By blindly going along with the idea that banks do not belong in public hands, the government is simply rebuilding the pre-2007 banking structure
The British public woke up yesterday morning to a loss. A £1 billion loss. It was not until 7am that the government announced the pitiful 330p share price at which it had sold 5.4 per cent of Royal Bank of Scotland the night before, the bank which the country made enormous sacrifices to rescue for 502p a share in 2008.
Losing £1 billion at a time of austerity was never going to be popular, so it should come as no surprise that the sale would take place when the public’s backs were turned. School holidays mean lots of families are taking a break, and parliament is in recess. But it seems the City was wide awake. More than half of the shares went to hedge funds.
Yet even as beneficiaries of the sale, many traders were not afraid to criticise it. Investec analyst Ian Gordon was ‘perplexed‘ by it. London Capital Group’s head analyst compared it to Gordon Brown’s controversial sale of UK gold reserves.
Indeed, the uncharacteristic absence of profit motive in this sale raises questions about its logic.
The only explanation can be ideological. This is about privatisation, and the Conservatives’ staunch belief in free market capitalism as the answer to all of our problems. It’s about austerity: the billion pound loss allows Osborne to continue to plead poverty and slash public services. And undoubtedly, it is the result of decades of lobbying from banks and markets for more freedom.
This lobby has been remarkably successful in presenting the banking sector as a force for good. Even after their greed and fraud caused the financial crash that destroyed economies around the world and made life more difficult for millions, the banks got away with minimal regulation. And as politicians appear to forget what caused the crash, history is repeating itself.
By blindly going along with the idea that banks do not belong in public hands, the government is simply rebuilding the pre-2007 banking structure. By hastily handing back control to those who caused the financial crisis, it fails to address the detached, profiteering culture that allowed bankers to manipulate the markets to make a quick buck.
Reprivatisation is a backwards step, and does nothing to improve banking’s relationship with the wider economy.
George Osborne’s privatisation drive has not only lost us £1 billion worth of public money that could have been spent on helping young people into work, dampening the housing crisis, or relieving some of the strain on our ailing NHS – it has lost us a key asset in any move towards a more equitable banking system.
RBS could be a bank of the people for the people. It could be a bank that serves the country’s needs – from providing loans to small businesses to promoting free basic accounts that would open up banking to all.
The Green Party would keep RBS in public hands, using its dozens of branches to create a network of local banks for every city and region.
It’s time our banks worked for the people, instead of consuming public money. And it’s time our government stepped back from the banking lobby, listened to the public and thought harder about how to get the most out of our assets.
Natalie Bennett is the leader of the Green Party. Follow her on TwitterLike 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.