Clegg backs 'bank shares for all'

23 June 2011 Last updated at 10:44 GMT "Every (adult) citizen should get some shares," says MP Stephen Williams

Proposals to give the public shares in part-nationalised banks RBS and Lloyds have been backed by Nick Clegg.

The idea is that individual taxpayers would benefit from any long-term gains when shares in the banks are sold.

The deputy prime minister said it was important British people were not overlooked after their money was used to keep the banking system alive.

The Treasury said all options would be considered but some experts have warned the scheme would be difficult to run.

'Life-support machine'

Under the plan, the 45 million people on the electoral roll would be given free shares in the bailed-out banks, Royal Bank of Scotland and Lloyds Banking Group.

The shares would only have any value above a "floor price", equivalent to what the government paid for the holdings, so the Treasury could cover the cost of its investment.

That price is estimated at 74p per share for Lloyds and 51p for RBS.

Continue reading the main story About 75% of publicly-owned shares distributed to all British adults on the electoral roll - for free Recipients get full rights of shareholder When shares are sold, a fixed "floor price" goes to Treasury to return its investmentThe shareholder, who could choose when to sell, would keep any profitThe idea for so-called people's shareholdings, first suggested in March, was developed by City firm Portman Capital with the support of the Lib Dems' Treasury Parliamentary Committee, chaired by backbencher Stephen Williams.

He argued that the mass distribution of the bank shares would be the fairest way of giving taxpayers a share of the rewards, of getting back the money the government paid out in 2008, and would help restore confidence in state-owned financial institutions.

Mr Clegg has written to Chancellor George Osborne in support of the proposal.

Speaking on a trip to Brazil, Mr Clegg said: "Psychologically it is immensely important that the British people feel they have not just been overlooked and ignored.

"Their money has been used to the tune of billions to keep the British banking system on a life-support machine and they have absolutely no say at all in what happens when normality is restored.

"I think, in a sense, as a society we are condemned to take an interest in our banking system."

'Huge fees'

He said the scheme would give the Treasury an assurance that they would "break even" without allowing it "the freedom to grab the windfall if there is one".

Liberal Democrat leader Mr Clegg admitted there remained "a huge amount of detail still to be worked on".

Continue reading the main story Hugh Pym Chief economics correspondent, BBC News

If it happens it would be the biggest exercise yet in "people's shareownership", putting the Thatcherite privatisations into the shade.

The sales of British Gas and other utilities created a new generation of 10 million shareholders in the late 1980s and early 90s.

But they had all made a conscious decision to buy.

The proposed scheme for Lloyds and RBS would give 45 million adults shares, many with no experience or knowledge of the Stock Market.

The fact that Nick Clegg has thrown his weight behind it is significant.

There has been no rubbishing by the Treasury who say they will "look at all options".

But there's no guarantee it will go further.

The chancellor ultimately will decide whether its workable and gives value for taxpayer.

There have been suggestions the scheme could cost hundreds of millions to administer but Mr Williams, the MP who floated the idea, told the BBC he was convinced it would be cheaper than a conventional privatisation.

He said: "If you privatise a huge utility, like BT or British Gas, all the merchant banks get involved, stock brokers get involved... huge fees will be clocked up by the Treasury."

He added that people with "surplus cash" would be able to buy shares, but millions of citizens would miss out, despite having "felt the pain of contributing" to the bank bailout in the first place.

The idea has also been backed by the Conservative backbencher John Redwood, who told the BBC: "It is a great opportunity so that the taxpayers can be involved, the taxpayers could then it discipline the banks as their owners and shareholders and they can get something back when the banks have sorted themselves out."

Northern Rock

The Tory right winger asked Chancellor George Osborne about the idea in the Commons earlier in the week.

Mr Osborne told him was "always happy to discuss ideas" about disposing of the bank shares and the "good bank" in Northern Rock was going up for sale.

Continue reading the main story

The government needs to urgently explain what impact this proposal will have on the public finances”

End Quote Ed Balls Shadow Chancellor But he added: "We want to exit from our shareholdings in RBS and Lloyds in due course, but we do not judge now to be the right time."

Business Secretary Vince Cable said proposals were at a "preliminary" stage and it would be some years before the banks were in a position to be returned to the private sector.

But he said it would be a way for tax-payers to benefit after "saving" the banks.

Mr Cable, who has previously accused the banks of privatising their profits and socialising the losses, said the proposal would be one way of reversing that he said.

The taxpayer owns 83% of RBS and 41% of Lloyds after the government invested about ?65.8bn in 2008 at the height of the banking crisis.

A Treasury spokesman said: "While the question hasn't arisen at the moment, we've said we shall look at all options".

