a monkeys about your personal democratic right.

...of course you could always 'threaten to withdraw your money' - but unless you're a regular in the times 100 'rich list' then your threat of removal is like threatening to remove a hair from Big foot.

WOTW wrote: "For anyone with an ounce of sense can see that success in the Capitalist world has nothing to with skill or talent, but all to do with GREED"

What a ludicrous generalisation. Lets see this means tell all the kids no point in going to school, then university (with the debts that brings) no point in working hard, no point in starting your own business - skills and talent are irrelevant as long as you are greedy (or maybe lacking in WOTW morals).

In the short term people can be successful with luck but in the real world in real companies providing real goods and services to real people around the world, you need skill, talent, hard work and yes some luck.

As for the trains - at least you cannot blame the Tories for that, all down to TB/GB. They messed up, as anyone who studied the privitisation knows, and failed to realise that they were selling the rolling stock off too cheaply such that ROSCOs could make a lot of money doing simply sale and leaseback transactions - not exactly novel financing as the property world had been doing it for decades.

#60

Just wondering to whom should we sell our banks shares to?

If the bank shares are sold to the taxpayer, that is a rip-off - they're asking us to pay for things we already own!

If they are sold to other interested parties, these 'investors' will need an incentive to take the shareholdings off the government's hands, so whatever price they agreed on, it would be a discount to the market. That's another rip off.

The only sensible, democratic solution is to give the shares back to the taxpayers. The individual should be given back the right to exercise his/her judgement - the sell or to hold. The government, no matter how smart they claim themselves to be, is not better informed than we are in how to spend our money spend our money sensibly. (Just look at how much we could have earned had we not sold the Bank of England's gold at historical low!)

55. At 3:01pm on 22 Feb 2010, Beaumool wrote:

"In effect, the Tory proposal offers those members of the public who wish to remain exposed to the risk of share ownership the opportunity to do so. These individuals will therefore help reimburse the Treasury (and therefore us the taxpayer) who no longer wish to hold those shares. Only the people who want shares end up with them."

...allow me to translate....

"If the Government can find enough tax paying mugs who are unable to realise the risk of holding these shares - then we can flog them off a la Del Boy - from the back of our Treasury van and we'll be drinking pina collada on a beach before they've worked out what they've got!"

So the Government got diddled by the banks, and it's solution is to swing a bigger diddle on the unsuspecting and over-trusting public.

Sorry Beaumool - I think I just let the cat out of the bag!

"Second, the point of the discount is to provide those taxpayers who take up the offer with an instant (almost risk free) return as a reward for the period in which the taxpayer funded the banks. By investing now, there is no guarantee of upside and there will potentially be a significant time lag before any investor were to realise the 10% of upside the Tories are proposing (let alone the full 30%)."

....unless of course the shares dive upon release into the market - or did you think millions and millions of shares released into the same sector won't make a difference.

You must work for Tory central office - nobody else in the world could write this up as a 'good deal'.
If you don't work for the Tories - then how about I sell you your house to you - let's say a bargain £50k?

"All in all a sensible plan. What is an interesting question however is 'when should the government sell its stake in the banks'? Arguably the price at which it bought shares is irrelevant. The government either does or does not want to be exposed to the risk of share price volatility."

Now you're getting silly - so the share price doesn't matter - the loss that will be on the Governments balance sheet won't make a difference - we will have effectively paid bankers bonuses through the boom with public money.

Whatever you're on - I think I need some.

"Why have an arbitrary exit price driven off the emotive notion of having to make a profit on the original investment? Any savvy investor will tell you that is no way to invest."

No stop please - it's hurting me too much.....

Of course any savvy investor will say 'losing money is the best thing to do'

58. At 3:10pm on 22 Feb 2010, spikegifted wrote:

"Well... If only our government would allow the part-nationalized banks to hire and retain the best talent in the market and to allow the banks to make as much money for the shareholders as possible, then the share price of RBS and Lloyds would not be where they are now."

I'd say if they had retained the 'talent' which RBS and Lloyds had (which coincidently led them to make record losses) - then the share price would be lower than today.

"If the performance of other banks are to go by, profitability and share prices would both be stronger than where they are today and we won't be looking at a loss."

Only on the ship of fools....

The only advantage in purchasing a share or a few shares in RBS is for industry workers and concerned citizens to secure the right to vote down some of the more self-centred proposals put forward by the board.

