My Lords, UK Financial Investments manages the Government’s shareholding in financial institutions. UKFI’s objective is to dispose of the investments in an orderly and active manner, with an overarching objective of protecting and creating value for the taxpayer. The Treasury and UKFI continue to assess all potential options to realise value for taxpayers through the disposal of these shares.
My Lords, there is a well known saying by a famous American tennis player: “You cannot be serious”. Does the noble Lord himself believe what has been said, given that that would achieve nowhere near best value? If you wanted to have an administrative scheme that was absolute nonsense, you could not find a better one. Given that the Government manage potential sales, is the Minister seriously suggesting that the Chancellor is looking at that proposition? If so, what would be the eventual cost in loss of expected revenue in due course from the sale of Lloyds and RBS shares?
My Lords, what I said is that we are considering all options for the disposal of the shares in RBS and Lloyds Banking Group. My right honourable friend the Deputy Prime Minister has asked the Treasury to consider a particular disposal option, and that is what UKFI and the Treasury are doing.
Will my noble friend tell the Treasury that there is no need to consider this tired old suggestion for long? It was fully considered in 1979 when we embarked on the original privatisation programme and I am sure that his officials will be very pleased to give him all the old papers showing that it bristles with practical difficulties, not least the precise method of allocation, quite apart from the point made by the noble Lord, Lord Barnett. Will my noble friend also bear in mind the wise words of that great radical, Thomas Paine:
“What we obtain too cheap, we esteem too lightly”.
On the one hand, I might say to my noble friend that sometimes the old ideas are the best ones and it is good to dust them off. I recognise that the idea of free distribution of shares is not new but it is perfectly serious. However, the difficulties that my noble friend rightly puts up and some of the questioning from the noble Lod, Lord Barnett, are issues that must be properly considered.
My Lords, noble Lords will be aware that the Government have promised to set up a green bank with a capital of £3 billion. Does the noble Lord agree that a more constructive version of the Deputy Prime Minister’s suggestion might be to sell the shares in Lloyds TSB and RBS, as convenient, and use part of the cash thus raised to increase the capitalisation of the green bank? If in addition the bank was allowed to borrow, could that not be a powerful instrument for economic recovery and long-term development by mobilising shares for which there is no present business use?
My Lords, bearing in mind the immense damage that the Government’s fiscal policy is doing to the economy, is not the explanation of the hare-brained scheme from the leader of the Liberal Democrats simply an attempt by the Government to distract the public’s attention from that damage?
My Lords, I do not know what constitutes language that is not permissible in this House but I do not accept one iota of that analysis. The reason why we have an enormous monetary stimulus through the interest rates—last night, 10 years were at 3.33 per cent—is precisely because we are sticking to the plan to reduce the deficit. Otherwise nothing else would be possible in terms of growth for the economy. Indeed, one of the potential downsides of handing shares out free is that it would have a negative effect on the public finances, which is one of the issues that must be considered.
Would the Minister accept that technology has moved on since 1979 and whatever might have been in the papers at the time in terms of doing something then is wholly irrelevant to the costs of doing something today? Can he see the strength of the argument that once the Treasury has its money back, best value for the British people might best be served by giving them some cash in their pockets to decide for themselves the best way of spending the upside of the privatisation of the banks?
Of course I agree with my noble friend that IT has progressed significantly over the past couple of decades, but that does not mean to say that it would be easy to create an IT database of the sort that would be required for this operation. While that is one of the issues to be considered, there are other questions—of distribution, of the impact on the banks’ own funding, of share overhangs and so on. All of these things would have to be looked at.