Tories to offer cut-price deal on state-owned bank shares

Published on Sunday 21 February 2010 22:03

SHARES in state-owned banks would be offered to voters at a discount as part of a Tory effort to encourage young people and those on modest incomes to invest, George Osborne announced yesterday.

The shadow chancellor said his "people's bank bonus" would reward taxpayers for the 850billion ploughed by the government into propping up crisis-hit financial institutions.

During the financial crisis, the government nationalised Northern Rock and took stakes in the Royal Bank of Scotland (RBS) and Lloyds Banking Group in return for bailing them out.

Cut-price shares would be offered to everyone with extra discounts for target groups, Mr Osborne indicated.

They warned that the sale could only happen at a time when the government stood to make a profit – which experts recently suggested could be as long as five years away – and that institutional sales would also form part of the package given the sums involved.

Bank regulation would make them safer investments by preventing "irresponsible" behaviour, they suggested, but critics dismissed the plans as a cynical "gimmick" that put taxpayers' money at risk.

Chief Secretary to the Treasury Liam Byrne said: "The Tories' deficit reduction plan is now a certified farce. When it comes to the shares in the banks, the public expect us to focus on getting their money back. That means selling them at a time and way that maximises their value, not an irresponsible and expensive political gimmick."

Liberal Democrat economics spokesman Vince Cable said: "Dangling this prospect, when UKFI has said it will take at least five years before the likes of RBS are back in private hands, is Tory electioneering at its most cynical."