Open letter to David Cameron describes conflict as a ‘military disaster and a human catastrophe’
David Cameron’s plan to spend more than £50m marking the centenary of the first world war has been attacked by a group of actors, writers and campaigners including Jude Law and Michael Morpurgo, author of the children’s novel War Horse which is set during the conflict.
Promising a “truly national commemoration”, the prime minister said last year there would be events in 2014 to mark 100 years since the outbreak of the conflict and in 2018 for the centenary of Armistice Day, as well as on the dates of major battles in between.
But in an open letter to Cameron, published in the Guardian, a range of figures also including the musician Brian Eno, the artist Anthony Gormley and the actors Patrick Stewart and Alan Rickman describe the conflict as a “military disaster and a human catastrophe”.
“Mr Cameron quite inappropriately compared these events to the diamond jubilee celebrations and stated that their aim will be to stress our national spirit,” they say. “That they will be run at least in part by former generals and ex-defence secretaries reveals just how misconceived these plans are.”
The letter’s 49 signatories, who also include the film director Ken Loach and the poet laureate, Carol Ann Duffy, invite the public to add their names to the letter online “to ensure that this anniversary is used to promote peace and international co-operation”.
A total of £50m was being spent on the commemorations, according to the prime minister, who said an advisory board of former defence secretaries, chiefs of staff and military specialists would bring together ideas for the events. There will be a £5m educational programme for schoolchildren, including trips to the battlefields and support for an overhaul of the Imperial War Museum.
Cameron said last October: “The centenary will also provide the foundations upon which to build an enduring cultural and educational legacy to put young people front and centre in our commemoration, and to ensure that the sacrifice and service of 100 years ago is still remembered in 100 years’ time.”
Pressing the G8 to get tough on avoidance is hypocrisy while British dependencies like the Caymans are still in business
I cannot see the point of tax havens. Or rather, I can see the point, but not why we tolerate them. They are licensed theft from the exchequer, offshore fiscal Scud aimed directly at the nation’s budget. For a decade politicians in Washington, London and elsewhere have railed against them – but done nothing.
Years ago I, by mistake, slipped an income tax voucher for March into my folder for April. This delayed payment to the next tax year. Somehow I was detected. I was dragged before Her Majesty’s inspector, reprimanded and hit with a swingeing fine – just to show who was boss.
I wish my name had been Goldman Sachs, Amazon, Starbucks, Google or Apple. I would instead be popping in and out of Downing Street, lunching with the chancellor and having “sweetheart” conversations with HMRC, offering them a few quid out of kindness as I left. The only downside would be a day spent before an “influential” Commons committee, listening to some bat called Margaret Hodge boring on about how evil I was.
We cannot open a paper these days without reading tales of the fiscal antics of big corporations. Ever since the tycoon Leona Helmsley declared in 1989 that “only the little people pay taxes”, taxpayers have grown littler and littler. Treasuries have become more grasping. The wealth of the world has grown inexorably. But Helmsley’s law has held good. Taxes are paid by fools. Real men go offshore.
In the early days of the internet, companies such as Amazon, Google, Apple and Facebook had liberal, funky images. Their staff said things like “awesome” and offered a service free at the point of delivery. They were the welfare state of the wired generation, and the left loved them.
Now they are grasping capitalists like the rest. They float their balance sheets on wild prospectuses. They gobble up competitors with leveraged deals. They buy hardware from cheap labour subsidiaries. Above all, they avoid tax by burying their businesses on Caribbean islands or in European principalities. The internet is built on a gigantic subsidy from the taxpayers of the world.
The sheer gall with which the new cyber-corps defend tax avoidance is astonishing. They either claim that they employ lots of people and that is good enough, on which argument hardly an employer would pay tax; or, like Amazon, they pretend their real “business” is nowhere near where they trade. In four years, Amazon has paid just £10m tax on £12bn of UK sales, since it was really “in” Luxembourg.
Likewise Google operates through companies lodged in Dublin, where tax can be negotiated close to nothing, while its large UK operation is merely “encouraging” sales. Since 1998 Starbucks has paid just £8.6m in corporation tax on £3bn in UK sales. Its boss said he might “negotiate” a bit more, but really Britain was just a “franchise”.
Whose intelligence are these people trying to insult? And they are the tip of an iceberg, which Tax Justice Network estimates is a vast slew of $21 trillion stashed away in tax havens.
