Monday, 7 March 2011
Lib Dems propose Bank Giveaway - sense from the Loonies.
The only doubts are the cost of execution, which are not properly dealt with in any media that I see. Ideally, all the shares would be paid into ISA accounts and also help to encourage people to start saving. However, for millions of people, many of whom would have to sign up to new accounts, this would be difficult. I guess you could make an opt-in solution whereby you only get your stake if you want it? overall though the costs of making this happen may stretch to tens or even hundreds of millions which is a high price to pay - and one lucky broker is going to have a very good year off the back of it!
Also the small problem of a £40 billion whole in the Country's balance sheet has to be taken into consideration, for in effect this giveaway is like a giant one off tax cut (the money was borrowed to pay the banks and now the liability is going to get stuck on the Government balance sheet with no off-setting asset) - and as such will be difficult to execute in the next couple of year with spending so tight and tax revenues still at low levels. Still, although the above points need addressing, the idea is one that merits being worked through.