Clegg’s Free Shares: A Half Baked Idea

The Deputy Prime Minister wants to give everybody free shares in Lloyds Bank and RBS, so as to reward taxpayers for bailing out the banks. This is just silly.

First we are in the midst of a sovereign debt crisis, destabilised by a euro crisis. At best this will lead to significant sovereign debt re-structuring, starting with Greece. This will mean substantial losses to European banks, with UK banks exposed either directly or by credit default swaps and the like. We all know how much they are worth when reality kicks in. Except it is worse, because some will require a payout to French and German banks to cover their losses, which UK banks have covered. It is not impossible that further rescue by taxpayers will be needed, not least because the coalition government, of which Nick Clegg is Deputy PM, has shuffled about and delayed urgent bank re-structuring, which leaves these profligate institutions too big to fail. In fact they may now be too big to save.

On top of all that, the issue of whether HBOS should be separated from Lloyd’s is not fully resolved, nor whether Halifax should be reconstituted as a building society and separated from Bank of Scotland. There is too the question of whether Nat West should have its independence restored and whether Coutts, as the country’s poshest bank, might not do better out of Sir Fred’s former and now tottering empire.

To come up with this childish plan in order to appeal to simplistic echoes of Thatcher’s Sid, tells us a good deal about the drifting nature of Clegg’s brief as Cameron’s minder. It does not enhance their joint creditability and coming on top of one of the richest harvests of policy u turns in the history of government, makes it look as if the weakest links in the coalition are at the top. Compare with the single minded Osborne and Alexander, with Hague and Cable in the wings.