Nor is only company tax foregone. The Times recently calculated that £4.5bn in income tax was unpaid by individuals doing business in Britain but declaring offshore status. Some £1bn was unpaid by UK “residents” of Monaco alone. Most of these people earn so much money that they could pay their taxes and hardly notice. The intention can only be to cheat other citizens of what should be a shared obligation to support the state.
Every now and then politicians get hot under the collar about offshore tax, though usually only in opposition. In power, like Peter Mandelson, they get “intensely relaxed … about the filthy rich”, largely because they enjoy their company. The G20 in 2009 said it would get tough with tax havens. It did not. Nor did Alistair Darling or Gordon Brown. The Bank of England did nothing. HMRC did nothing. The CBI did nothing – its president, Roger Carr, pleading last week that “taxation cannot be about morality”.
The irony is that the cyber-corps are now being hounded not by government, or the long arm of the fiscal law but by the web. It is the nerd in the attic, the downloader, the whistleblower who is hacking into tax haven records, publishing lists of tax dodgers and supplying information to the Revenue. Even then the only remedy is “name and shame”.
There are proposals to force firms doing any sort of business in Britain (and hopefully Europe and the US) to register their profits wherever they operate, and be assessed for tax pro rata. The trouble is that any company whose business is not nailed to British soil seems to treat corporation tax as voluntary. It might be better to ease it out in favour of sales tax, business property tax and, if the City bites the bullet, a financial transactions tax. Meanwhile we gasp at the absurdity of HMRC in ignoring the cyber-corps’ gigantic warehouses and gleaming London offices as evidence of “business”.
The biggest challenge lies in the havens themselves. Why do they survive as part of any tolerated union? Brussels is ruthless in enforcing its rules on members, yet indulges such fiscal miscreants as Luxembourg, Liechtenstein and Monaco. Why does it not excoriate Switzerland?
The British Crown retains “dependencies” that enjoy the benefits of UK citizenship and yet harbour people who are lifting billions of pounds from UK taxpayers. The Cayman Islands, the worst culprit, has a government accountable to Britain that enforces banking secrecy, levies zero company tax and is consequently home to the biggest money-laundering and tax-evading operation this side of Dubai.
British governments sometimes claim they turn a blind eye to these practices and places because they fear the tax-dodgers might go further afield, to the Gulf and the east. Why not then ban the dodgers from residing in England and their “companies” from operating in England – and, if Europe means anything, from Europe? Besides, we do not allow fraudsters free rein for fear they might take their business abroad.
David Cameron and George Osborne have commendably reiterated opposition to tax rackets that drain some £7bn from their revenue each year. Both have condemned tax “avoiders” and their accountants. Next month the G8 is again purported to be “getting tough on tax havens”, this time at Cameron’s bidding. He would carry more conviction if he brought his own havens to book.
Burberry, Tesco, Vodafone and BAE Systems join CBI chief in lobbying PM to stop moralising on tax ahead of G8 talks
The bosses of some of Britain’s largest multinational corporations have urged David Cameron to stop moralising and rein in his rhetoric on tax avoidance ahead of a G8 summit next month.
Chief executives of companies such as Burberry, Tesco, Vodafone, BAE Systems, Prudential and GSK were keen to take a final opportunity to lobby the prime minister in advance of the meeting of political leaders in Northern Ireland.
Cameron has pledged to use Britain’s G8 presidency to tackle aggressive tax avoidance by multinationals, but is also keen to heed the counsel of his business advisory group, which he met with on Monday.
Also present was Google’s chairman, Eric Schmidt, despite the internet search firm coming under fierce attack from MPs last week because of its tax arrangements.
The president of the Confederation of British Industry, Sir Roger Carr, who was at the meeting, was among those who have taken issue with Cameron’s attacks on the ethics of big business tax engineering.
During a speech earlier in the day at a London event organised by Oxford University’s Said business school, Carr said: “It is only in recent times that tax has become an issue on the public agenda – Starbucks, Google, Amazon – businesses that the general public know and believe they understand; businesses with a brand that become a perfect political football, the facts difficult to digest; public passions easy to inflame.”
In what appeared to be pointed criticism of increasingly firm rhetoric from Cameron on multinational tax engineering, Carr insisted tax avoidance “cannot be about morality – there are no absolutes”.
