Today’s FT front page story that George Osborne is considering selling a tranche of shares in Lloyds TSB and RBS to retail investors in a re-run of the 1980s privatisations echoes an idea put forward in this blog a few weeks ago (See “What next for the banks?” August 25th) and prompts the question: are the Tories reading this blog for policy ideas?
Whilst I don’t have an answer to that question (if you are could you also consider capping my council tax?) this is certainly populist politics from the party that is probably going to be our next Government and once again leaves Labour trailing in its wake, just as it did over MP’s expenses.
However, there is another good reason to consider a strong retail investor presence on the shareholder register. One of the main reasons behind the deliberate targeting of millions of small investors with the 1980s privatisations was in order to make it more difficult for a future Labour Government to renationalise.
Once they become private companies again our banks will be prey to global M&A activity and the possibility of foreign takeover. My personal view is that it is vitally important we retain a strong banking system populated by British-owned banks, not sub-branches of some enormous global banking institution.
Normally, any predator would only have to persuade a dozen or so institutional investors of the value of a deal but with a strong retail investor presence the logistics of persuading shareholders to accept an offer becomes that much more difficult and high profile within in the media.
At the moment, this is just being floated by Central Office but I suspect it will find its way into the Tory manifesto as Mr Cameron certainly knows a popular policy idea when he sees it.