Centre for Policy Studies says the public should save more with banks

The Centre for Policy Studies is a conservative think tank that originated in 1974, founded by Margaret Thatcher and Sir Keith Joseph.  The organization’s stated goals include promoting “coherent and practical public policy” amongst others, and they have just presented a fairly radical suggestion regarding taxpayers and bank bailouts.

Chairman Maurice, Lord Saatchi is also the former chairman of the Conservative party, and he says that taxpayers gave their money to the government to invest in banks, and they should start getting it back the minute those banks start to show a profit.  The report from CPS theoretically offers a way out of government’s burden of debt; they suggest that every taxpayer (about 46 million of them) should be given shares in the banks.

Royal Bank of Scotland and Lloyds Banking Group were specified in the CPS proposal; it said that 1450 RBS shares and 450 Lloyds shares should be distributed to each individual.  When those shares are sold as the financial market continues to improve, the taxpayer would get his or her money back plus a percentage of any profit.  The Treasury would collect capital gains tax on profit and also recoup the original bailout money.

CPS argues that such a scheme is viable with today’s technology, and would save the government around 750 million pounds in investment banking fees that would be incurred if the shares were sold as a public offering.  The idea is that taxpayers who basically paid for the banks’ survival should reap the benefits when RBS and Lloyds start making a profit again, though some economists are sceptical.  The UKFI is reportedly waiting for developments in hopes that bank shares will become more attractive to investors.

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