The Government is currently pressing ahead with its plans to sell off all of its shares in the Royal Bank of Scotland (RBS) by 2023-24.
I have several concerns about these plans, not least the desire to sell off shares for far less than they were purchased. Indeed, in June 2018, the Government sold off a 7.7% stake in RBS for £2.5bn (at 271 pence per share), which meant a £2.1bn loss for the Government and the taxpayer.
To replicate this loss on a larger scale makes no economic sense, with the Office for Budget Responsibility estimating that this would leave the taxpayer £28.5bn out of pocket. It also means that the Government will be throwing away the dividends it would receive from a now profitable RBS.
The sell-off would also return the RBS to its old, private-sector ways of putting profits before people and the needs of the economy. Partly owning RBS provides a golden opportunity to influence the wider banking sector, and push it towards serving the public good, but this is also due to be discarded by the Government’s plans.
A YouGov poll conducted in February 2019 revealed that just 9% of the public think RBS should be sold off in the near future. The public recognises how deeply flawed are the Government’s plans to sell its shares in RBS.
I have written to the Chancellor of the Exchequer, Philip Hammond, and called on him to abandon this deeply unpopular and economically illiterate policy.
I recognise that there is clearly unmet demand for lending in the UK and a problem with financial inclusion. Indeed, at the 2017 general election I stood on a manifesto which pledged to take a new approach to RBS, and launch a new consultation on breaking up the bank to create new local banks that are better matched to their customers’ needs.
The Opposition is also considering plans to develop a Post Office bank to ensure universal access to banking services for every part of the UK. These proposals are being developed in more detail, alongside plans for the future of the public stake in RBS and other measures designed to increase plurality in the banking sector.