If all the people who were harmed by RBS all bought one share they would have considerable voting power.

Shares are a mug's game because prices can fall dramatically for no valid reason and thousands of pounds can be wiped off the value of shares.Sound well managed companies can go under on the slightest hint, true or untrue,of financial difficulties.

The only ones to profit are the traders who do the dealing, unless of course the stockmarket crashes which is not unknown.

# 61. At 3:21pm on 22 Feb 2010, GRIMUPNORTH77 wrote:


> Oh and of course every 5 years or so the government wouldn't have to
> bail them out but lets not worry about that - more nudges and winks -
> another glass of wine Rupert?

The government will always take the line of least resistance. Luckily, Republicans and Democrats alike despise and mistrust Wall Street spivs, so The Prez will do it there first.

What happens there happens here. When America puts the pressure on, the line of least resistance IS to break up the banks. City boys like your “Rupert” are wasting their wine. The more ordure we heap on the City spivs, the easier it becomes.

58. spikegifted
....
Are you one of these 'talents'?
Do you know any that could justify higher wage/bonus that were already extorted?
I am afraid you may need a big adjustment soon... if anything those 'talents' will become more amd more rare... there is not much left to squiz out of the system... so if you are one (and can justify your huge wage/bonus while bloging away during work hours...) - hide and prey your pathetic god your turn does not come too soon (pathetic as any kind of moral understanding did obviously pass you through completly). If you are not... I am please to say you will certainly never be...

#17 stanblogger - think you've said it best. There is no such thing as a free lunch. I'd be balking at the thought of paying again for something I already own. I think if Pravin Gordhan, South Africa's finance minister used this nifty trick in the South African 2010 budget last week to sell off some of the state owned Telecom shares there, at current prices he could easily have provided funding in some other much needed areas. Alas, sadly as in the UK, once you've got the votes, policy changes to reflect internal interests rather public benefit.

So, the Tories are so bereft of ideas that they are trying the old con trick of selling to the taxpayers something they already own, rather than seeing the taxpayers repaid by the honest toil of the banking sector...
AND on top of that they will give a state guarantee that you need not use up your assets (particularly the holy of holies: The Family Home) to help pay for care when elderly and infirm. Can't wait to see all of that in action, but on second thoughts, perhaps not.

PS to 64...

Be very afraid of even 'free shares' in bust banks as the way that they will restructure their balance sheets is to push rights issues on the shareholders. (See RBS before it collapsed!)

The Tories are trying to cut their costs by getting rid of the shares so they do not have to finance the rights issues!

A banking story. How novel.

GC

Staff meeting for the moderators maybe?
50 minutes and counting...

#54: "Whether they give my share to me or sell them to lower my taxes or put the money in education or the NHS, I benefit."

That is your view. You are assuming that the government can get the best price for each share for the taxpayers. You are also assuming that the government knows how to spend your money better than you do. The last time I checked, neither of the above was true.

I had shares in Halifax from when it became a bank and acquired more over the years in lieu of a dividend in casj.

At one stage they were worth about £4K. I kept them for a rainy day, which never came.

When Halifax shares started to drop, I never expected the largest mortgage company to more or less go down the pan.

My eventual stake when Lloyds took them over was miniscule in comparison to what they were once worth.

I still bought more Lloyds shares ... just as a small gamble as I dont do the lottery or gamble or smoke.

I can understand why many would NOT wish to invest in banking shares after what's happened in the last couple of years.

Would the public actually WANT to buy shares in Lloyds and RBS? It will be a few years before confidence is restored in them.

#65: Fund managers...

Total agree with your assessment of fund managers.

However, it is the pension fund managers who are the most ridiculous. The only reason why the UK defined benefit pension blackhole is not bigger is because pension schemes could not get rid of their shareholdings quick enough when the market was down. They bought shares on the up, but sold them at a lower price. Then they piled in bonds when yields were dropping to historical lows. They lost on the pick up because they didn’t buy early enough, but lost even more when they sold at the bottom. Talk about destroying value!

This is the kind of soundbite policy Dave & George have been coming up with that scares the begeezus out of me. The future 2 most powerful men in Govt have been spending time on this rubbish and obviously both agree it's worth putting forward to the British public as a serious proposition with everything else that's going on around them.

Next they'll be saying that there should be an enquiry into whether or not GB is a bully

Can we trust Cameron to do any better than Brown? Brown sold much of our gold reserves at historic lows (look at the price of gold now!). As neither man or any member of their respective front benches has any business/management experience why trust them this time?

