SNP and Labour politicians last night warned that the taxpayer should not lose out if Chancellor George Osborne decides to sell off some or all of the Treasury’s holding in Britain’s bailed-out banks.
The warnings came after reports that state-owned RBS and Lloyds could be sold before the UK general election at share prices well below the levels the government paid for them when the were saved from collapse at the height of the 2008 financial crisis.
Opponents of the Conservative/Liberal Democrat coalition criticised the possible sell-off amid reports that senior Tories believe the then-Labour chancellor Alistair Darling paid too much for the shares when he bailed out the banks with £65.5 billion of taxpayers’ money.
In a move that has been interpreted as the Chancellor attempting to pave the way for a sell-off that could short-change the taxpayer, one senior Tory close to Chancellor was reported as saying it was “unrealistic” to expect the RBS share price to return to its 2008 level in the foreseeable future.
The Conservative source admitted the UK government may have to sell while the shares were “under water”.
There has been increased speculation that Mr Osborne is keen to re-privatise the banks before the 2015 General Election, to distance the coalition from a bail-out that it sees as a product of Labour’s financial failure.
Yesterday, the SNP Treasury spokesman Stewart Hosie MP said: “The taxpayer must not lose out.
“There has been a clear commitment that all the financial institutions taken into public ownership from across the UK would return to the private sector and the taxpayer would see their money returned.
“Alistair Darling may well have overpaid to benefit Labour’s banker friends and George Osborne may well be trying to cut and run, but what matters is that the public get their money back and we need to see the small print of the government’s plans.”
He added: “If the shares are sold at a loss, would taxpayers be taking future dividends until money was fully reimbursed, or, would they take a stake of future profits as stock rises above break-even level?
“The public must get their money back.”
Labour MP Cathy Jamieson compared the situation with the collapse last month of plans for the Co-operative Bank to take over more than 600 branches of Lloyds TSB.
“The weak economy has already been cited by the Co-operative Bank as the reason for scuppering the deal on branch sales with Lloyds,” Ms Jamieson said.
“Today’s low share price for the state-owned banks reflect the lack of prospects for economic recovery.
“A loss-making fire sale to suit George Osborne’s political timetable is not in the best interests of the taxpayer.
“These assets should be sold when the time is right and in the best interests of the taxpayer with the proceeds used to pay down the national debt.”
The Treasury refused to comment on the reports on a sale at a low share price. But one source described them as “speculation”.
The UK government’s strategy remains for the banks to reform themselves into a strong and sustainable financial institutions before being returned to full private ownership.
No timetable has been set for this process. Nor has it yet been decided how the sale will be structured and whether or not the banks will be sold in tranches in an attempt to stimulate demand for the shares.
Mr Darling rebutted Tory criticism of his handling of the banking crisis.
Yesterday, the former chancellor said: “I’ve not the slightest doubt all of this is a rather obvious attempt to blame the last Labour government for whatever they do. The share price we see today is largely of their own making.”