In January the prime minister used a speech at the World Economic Forum in Davos, Switzerland, to put a marker down on questions of tax structuring by big business. “Some forms of avoidance have become so aggressive that I think it is right to say these are ethical issues,” he said, urging multinationals to “wake up and smell the coffee”.
Carr said: “Tax payments are not, and should not be … a payment viewed as a down payment on social acceptability, or a contribution made by choice in order to defuse public anger or political attack.”
The CBI boss, who is being talked of as a successor to Dick Olver as chairman of BAE Systems, invited the G8 to consider three points in relation to tax reform:
• Avoiding the moral debate – “it’s all about the rules”.
• Fixing the rules on an international stage, not unilaterally.
• Consulting on proposed changes with business.
A Downing Street spokesman said the specific controversy generated by Google’s tax affairs was not raised during the meeting with business leaders, though discussions did focus on “explaining the tax and tax transparency part of the G8 agenda”.
Also speaking at the Said business school event was Margaret Hodge MP, chair of the public accounts committee and one of parliament’s most outspoken critics of tax avoidance. With Starbucks and the big four accountancy firms in attendance, she said: “Your time has now come on accountability. You are now being asked to answer certain questions and it’s important that we all engage.
“One could argue that the way some companies organise their affairs is anti-competitive to many British companies. Especially if you look at the way Amazon arranges its affairs.”
On Revenue & Customs’ appearance before her committee last week, she added: “Their approach, when they came to parliament last week was complacent and patronising, an attitude that actually didn’t help take the committee forward. I don’t think it helped members work closely together across my committee.
“In my opinion they are not aggressive enough. These are issues of how you judge individual companies, but at the moment I’m not clear how HMRC makes its judgments. So toughen up, HMRC.”
Other attendees at the event were representatives of retailer Marks & Spencer, which was accused of running its online business in a similar structure to Amazon’s, and pharmacy group Alliance Boots, which recently relocated its headquarters to Switzerland.
CBI head and UK’s largest employers descend on Downing Street amid claims tax row has been used as ‘political football’
The president of the CBI is delivering a firm message from some of Britain’s largest employers to David Cameron, calling on him to stop “moralising” on how multinational corporations should be taxed.
Roger Carr, flanked by some of the country’s most powerful global business leaders, trooped into Downing Street on Monday for a 3pm meeting of the prime minister’s business advisory group. Around the table were chief executives of the UK multinationals Burberry, Tesco, Vodafone, BAE Systems, Prudential and GSK. Also present was Google’s chairman, Eric Schmidt, despite the search firm coming under fierce attack from MPs last week over its tax arrangements.
Business leaders were keen to outline their views to the prime minister before the G8 meeting in Northern Ireland next month, during which David Cameron has pledged to use Britain’s presidency to tackle “aggressive tax avoidance” by multinational firms.
A hint as to the robust tone business leaders were likely to take with the prime minister came in a speech Carr gave earlier in the day at an Oxford Business School event in London.
“It is only in recent times that tax has become an issue on the public agenda – Starbucks, Google, Amazon – businesses that the general public know and believe they understand; businesses with a brand that become a perfect political football, the facts difficult to digest; public passions easy to inflame.”
In what appeared to be pointed criticism of increasingly firm rhetoric from Cameron on multinational tax engineering, the CBI boss insisted tax avoidance “cannot be about morality – there are no absolutes”.
In January the prime minister used a speech at the World Economic Forum in Davos to put a marker down on questions of tax structuring by big business. “Some forms of avoidance have become so aggressive that I think it is right to say these are ethical issues,” he said, urging multinationals to “wake up and smell the coffee”.
Carr told an audience at the London event: “Tax payments are not, and should not be … a payment viewed as a down payment on social acceptability, or a contribution made by choice in order to defuse public anger or political attack.”
The CBI boss, who is being talked of as a successor to Dick Olver as chairman of BAE Systems, invited the G8 to consider three things in relation to tax reform:
• to avoid the moral debate – “it’s all about the rules”
• to fix the rules on an international stage, not unilaterally
• to consult on proposed changes with business.
Earlier in the day, asked whether Cameron was going to raise Google’s tax affairs at his meeting with business leaders, a Downing Street spokesman said: “We don’t talk about individuals or individual companies’ tax affairs. What the PM will be doing at the meeting will be explaining the tax and tax transparency part of the G8 agenda which he has been discussing with other G8 leaders and he will discuss again at the European council.”
