Government loses £2.1 billion selling off RBS stake
The Government has come under heavy criticism after selling off another tranche of RBS shares at a £2.1 billion loss.
Chancellor Philip Hammond said the sale was "a significant step in returning RBS to full private ownership and putting the financial crisis behind us”, as if the problem with the financial crisis was the bailout of the banks, rather than the fact the banks needed to be bailed out in the first place.
In essence, we saved the bank from its own reckless behaviour, nobody was punished, and we’ve passed the profits back to city investors. This sort of short-sighted behaviour won’t prevent similar financial crises in the future - in fact it makes them more likely.
Observers have questioned what benefits the public have accrued from owning a majority stake in RBS, as the government has decided to remain an arms length owner, and opted not to prevent the bank from closing hundreds of branches, cost-cutting measures that were meant to increase profitability. But this is entirely the decision of the government, desperate to restore the status quo ante.
Stagnant wages continue to hold back the economy, which is only sustained by a growing mountain of private debt. In fact, personal debt - credit cards, personal loans, finance payments - recently returned to its dizzying pre-recession heights. Growth is stagnant, and high street shopping is collapsing. Why, in this economic environment, should we take Phillip Hammond’s words seriously? The government has its fingers in its ears about the deleterious state of the economy, and another crisis could be just around the corner.
Labour opposed the sell off in its entirety. Responding to the news, Shadow Chancellor John McDonnell said:
“There is no economic justification for this sell-off of RBS shares. There should be no sales of RBS shares, full-stop. But because of this government’s obsession with privatisation, the taxpayers who bailed out the bank will now incur an enormous loss.
“Taxpayers are paying the price for the Tories’ mismanagement of RBS over the past eight years. The next Labour government will deliver a banking system that works for the many, not the few.”