Martin Flanagan: Nick Clegg's carpentry skills leave a lot to be desired

Published on 22/06/2011 22:20

NICK Clegg is obviously a man on a mission to escape the shadow of the accusation that he cynically sold a student generation down the tuition fee river for political power.

The Lib-Dem leader and deputy prime minister in the coalition government first of all forced a climbdown from the Tories on the more carnivorous market forces aspects of the proposed reform of the NHS.

It played well with his disillusioned MPs, who fear emasculation by a thousand cuts in the coalition, and, to be fair, it went down well with a big slice of the population as well. There were genuine fears that the NHS reform proposals represented foot-in-the-backdoor privatisation of the health service, whatever protestations to the contrary were coming from David Cameron.

Emboldened by this appeal to the gallery, Clegg has now upped the ante by suggesting Joe Public should get something more tangible out of the eventual restoration of health to the state-owned banks than just a tailwind to the economy and a payment off the gigantic public deficit.

Clegg wants to give every British voter shares in Royal Bank of Scotland and Lloyds Banking Group, owned 83 per cent and 41 per cent respectively by the taxpayer.

However, there is a crucial difference to the NHS issue. It is easier to derail something seen as undesirable using political clout than changing flight trajectory in mid-air on a policy already well-established and generally accepted in the public's mind.

Although it is academic considering RBS and Lloyds's current share prices, the Treasury has made clear that any profit eventually made on the taxpayer stakes in the banks will go to paying down the national debt and boosting ravaged public spending. That or a vote-catching tax cut, perhaps.

Largesse to fund what would be the biggest exercise in private shareholder ownership since the Thatcherite 1980s revolution was never on the cards.

The Treasury will fight it tooth and nail, and it is difficult to see how Chancellor George Osborne could willingly give up money when Britain will be so financially stretched for several more "lean years", as the governor of the Bank of England has predicted.

In short, this looks like Clegg transparently trying to hammer in another plank in his hoped-for political rehabilitation, but the carpentry looks like mine did in secondary school.

Even the Lib-Dem leader acknowledged that the scheme could be "insuperably complex". When even the political proponent of a plan uses such words, one can only wonder what a field day critics will have.

There is something vaguely summer "silly season" about the story in that RBS and Lloyds's shares are trading well below the average price the taxpayer bought in at - 51p and respectively - and so are some way off being valuable to Joe Public at all (with the public only getting the "profit" above the buy-in price).

It is not only floating the idea of possible jam tomorrow, but theoretical jam that would almost certainly be scraped off the bread by wider political considerations if it ever became a practicable idea.Non-core is the new black when it comes to assets

A PRESS officer with a Scottish financial organisation remarked flippantly to me this week that non-core business operations were becoming a must-have accessory in the sector.

True, having identified an unwanted portfolio shows management is on the case of getting the best out of operations that it is pruning, sprucing and shaping up to sell.

Lloyds Banking Group and Royal Bank of Scotland are two of the most obvious ones that spring to mind, but insurer Standard Life under David Nish also had its bank and healthcare subsidiaries in such a non-core niche before flogging them off.

Generally, however, the sooner banks and insurers can ditch non-core the better they like it. Witness Lloyds speeding up the sale of the 600 branches ordered by the EU.

Fitting into this category is insurer Aviva's 1 billion sale yesterday of its RAC motoring business to private equity. Good price, tidy clean-up.