Over at the Adam Smith Institute, Dr. Eamonn Butler criticises Stephen Williams’ proposals to give away the Government’s shares in RBS and Lloyds to each and every person in the country. As Eamonn notes, this form of privatisation proved disastrous in post-communist Russia, where citizens sold their shares too cheaply to oligarchs with deep pockets. Even if they hang onto the shares, Eamonn doubts that they would become the interested shareholders that would ensure good governance of the company, as is surely desired.
I agree with him, but I also see two further problems with this proposal.
Firstly, each shareholder would own such a small fraction of the company (about 0.00000014 per cent of RBS and 0.0000007 per cent of Lloyds, I calculate) that their influence on decisions would be minimal, rendering their presence at an AGM or the time spent filling in the voting forms meaningless.
The second issue is one of fairness. The debt for the banks does not, as people often claim, fall on each and every one of us equally. It actually falls on each of us in proportion to how much tax we pay. Those who pay more tax are already in the frame for more of the bill. Giving the shares equally to all is a deliberate act of redistribution that does nothing to ease the national debt, which is £66 billion higher as a result of these two interventions alone.
If the shares are sold and the money used to pay down the national debt, each citizen would be relieved of debt in proportion to how much of that debt they were expected to pay in the first place. That seems a much fairer way of going about it. The alternative is to give the money away to the citizens, and tax the hell out of them down the line to recover that £66 billion (and the other trillion, of course). That hardly seems like a sensible approach.