Ben Chu: We're being cuckolded by RBS. It's time for the Coalition to nationalise
Outlook Power without responsibility, as Stanley Baldwin noted, was the prerogative of the harlot through the ages. So what does that make "responsibility without control", as Vince Cable described the Government's teeth-grindingly frustrating relationship with the Royal Bank of Scotland? Here's a suggestion: the prerogative of the cuckold.
Ministers find themselves behaving like a pathetic husband who picks up the bills of an unfaithful wife but who is powerless to prevent the missus racking up huge bills as she entertains her legions of gentleman friends. This husband also has to pay for the legal fees of this wayward spouse, bailing her out of jail when she gets caught shoplifting (or fixing interest rates). Yes, the husband has promised to dock her allowance as a punishment, but the broad guarantees of her credit remain in place, ensuring that she never truly feels a compulsion to reform.
So what's the solution to this plainly abusive relationship? What do you do with a bank that you fund, but don't control? The Business Secretary hinted, once again, at a divorce, dredging up the idea of distributing RBS shares to the public. A nice idea in a perfect world. But back on this planet such a dispersal would be a disaster. Even the few scraps of influence the Government has over the tottering bank, which still accounts for a colossal share of lending, would be lost.
That leaves full nationalisation, recently recommended by that radical, socialist firebrand Nigel Lawson. Impractical, says Vince. "Full nationalisation would cost the taxpayer billions and, except in a new financial emergency, this is unlikely to take precedence over other claims on spending," he said.
This is feeble. The market capitalisation of RBS is presently about £20bn. This implies that it would cost the Government about £4bn to buy out the fifth of the bank that it doesn't already own. As the Institute for Fiscal Studies pointed out, the Government is already planning on borrowing £64bn more in 2014-15 than it planned at the time of George Osborne's "emergency" June 2010 Budget. Why on earth would ministers choke on an extra £4bn?
Would the public blow a gasket at a few extra billion quid spent in purchasing the remaining 20 per cent of RBS shares in private hands? Newsflash: the gasket of public tolerance over this bank has already blown. If ministers want any evidence of that fact they should head down to the biggest pub in their constituency with the latest transcript of the conversations between RBS's Libor-fiddling traders in their hands and convene an impromptu discussion group.
If the Coalition framed the nationalisation as a way of preventing the bank paying any bonuses whatsoever to these jackals, and as a way of finally getting lending to credit-starved small businesses, my guess is that the public would welcome the buyout with open arms.
The Coalition is fond of claiming that it is cleaning up after the mistakes of Alistair Darling and Gordon Brown. This is mostly baloney: the bulk of the deficit is a consequence of the financial crisis rather than overspending by the last government.
But one area where those two aforementioned politicians did leave a reeking mess was in the half-nationalised RBS. So why on earth don't Mr Cable and the Chancellor actually live up to their rhetoric, don their rubber gloves and nationalise this confounded bank in the name of the public good?
Or do they imagine that taxpayers secretly enjoy being treated like cuckolds?
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