PM urges havens to ‘get our own houses in order’ before G8 summit in June, where he claims tax avoidance will be a priority
David Cameron has written to the leaders of Britain’s offshore tax havens stressing the need to “get our own houses in order” as he pushes for international action to tackle avoidance schemes.
In a message to 10 crown dependencies and British overseas territories Cameron said he backed their right to be low tax jurisdictions but insisted that rules needed to be set and enforced fairly.
The move comes ahead of next month’s G8 summit in Northern Ireland, where Cameron will push for an agreement aimed at clamping down on tax evasion and avoidance.
He said he wanted the G8 to “knock down the walls of company secrecy” to reveal who really owns and controls firms.
Cameron’s initiative came as he prepared to raise the issue of corporate tax dodging with Google’s boss, Eric Schmidt at a meeting in Downing Street.
The internet fim’s executive chairman is a member of Cameron’s business advisory group, which has its regular quarterly meeting on Monday, just days after Google was given a mauling by a House of Commons committee over its tax affairs.
The group holds its meetings behind closed doors and Downing Street does not reveal the content of its deliberations but a source inside No 10 confirmed that tax will be up for discussion, insisting that “nothing is off the table” when Cameron meets the group of 16 business leaders.
The PM’s letter calling for more transparency about tax information and the ownership of companies was sent to leaders in Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man.
Cameron wrote: “As you know, I have made fighting the scourge of tax evasion and aggressive tax avoidance a priority for the G8 summit which the UK is hosting next month.
“With one month to go, this is the critical moment to get our own houses in order. I am looking to all the overseas territories and crown dependencies to continue to work in partnership with the UK in taking the lead on two critical issues: tax information exchange and beneficial ownership.”
He told the leaders: “I respect your right to be lower tax jurisdictions. I believe passionately in lower taxes as a vital driver of growth and prosperity for all.
“But lower taxes are only sustainable if what is owed is actually paid – and if the rules to achieve this are set and enforced fairly to create a level playing field right across the world. There is no point in dealing with tax evasion in one country if the problem is simply displaced to another.”
He welcomed commitments made by the territories to exchange tax information but said there was also a need to improve its quality and accuracy.
“Put simply, that means we need to know who really owns and controls each and every company,” he said.
“This goes right to the heart of the ambition of Britain’s G8 to knock down the walls of company secrecy.
“Some of you have already led the way with public commitments to produce action plans on beneficial ownership – and I hope those who have yet to can do so as quickly as possible.
“Getting the right content in these plans will now be critical. These will need to provide for fully resourced and properly managed centralised registries, that are freely available to law enforcement and tax collectors, and contain full and accurate details on the true ownership and control of every company.”
Ed Miliband has pledged to write new rules to tackle corporate tax dodgers if he wins the next election, even if there is no international consensus for action.
In an interview with the Observer, he said Cameron’s government was “dragging its feet” on the issue.
Meeting follows row over Google’s tax affairs but No 10 denies multinational tax arrangements are on agenda
Google executive chairman Eric Schmidt will meet David Cameron next week, just days after the internet giant was mauled by a Commons committee over its tax affairs, it has emerged.
Downing Street confirmed that Schmidt is set to attend a quarterly meeting of the prime minister’s Business Advisory Group at No 10 on Monday.
The Google chief is one of 16 members of the group, established in 2010 as a sounding board for the PM to hear business leaders’ concerns and priorities and discuss the government’s policies for the economy and growth, and has regularly taken part in its gatherings.
Downing Street said Monday’s meeting had been in the diary for some time and was not called in response to the recent controversy over the levels of tax Google pays in the UK. Details of the discussions are not normally released by Downing Street, but the spokesman said he was not aware of any plans for multinationals’ tax arrangements to be on the agenda.
Google was branded devious, calculating and unethical on Thursday, as furious MPs stepped up pressure on the search engine over its efforts to shelter its multibillion-pound profits from UK taxes.
At a stormy session of the Commons Public Accounts Committee, members reacted with incredulity to claims that the company – which paid just £6m in corporation tax in 2011 – did not carry out advertising sales in the UK, despite generating more than £3bn a year in revenues.