Labour dismissed the proposal as a headline grabbing exercise by Mr Clegg that had not been properly thought-through.

Shadow chancellor Ed Balls said: "The test for what happens to the nationalised banks must be the long-term best interests of the taxpayer not the short-term need to get headlines for Nick Clegg's overseas trip.

"The government needs to urgently explain what impact this proposal will have on the public finances, what the administration costs are estimated to be, how the scheme would work and what effect it would have on the balance sheets of the banks."

Michael Stephenson, general secretary of the Co-operative Party, which is affiliated to the Labour Party, accused Mr Clegg of recycling an old Conservative proposal "to sell off cheap shares in the rescued banks that can be sold on by the shareholders for a quick buck at taxpayers' expense".

Instead, he said Northern Rock should be "re-mutualised" to create a real "people's bank".

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Cameron defies Clegg on Ashcroft

24 May 2011 Last updated at 16:08 GMT Lord Ashcroft was made a peer in 2000 David Cameron gave a government advisory post to Conservative donor Lord Ashcroft despite objections from Nick Clegg, the BBC understands.

The peer and former Tory deputy chairman will lead a review of the UK's military bases in Cyprus.

But he has come under fire from Labour and Lib Dem MPs, including the deputy prime minister, over his tax status.

A source said Mr Clegg made it clear he was "not keen" on the appointment, but the prime minister chose to go ahead.

In a statement, Defence Secretary Liam Fox confirmed that Lord Ashcroft would undertake the role of senior independent advisor to the review of the Cyprus bases.

He will work alongside Conservative MP and former Army officer Patrick Mercer.

Government sources say Lord Ashcroft's appointment is unpaid, short term and advisory only. The study, due to be completed by the end of 2011, is part of the strategic defence review.

More than 3,000 UK personnel are stationed in two bases, Akrotiri and Dhekelia, on the Mediterranean island.

'To the wall'

In the run up to last year's general election, Lord Ashcroft was the subject of fierce criticism from Mr Clegg.

The future deputy PM said it was "wholly wrong" that someone "seeking to influence the outcome of the general election" sought to pay taxes "only partially" in the UK.

The peer confirmed in March that he did have so-called "non-dom" status, but later renounced it in order to keep his seat in the Lords.

A non-dom is someone who is resident in the UK but not domiciled in the UK for tax purposes - although they will pay some UK tax, they will not be fully taxed in the UK on their interests overseas.

Following the announcement of Lord Ashcroft's appointment, a senior Liberal Democrat source told the BBC: "We knew about it, but we were not keen.

"The prime minister made it clear he really wanted to do this, but it was not the appointment we would have made.

"You cannot go to the wall on every single appointment, but we made it clear we were not keen."

Lord Ashcroft has donated more than ?4m to the party in recent years, much of which has been spent on campaigns by Tory candidates in marginal seats.

There had been speculation for a number of years that he was a "non-dom", but both he and the Conservatives had previously refused to clarify the matter.

He was appointed a peer in 2000 by then Conservative leader William Hague.

'Sinister'

Lord Ashcroft has longstanding connections with the military and was heavily involved in the Imperial War Museum.

He also owns the world's largest collection of Victoria Crosses - Britain's highest military honour.

But BBC News Channel's chief political correspondent Laura Kuenssberg said his appointment would inevitably be controversial, particularly among Liberal Democrat MPs, many of whom are now in government.

One of those angry at the decision was Lord Oakeshott, former Lib Dem Treasury spokesman in the Lords.

"Even [President] Obama's visit cant hide this sinister news, which Liberal Democrats will find deeply offensive," he told the BBC.

"Lord Ashcroft's qualifications for this task are his collection of old Victoria Crosses, years of private plane and yacht rides with William Hague, and a decade of vast Tory donations as a secret non dom.

"The government has still not brought in the simple order needed to ban non-dom donations to political parties under the 2009 Political Parties and Elections Act. The Queen's Speech promised to remove big money from politics, not reward big donors.

"What on earth is his hold over Cameron and Hague?"

For Labour, Shadow Defence Secretary Jim Murphy said: "People will be surprised that such a contentious and controversial character has been put in charge of something as strategically important as British bases in Cyprus.

"The Tories' major donor should not write government policy. Many in the Armed Forces will be bewildered by this decision.

"There needs to be ministerial involvement in this. Military expertise, not the self interest of the coalition parties, must drive the study."

The strategic defence review was announced by the government in October 2010 and set out ways to cut defence spending by 8% over four years.

Among the plans was a commitment to bring home some 20,000 UK personnel currently stationed in Germany by 2020.

The bases in Cyprus are used to give the UK a foothold at a strategic point in the Mediterranean, and the MoD describes RAF Akrotiri in particular as "an important staging post for military aircraft".

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