George Osborne’s Lloyds Bank Share Sale Pledge Is Cynical And Short-Sighted

George Osborne - Lloyds Bank - Lloyds Banking Group Share Sale - General Election 2015

 

It isn’t always easy defending Conservative policies. While left wing parties have the luxury of flaunting their “compassionate” credentials with every unfunded pledge and extravagant promise to spend other people’s money, those on the right have the trickier task of explaining that a smaller, less interventionist state and a safety net reserved for those in real need is the only true path to a happier, more self sufficient population.

Visit any left-leaning website or listen to any left-wing activist speak, and it won’t take long before you hear a tirade against the “Evil Tories”, who in the minds of their accusers are not just wrong, but positively eager to hurt the poor and hound the vulnerable. Whether it’s on healthcare and the NHS, welfare reform, tax policy or public services, British conservatives always begin every argument ten points behind, having to battle against the widely-held assumption that conservative policies are motivated only by greed and a desire to protect the interests of those at the top.

Countering this false, pernicious narrative is hard enough at the best of times. And it really doesn’t help when patrician-sounding Conservative politicians like George Osborne announce the “sale” of partly nationalised Lloyds Bank to the public at a discounted price, a giveaway for the middle classes, the politically engaged and the financially literate at the expense of everyone else.

From George Osborne’s triumphalist announcement, published in the Telegraph:

Seven years ago, taxpayers were forced to put £20 billion into Lloyds bank to stop it collapsing. Many thought taxpayers would never get that money back.

Now, thanks to a growing economy and a stronger bank, the share price is back above the level that the last government paid for it and we are getting taxpayers’ money back. We have already recovered £9 billion by selling down our shares, and I have said we will sell another £9 billion over the coming year.

As part of that, I can confirm that a Conservative government will launch a retail share offer of Lloyds shares within a year of the election.

And not only are we getting taxpayers their money back, we are going to do it in a way that gives many more people a stake in our economy and encourages a culture of long-term share ownership at the same time.

People will be able to buy from as little as £250 of shares and up to £10,000 worth, with those bidding for up to £1,000 worth getting priority.

To encourage the longer-term shareholdings that we want to see more of under our economic plan, the offer will include a “loyalty bonus”, whereby people who still own their shares one year after they were bought will receive one free bonus share for every 10 shares that they bought, up to a maximum bonus value of £200. This idea of a loyalty bonus has been used successfully in recent public offerings by TSB and Saga.

The share offer will raise billions of pounds, helping taxpayers to get back the money that the last Labour government put in, and reducing the national debt. This is another example of our long-term plan in action – cleaning up the mess we inherited, dealing with our debts, rewarding hard-working taxpayers and rebalancing the economy towards investment and saving.

No. This is an example of tone-deaf Tory electioneering, motivated partly by positive intentions (the desire to build a property and equity-owning democracy) but also by an instinctive, short-sighted impulse to take care of their core constituency (the older, more affluent, financially literate voter) at the great expense of expanding the shrunken appeal of the Conservative Party.

A Conservative Party that believed in small government would seek to bring about an end to the state’s ownership of the rescued banks, yes, but it might also see this as an opportunity to give something back to all Britons, not just those with the disposable income and financial knowledge to get involved in George Osborne’s election-time pyramid scheme.

The latest unemployment figures showed that the Conservative Party’s medicine is working, drastically cutting the number of unemployed and creating millions of new jobs. This is a great thing. But many of those people who have found work again in the past few years will have been scarred by their experience of redundancy and unemployment. Many of them will have exhausted their savings, or been forced to live on meagre Jobseeker’s Allowance benefit payments for some time.

The chances that many of Britain’s zero hours contract strivers and newly employed workers will have £250 or more sitting around to invest in George Osborne’s giveaway are slim at best – many are probably just grateful that they can finally repay crippling payday loans or replace househould appliances that have lain broken for months.

Since we the people rescued these dreadfully run banks at the height of the financial crisis, all British citizen taxpayers should receive a share of the windfall now that Lloyds Bank has been stabilised and made ready to return to private ownership. And in the spirit of us being “all in it together”, as George Osborne loved to say in the early days of this coalition government, each taxpayer should benefit equally.

That’s why rather than offering Lloyds shares for discounted sale, in a move that will only benefit the middle classes and those who probably already own investments, the government should make each British taxpayer the owner of a small number of shares. This would be a welcome acknowledgement that the tribulations our country has suffered since the financial crisis have not been in vain, and would do far more to connect the economic recovery to everyday people’s lives than a million press releases about falling unemployment ever will.

Once they become share owners, the British people should be free to do as they please with their stake in Lloyds, either keeping it or selling it at a time of their own choosing. The only restriction should be on parasitic companies such as those who cold-call people to make PPI claims on their behalf in return for a large cut of any settlement – the last thing we should want is for a similar racket to build up to facilitate the easy (but poor value) disposal of Lloyds shares. Rather, universal share ownership among all British taxpayers will lead to an increase in financial literacy among the people and do far more to create the stakeholder society (and future conservative voters!) that all Tories should want.

The fact that George Osborne doesn’t see it this way only adds to the perception that the modern Conservative Party is simply unable to empathise with (and have nothing to offer to) people who earn the minimum wage, live pay-cheque to pay-cheque, or who lack the security and peace of mind that comes from always having a spare £250 sitting in their bank account, ready to invest in some government scheme.

Conservatives instinctively recoil from excessive redistribution of wealth by the state, and so rightly oppose punitively high tax rates on the rich, as well as government raids on private wealth such as the inheritance tax or Labour’s proposed mansion tax. But that’s the beauty of the opportunity presented by the sale of the government’s stake in Lloyd’s Bank – no redistribution from the rich to the poor is required. The government already spent our money rescuing the banks back in 2008. All that’s needed is to transfer ownership of the shares from the government to the people – all the people.

Sadly, George Osborne’s colossal failure of empathy and imagination will only provide Ed Miliband’s Labour Party with more so-called “smoking gun” evidence that the Evil Tories only care about the rich. And that’s a slap in the face not just for the Conservative activists who spend every day on the doorstep trying to convince sceptical voters that theirs is truly a One Nation party, but ultimately for all the British people.

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One thought on “George Osborne’s Lloyds Bank Share Sale Pledge Is Cynical And Short-Sighted

  1. Richard Dodson May 20, 2015 / 6:14 PM

    Banking system has always only benefited one kind of individual,the bankers themselves the public bailed them out so they should be helping the people whos taxes helped bail them out.

    Like

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