Nick Faith is the Director of Westminster Policy Institute.
By and large, people pay little attention to politicians. Indeed, according Jim Messina, voters spend on average four minutes a week thinking about politics.
This presents our political parties with a huge challenge. Poll after poll shows that people associate the Conservatives as the ‘party of the rich’. But they are also seen as economically competent. Labour are perceived to be on the side of the poor. But they are also seen as the party of welfare recipients, and therefore cannot help but over spend.
Changing these deeply ingrained perceptions is a huge challenge. The starting-point must be to a determined effort to – as the Prime Minister has continually said – help people who work hard and want to provide for their family.
The newly formed Conservative Government has set out some encouraging proposals: extending free childcare, cutting household energy bills, freezing fuel duty and raising the personal allowance.
These are all positive ideas that will genuinely help people across Britain. They are policies that are rooted in the values of family and fairness. And they provide the foundations for further announcements that could slowly chip away at the image that the Conservatives only stand up for rich people and big business.
The next step should be a grand offering that builds on this narrative – namely, a mass distribution of RBS shares to every taxpayer in the country.
When he stands up to make his Mansion Speech next week, George Osborne may well set out a roadmap to return RBS to the private sector. Instead of a traditional privatisation, in which institutional investors sweep up large chunks of the bank, the Chancellor should be brave and give every taxpayer in the country the chance to own a risk-free stake in the bank they bailed out.
A mass distribution of shares to every taxpayer in the country is one of those seminal policies – think Thatcher’s Right to Buy – that could genuinely make the public sit up and take notice.
A few years ago, a Policy Exchange paper set out how such a scheme could be delivered. Below is a short summary of the proposal. I urge you to read the full report if you have time.
- 50 per cent of shares in RBS would be distributed to taxpayers who are able to apply for them at no initial cost. They are paid for at the time of sale.
- For taxpayers, this could mean somewhere in the region of £1,000 worth of shares being allocated, depending on approximately 20million people taking up their allocation.
- A floor price would be established at the original level the shares are sold. If the share price falls under the floor, then no-one will want to sell. As a result, taxpayers would take the profits from any rise in the share price above the floor price, but would not lose any money if the share price dropped below the floor price.
- If the share price never exceeds the floor price, the shares would be returned to government ownership after 10 years. This gives taxpayers confidence in taking on shares, since there is no downside or upfront cost.
- The shares are held in a nominee account. Individuals can then transfer their shareholding into a personal account should they wish, providing they have paid the government the floor price.
- There would be an automated sale option if people did not want to manage their own shares on a day to day basis. For example, they could sell a quarter once the share price had risen 10 per cent, another quarter above 20 per cent and the rest above 30 per cent. Alternatively, they could sell the whole amount once the share price has risen by 20 per cent.
- At the same time of the mass distribution, 25 per cent of shares in RBS would be sold to institutional and retail investors. The Treasury could raise approximately £17-18 billion through institutional and retail sales alone.
By offering a large portion of its shareholding to taxpayers in this way, the Government would be able to move much if not all of the banks into private ownership in one go, at a better price than through a traditional sale – while at the same time giving the taxpayer the bulk of the upside and generating the conditions for a sizeable institutional and retail offering alongside the distribution.
Instead of offering the City the opportunity to gobble up all of the reprivatised banks, Osborne could, in one fell swoop, create the biggest number of shareholders this country has ever seen.