Such rank amatures should keep their mouths shut until they have taken independent expert advice and then speak but at the same time publish the advice so the public can decide for themselves what the options are and mean.

#71 Jacques - so why hasn't it happened already? What is stopping the powers that be, whether in US or UK, splitting up the banks?

Perhaps they make big donations to the election campaigns? Although they would need to disclose these in their accounts so I can't believe they do this. So it must be as simple as wining and dining, Freemasons and the old pals act.

Why do we need to sell it off, why not see it as a long term investment and make money for the tax payer. Instead of making a handful of individuals VERY wealthy why not make the taxpayer slightly wealthier. To me the biggest problem with society is distribution of wealth, selling RBS off the retail investors isnt going to benefit society, we have had decades of a few individuals getting VERY wealthy off societies hard work, isn't it about time society is the one who benefits when times are good. I maybe a investment laymen but that doesnt make me ignorant to the fact that certain individuals have made a mockery of society and bled us dry. It is time for a change but I seriously doubt the "tōraidhe" are the party of change, just the party of repeating the disasters of the last CON government,sell,sell sell.

77. At 4:54pm on 22 Feb 2010, copperDolomite wrote:
Staff meeting for the moderators maybe?
50 minutes and counting...
--------------------------------------
Perhaps they are looking forward to a possible strike (if they are outsourced via Siemens)
https://www.broadcastnow.co.uk/news/bectu-urges-bbcs-it-crowd-to-strike/5011140.article

85. At 6:52pm on 22 Feb 2010, Kit Green


So the rumbles about are spreading....

I don' know if it's already been pointed out - bu I just read a story pointing out that there are 3.1 million Lloyds shareholders who will ultimately lose out (again) with this idea.

....and what is the likelyhood these are 3.1 million Labour voters? - possibly quite unlikely.

Maybe this is another sign that the Tories are trying to 'throw' the election - because let's face it, it's not going to be the 'grand finale' to the years of Tory exile from power as whoever is taking over - I can guarantee will be unpopular!

21. At 12:33pm on 22 Feb 2010, Justin150 wrote:

"Therefore the comment that individual share ownership has declined may not be true - you have to add back all the "individual" money in PEPs, ISAs and pension funds first"

The fund administrator has all that information through the transfer agent and the share class information.

Don't worry, "we" know exactly who has invested "what" in "where" - right down to the last penny.

Evening Robert,
is the title of your blog a rhetorical question?
Just to put this deal of the century into some perspective, the Government of the day would need to sell 38 million RBS shares AND 22 million LLoyds shares EACH and EVERY DAY for 5 years.
Trading figures for today were 125 million shares traded in RBS and 260 million shares traded in Lloyds so I think that such a large percentage of new shares being sold to the market would depress prices in both banks by more than the 10% discount (nevermind stamp duty and brokers fees)!
As to selling to large institutions, where do they get their money from?

I believe that both banks are still too big to fail so that only leaves one option which is to nationalize both banks and the shareholders would receive NOTHING (as per B&B). I would doubt that any sane investor would buy shares at any price in a company which has declared in its annual report to shareholders that Nationalisation could not be ruled out!

p.s. I have some nice tulip bulbs if anyone is interested in gambling with them.

It sounds like conventional Tory policy to me:

Government sells 100% of taxpayer's holding at 90% of its market value, so ordinary hard working families ultimately lose out due to this 10% discount "carrot"

The shares are bought by those with the funds to invest, and thus a fair proportion of them will be the well off. Only these people who buy the shares will benefit from the 10% discount, so as usual only those with the money will benefit from this whole process.

As plenty of people have already pointed out, if the Tories were really interested in benefitting ordinary tax payers, they'd share out the holding equally and allow people to hold or sell as they see fit.

