The Royal Bank of Scotland mostly belongs to us. That might seem a statement of the obvious. After all, we’re often reminded that the taxpayer acquired 81 per cent of the bank’s shares during the financial crisis to prevent it from collapsing. Yet the fact of public ownership needs to be stated, clearly and loudly, because the Government is in danger of overlooking it, and making a costly mistake as a result.
Some background. The Chancellor is looking into splitting RBS into a “good bank”, made up of its solid assets, and a “bad bank”, made up of its dodgy ones. The good bank could then be sold to private investors, where it should be able to increase lending, while the bad bank would be taken into full public ownership and its questionable loans gradually run down.
But there are a couple of roadblocks. First, George Osborne some time ago foolishly ruled out injecting any more public money into RBS beyond the £45bn already invested by the previous Labour government. This makes a split tricky since some extra funding is likely to be required to restructure the bank. Second, taking the liabilities of the bad bank into the public sector would probably push up the national debt.
But these objections lack force because, remember, RBS mostly belongs to us. Any losses from impaired assets are already taxpayers’ losses. And any increase in the deficit as a consequence of nationalising the bad bank would merely recognise a public liability that already implicitly exists. A nominal increase in the national debt is irrelevant to whether it is sensible to split the bank.
This is what Andrew Tyrie, the head of the Banking Standards Commission, meant when he wrote, in a letter to the Financial Times yesterday, that “formal accounting conventions should not be allowed to get in the way of what is best for the economy”.
The fact that the canny Mr Tyrie made the intervention should concern us because it implies that the Chancellor is being swayed by the arguments of those who do not want RBS restructured. There are powerful players on this half of the pitch, including senior civil servants and City lobbyists.
But their arguments smack of self-interest. Treasury mandarins were responsible for the present, half-baked nationalisation of RBS and regard restructuring as a humiliating admission of error. Meanwhile, the City seems to consider a split as a dangerous precedent. Financiers want governments to write bailout cheques, but are uncomfortable with any intervention beyond that.
Yet the case for restructuring is clear. Five long years after the bailout, the depressed RBS share price shows that investors still do not believe the institution is worth buying. And the bank is still not lending properly to small firms. The compelling evidence from other countries is that a good/bad split is the way to deal with rescued banks and to get lending flowing. The taxpayer has much to gain from restructuring. And, because we already own the losses, we have nothing further to lose.
A decision on RBS is due in the coming months. With it we will discover whether the Chancellor has the political courage and the clarity of thought to put the public interest first.
Are working women a business liability? Ask stagnant Japan
Not everyone will be scandalised by the research showing that some 50,000 women each year discover there’s effectively no job for them when they return from maternity leave. Good riddance, some might even mutter. “No self-respecting small businessman with a brain in the right place would ever employ a lady of childbearing age” Godfrey “Bongo Bongo Land” Bloom of Ukip informs us.
These women-should-stay-at-home types imagine (as Bloom shows) they are being economically hard headed; that working women are an economic burden. But history shows us exactly the opposite. Societies in which women have entered the labour force have experienced productivity growth surges, which have raised general living standards.
One of the reasons Japan’s economy has been stagnant for so long is that so many women stay at home, discouraged by a discriminatory system designed by male dinosaur politicians akin to Bloom. Two thirds of Japanese women leave the workforce after the birth of their first child.
That could be changing. Prime minister Shinzo Abe has pledged to raise the female share of the workforce as part of his stimulus programme. In Japan they’ve learned the hard way that making life hard for working mothers makes everyone worse off.