Interesting for Nick Clegg to raise this idea again. Firstly, we have discussed before here, when this idea was first floated by Policy Exchange and the Limp Dims.
In need of an electoral boost they are no doubt pushing this. Interestingly George Osborne floated this idea a long time ago when in opposition too - so with the top three in the Government in favour this is likely now to get a good hearing.
However, having thought about this more since I last posted here are the pitfalls:
1. Who Qualifies - how about those who don;t pay any income tax, is this fair ( I guess they pay VAT etc?)
2. How to administer - 40 odd million people to be contacted, the 2011 UK census cost £500 million so that is a comparator to the kind of costs of contacting everyone and sending them something.
3. The Government needs to be paid off first,so only profits go to the proles - is this likely? This in itself adds another level of complexity
4. ISA really need to be set up for this to make it fair and kick start saving in the UK - but that will be too much to do at the same time no doubt?
5. The deficit is big enough and needs to come down, this is a tax cut...would it not be simpler to sell the banks to Sovereign Wealth funds, pocket the money and reduce taxes by the difference - this would achieve much the same thing and be alot cheaper.
On the plus side, encouraging share ownership and an interest in companies I am all in favour of as a Capitalist - but the cost of doing this probably outweighs the benefits in this case.
13 comments:
I think it's crazy. The government should look to maximise the value from the banks and that involves selling them to the highest bidder and not giving away the shares in a complex and expensive exercise.
The Lib Dems getting desperate for popularity...instead of gimmicks..people want less foreclosures and cheaper more available loans from their bailed out banks...and less fat cat bonuses
The political advantage is great though Richard.
It stops the constant banker bashing. Can be made to appear as if the taxpayer has benefited from the bailout. Rewards the {enforced} patience of taxpayers.
Makes temporary shareholders of the nation and so on.
Another , cheaper idea is to guarantee free, current account, banking for life, to any taxpayer 2007-201X, available at any of the bailed out banks.
That way the cost falls on the bank.
George Osborne floated this idea a long time ago when in opposition too
Doesn't necessarily mean he'll back it now. Two different things, in opposition and in government.
I heard on the radio this morning that it was proposed to give the shares to all those on the electoral register so leaving aside the difficulties in distribution is it possibly a devious way of getting people onto the register? This could be a useful way for government to try to "flush out" immigrants etc and get a handle on the numbers.
Or am I just too cynical.....?
"The Government needs to be paid off first"....WTF
HMG is simply another type of bank where deposits (tax revenues) are hosed at the latest wheeze.
Paying HMG off is just paying ourselves
I see this as a disastrous idea too - not for the same reasons but for the scams that would follow it. "Want Your RBS cash now? We'll buy your "Free" shares now for 20p* :)"
Given the level of awareness of shares and such stuff by the general populace the scams would be legendary.
* Transaction fee of £69.99 applies".
Also, I would give the shares as "start-up money" to the Children in trust say, 10 years old or younger - not the parents. That way they might stand a chance of making a profit rather than them just being sold off at the first opportunity. It would also "Lock the savings away as a national asset" for the future - or not if Bank crash 2 appears shortly :(
Administration of the scheme? Simples: Just open a website where you apply with N.I. number(don't have one? - tough). and the kids birth certificates numbers. Write an Android & iPhone app. Robert is your uncle!
This must be easily do-able 100s of millions of shares change hands everyday - why would it be so hard for HMG?
Why start sending out bits of dead tree to inscribed with coloured water? Huh?
Timbo. There was the ill fated government scheme to encourage children's savings, that you seem to be recalling.. I forget its name, but it was a Gordon pet project so guaranteed that
A} It was hugely costly to administer.
B} It was completely unfunded
C} it didn't achieve anything except to give another state handout to people in the hope of making them clients
D} It must have had a daft New Labour name. probably the 'little-acorns,helping toddlers to grow up without poverty, happy sunshine fund.'
IIRC it was a savings account, but money could not be withdrawn for 18 years.
Jan, either this or my idea a while back for the next phase of QE could be an excellent opportunity to start the electoral register again from scratch to remove people who should not be on it and to make sure everyone who should be on it is on it.
Also, why stop at bank shares. Why not float a large chunk of the whole of HMG Plc on the stock market? This would have countless advantages not least that the City would be quite inquisitive about the kind of "business" decisions the government was making and how transparent they are, and each one of us could have a new metric to be shown on Newsnight to keep track of how we are doing as a country.
Win, win!
BE - idea of the year. have you seen the state of the UK IPO market though - not even shite floats at the moment....
I'm afraid that this is all political spin - why else are the papers swallowing the line that the everyone will get the full value of the shares, rather than the gain above the breakeven value (which doesn't even exist at present). I somehow doubt that Tories would want to go to the electorate on the basis of providing a handout to all tax payers funded by a permanent increase in debt based on the amount to bail out the banks.
If there is any gain on the disposal of the shares - it will not go to the hoi polloi, but to the true believers - inheritance tax and a reduction in the higher rate of income tax. Trust me - I know enough about how Tories think.
Blogger Bill Quango MP said: " ill fated government scheme to encourage children's savings, "
Child trust fund?
@anon 11:49 - That's the one! But that was actually giving the newborns money - this would be giving them a betting slip dated 2021.
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