I think they should simply be handed out to us all, based on the tax codes, maybe. But if the Tories and the City want to encourage small shareholders, then they have to do something to empower them, maybe make the shares belong to 'electoral colleges', as otherwise small shareholders are simply meat to the sharks of the Fund Managers, whose mates sit in the CEO seats. So far I know of 4 small shareholders (including me) who were both Lloyds and HBOS shareholders, and not one of us voted for Lloyds to take over HBOS as we had all been stung by the Train Set Man's rights issue when he said HBOS was sound and he was being Prudent (Can the Oxford Dictionary please redefine Prudence in the light of Mr Brown and the Train Set man?) Admittedly this is not exactly a scientific conclusion, but the fact is small shareholders have virtually been wiped out from Lloyds, as well as HBOS and there was nothing they could do about it at all, except take the losses, and it was and probably always will be thus. I know I'll never buy shares again, even the tax man wouldn't take my shares as payment for back tax, he told me to sell them and give him the cash (I was hoping he's take them at the rate they'd bought into these Banks - they weren't that stupid, a pity it wasn't the tax men rather than the Chancellor who was buying into the banks!)

Here we go again. Selling off what we all have a stake in so that those present day stakeholders can get ripped off.
There was a time when everybody in this country could proudly claim that they had some interest in the utilities. Steel. The railways.
I am sure folk were proud of their common interest.
What became of those industries? Sold off. Mainly ending up in foreign hands.

Now the interesting part is that all those previous owners are having to pay, and pay dearly, for those products. With real money no less. And just where is that money to come from? Obviously from the contributions of companies they are working for. Ah. But there is no longer any work for these people. So where is the money to come from? The money that is to sent abroad to the industry owners.

I know where the money went to when those foreign companies sprang up.
The money went to the people that will now be buying up UKFI.

As I wrote above. Here we go again.
It wont be long before those shareholdings are sold off.

And what pray will be the next thing to be sold off?
And how will hoi poloi pay for it?

It wont be long before there really is nothing left.

Presumably all the recently impoverished ex-Northern Rock share holders will be first on the list to be offered their own shares back at a discount to their recently suspended share price? Nice one!

Yes indeed - a slightly unambitious proposal. Surely they should want to incentivise share ownership for behavioural and psychological reasons: https://www.knowingandmaking.com/2010/02/agreements-and-disputes-tim-h-and-chris.html

4. At 11:25am on 22 Feb 2010, stanilic wrote:

Why am I expected to buy something I already own?

It is the privatisation scenario all over again which was not a case of `Tell Sid' but more a case of stuffing Sid by getting him to buy what he already possesses.


But surely in the sense that you "own" them now as a taxpayer, you'd be buying them off yourself as a "taxpayer"...which leaves only the gain/loss that you'd expect as an individual shareholder and the benefits that it brings.

I don't understand when people say they are not paying again for some thing they alerady own.
As i understand it the money goes to hm treasury, unless the Tories are planning to buy gold with the money and sink it in the north sea its the same thing.
Just moving the name on the share register.
Also in my opion, if their is a sell off to the public it should be on a sliding scale based on income tax paid and/or assets e.g.

someone earning £8000 with no assets would receive a 50% discount
someone earning £35000 with £150000 would get 0% discount

P.S
I am Labour voter, can't we just put party poltics aside for a moment and do whats best for our country.

I'm rapidly coming to the conclusion that the solution is to de-globalise and 'Protect'.

I agree it will be as painful as other solutions but having watched the boss of Goldman Sachs last night on Newsnight justifying misleading investors in Greek bonds on the grounds that it was within the law and the impotence of politicians to act, it is clear that the power of these investment banks is at very dangerous levels.

In the UK They need these banks to add to the £900 billion bonds already out there to the tune of £225 billion this year and more the following year so policticians have no choice but to toe the banks line.

As in previous bubbles created throughout history, because of greed, something has got to give.

Shades of Maggie Thatcher and her iniquitous "Right to Buy" scheme. We all know what that resulted in -
shortage of council houses i.e. low cost housing for those in need . Wonder what damage to our society there would be from this latest daft Tory scheme

89 hash

You doubt that any sane investor would buy shares in an institution such as RBS which may be nationalised, but the point is surely that it may not be, and indeed more than likely will not be.

If RBS is not fully nationalised, then following a few years of bank-friendly policymaking across the world, such as very low base rates, fiscal stimulus to keep default rates lowish, shares in megabanks such as RBS would look very cheap at 80p or even £1.80. In fact the upside for RBS shares is many times higher than the current approx. 40p downside. The bad news, including the risk of full nationalisation, is more than priced-in to the current share price.

RBS, LLoyds and NR shares should be kept by the UK government (of whatever party) until conditions are right such that they may be sold for a good profit to the taxpayer. This is surely only right, given the amount of risk the taxpayer took when bailing the banking system out. Floating RBS etc off at a discount / loss would be yet another rip-off of the taxpayer.