Osborne harks back to Thatcher with his “killer app”

By James Valentine

George Osborne has a big new idea. According to the Sunday Times, the man who would be Chancellor dreams of bribing the electorate with pie in the sky.

The nationalised banks are returning to profitability and, in time, can revert to private ownership. By selling off bank shares to small investors at a discount – a “People’s Bonus” – Osborne believes he can thereby give them a stake, which will be politically popular and financially attractive. He is so pleased with this proposal that he ludicrously calls it his “killer app“.

Osborne consciously harks back to the Thatcher era when the nationalised utilities like British Gas were privatised. Such a move will supposedly fulfil the aim of allowing ordinary folk to build up a nest-egg – to “recapitalise the poor”.

But in assuming that the investing public will necessarily buy the bank shares I believe he underrates them. The Thatcher government indeed created a host of new small investors, but subsequently most of them disappeared when they discovered the painful truth that shares can go down as well as up. The financial cataclysm of the last eighteen months, principally involving banks, has surely reinforced this.

If you offer big enough share discounts, as Thatcher did, you will of course find buyers, but that’s at a cost to the Treasury, which, ultimately, everyone else has to pay. With big discounts, everybody who can afford some shares will pile in to buy, and many will sell them on, making an easy profit. But the really poor, of course, can’t afford to buy shares in the first place.

Capital assets should indeed be spread more widely but if the Conservatives are so keen on this idea then why do they plan to limit Labour’s Child Trust Fund, which aims to encourage prudent, long-term saving?

Conservative supporters themselves don’t sound at all happy about these proposals; most of reactions on ConservativeHome today vary from embarrassment, to anger and despair at yet another own goal. Some even call on Osborne’s removal from his role as shadow chancellor.

I was out canvassing yesterday and pleased to see that, at last, we’ve given a Labour supporting businessman a prominent write-up in the new Future Fair for All literature. As a business owner myself I know the importance of enterprise, hard work, and calculated risk-taking. Thatcher betrayed both her upbringing and the country by those foolish, wasteful privatisations that diminished enterprise and encouraged the lazy notion that, somehow, you can get something for nothing.

It’s quite unbelievable that, even now, the Conservative leadership don’t seem to have learnt the lesson of history and wish to turn the clock back.