The problem with ‘People’s Bonuses’

Analysis of George Osborne's proposals that the Tories will offer 'small' investors the chance to buy shares in the bailed out banks at 'discounted' prices.

As a recent YouGov poll for the think tank Compass has shown, 75 per cent are worried that banks are still not being properly regulated. It feels all the worse now bonuses are looking so good at these, so recently destitute, financial institutions. But surely this discontent is no excuse for a potential future Chancellor to lose his marbles?

In his latest Sunday Times interview Mr Osborne proposes that a Tory government would offer ‘small’ investors the chance to buy shares in the bailed out banks at ‘discounted’ prices, likening the proposed scheme to Thatcher’s privatisations.

Of course this is a headline grabbing strategy to distract from the deficit cutting budget the Tories are proposing. But that does not excuse its stupidity:

1. We have all paid for these shares. Therefore if we sell them at a discount, we all lose out. We should be trying to sell them to investors at the highest possible price – nothing could be more obvious.

2. Ah, say the bright sparks in the Shadow Chancellor’s team – but these shares are being sold at discount to ‘small’ investors, so it is the ‘poor’ who will benefit. The idea that those who rely on free school meals, or income support, or publicly funded housing, will find a spare few hundred or thousand pounds to buy publicly traded shares is preposterous. Indeed, ‘small’ may well end up meaning the already financially astute and privileged, which further undermines the logic.

3. And what on earth are the Opposition doing proposing that the poorest in society should be ploughing whatever savings and wealth they have into perhaps the riskiest, and recently most volatile equity investment of all – financial stocks? The impact of these changes on bank stocks is uncertain to say the least. This is therefore very poor investment advice.

4. Osborne spoke about “recapitalising the poor,” a somewhat meaningless phrase given that many never had any capital in the first place, but also at odds with their other policy to reduce eligibility for the Child Trust Funds.

An explanation of both the principle and the practice behind Osborne’s proposal would be welcome – in its current guise, it appears to be the emptiest of policies.

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today. 

11 Responses to “The problem with ‘People’s Bonuses’”

  1. John Gamblin

    RT @leftfootfwd: The problem with ‘People’s Bonuses’:

  2. aidanskinner

    @angelneptustar ppl on low incomes won't be able to take advantage, discount will largely go to better off. see

  3. Rosie

    Poverty is relative. I am poor in relation to Osborne, but seriously wealthy compared to many in the world.
    He would probably see anyone earning less than £40,000 and with less than £5000 in the bank as poor.
    And where are all the British Gas shares now? What proportion if them are in the hands of hedge funds and pension funds, rather than with small investors?
    Or maybe he’s planning to give them away so we all get our share. Yes, that’ll be it!

  4. Mr. Sensible

    Spot on, Shamik.

    Add to that, Osborne sees Thatcher’s privatization policy as something to celebrate?

    That just shows how much the Tories have changed…

  5. Demontrout

    The problem with ‘People’s Bonuses’

  6. Sarah Pope

    RT @leftfootfwd: The problem with ‘People’s Bonuses’:

  7. Joe

    Excellent post! Very, very funny.

    The sort of desperate Tory thinking that’ll help Labour win in May…

  8. Look Left – The Week in Fast Forward | Left Foot Forward

    […] again remained the key policy issue this week. On Monday, Left Foot Forward outlined the “stupidity” of George Osborne’s plans for “people’s bonuses”, while on Wednesday […]

  9. Tory NI plans treat us all like fools | Left Foot Forward

    […] not when we’re in Europe’ and ‘let’s help poor people get rich by selling them shares in dodgy banks at a loss to the taxpayer’) this does not come as a […]

  10. City AM attack Osborne's "short-sighted" banking policy | Left Foot Forward

    […] offering a “people’s bank bonus”, which would privilege a few taxpayers at the expense of the many and which has been described by Nils Pratley in the Guardian as […]

  11. The George and Vince show may get ugly | Left Foot Forward

    […] as a way to recapitalise the poor. The ridiculousness of this proposal was pointed out not only by this blog, but by Dr Cable himself, who at the time suggested that the plan “beggars […]

Leave a Reply