Vice-president Matt Brittin, Google’s head of operations in northern Europe, insisted he stood by evidence he gave last year that all of the company’s European sales were routed through its operation in Ireland and so were not liable to UK taxes.
But he was told by the committee chairman, Margaret Hodge: “You are a company that says you do no evil and I think that you do do evil in that you use smoke and mirrors to avoid paying tax.”
PM confident of finding way forward over plans to relax child-to-staff ratios, also denying bias against stay-at-home mums
David Cameron has indicated that a compromise will be found in the coalition over childcare after saying it would be wrong to become “frustrated” over differences with the Liberal Democrats.
Speaking in New York before returning home after a three day visit to the US, the prime minister said he was confident of finding a way forward over plans to relax child-to-staff ratios in England.
Cameron also denied that he was biased against “stay-at-home” mothers after the government unveiled childcare tax breaks for working parents. He said the government was not seeking to “dictate” to mothers over the choices they make.
A coalition row broke out last week over childcare when Nick Clegg confirmed he had raised objections to plans by Liz Truss, the children’s minister, to allow child minders to increase the number of under-ones they can look after from three to four. This would increase from four to six for children over the age of two. The rules for three-year-olds would remain the same – eight or 13 children per adult depending on whether a graduate was present.
Clegg said he feared that the changes would not improve childcare and may not even reduce costs. His remarks, which came after studying responses to a government consultation, prompted a furious reaction from the Tories.
The prime minister said he supported the Truss proposals but added that he was open to negotiating a compromise with the Lib Dems. He said: “On the ratios, I think trying to get quality affordable childcare is a very important priority for the government. I think the proposals that we put forward about both qualifications and ratios had a lot of merit. Clearly there now needs to be a discussion in the coalition about how best to go forward and respond to the consultation.
“But I’m confident, as with all these things, we will find a way forward. There’s no point getting too frustrated about these things. We’ll find a way forward that I hope will be good for people who want affordable childcare, which is a very, very major priority for people.”
The prime minister, who has faced criticism from the right wing newspapers for discriminating against “stay-at-home” mothers after the government unveiled childcare tax breaks for working parents, said he supported mothers whatever choices they make. He said: “I support the choices that mums make and if they want to work we should support that and if they want to stay at home we should support that.
The idea is not to dictate to people what they should do but to support the choices they make. There are lots of things we do do that help stay-at-home mums. The support we’re giving for nursery education, for instance is a good example of that.”
UK PM says final meeting of UN panel on development after 2015 agreed to focus on ending extreme poverty by 2030
World leaders are to face a “very powerful” challenge to agree to eradicate extreme poverty by 2030, David Cameron said as he hailed a tentative agreement by a UN high-level panel to a new set of development targets after 2015.
Speaking in New York after the final meeting of the panel, co-chaired by Cameron, President Ellen Johnson Sirleaf of Liberia and President Susilo Bambang Yudhoyono of Indonesia, the prime minister said its members had “nailed” their colours to the mast on the need to eradicate extreme poverty.
But Cameron did not say whether the panel, whose final report is due to be presented to the UN secretary general, Ban Ki-moon, this month, will include other “zero” targets, such as eradicating hunger.
The prime minister sounded an upbeat note as he hailed the agreement on extreme poverty. He said: “We have brought this all together in what will be a very powerful report for the world to respond to … We have nailed our colours to the mast, with one clear overarching aim – to end extreme poverty.
“Over a billion people still live on less than $1.25 a day. Getting to the point where no one at all is that poor is no longer a pipe dream. It can and should be one of the great achievements of our time. And it means that by 2030 everyone will have what we in Britain already consider our birthright – drinking water, electricity, healthcare and a place at school.”
Cameron, who had hoped to unveil 10 new development goals in New York, made clear that further work is needed. His 10 goals are: ending extreme poverty, ending hunger, safe and sustainable water supplies, stopping preventable deaths, a school place for every child, empowering girls and women, delivering infrastructure and energy, boosting jobs, ensuring access to justice, and effective and open government.
“So we have agreed that there must be a transformational shift in the way we do things. Rich countries meeting their aid commitments is important, but will not be enough on its own.
“Our report will make clear that we need to tackle the causes of poverty, not just the symptoms. Above all: a focus on economic growth driven by a strong private sector as the most powerful engine to lift people out of poverty; a recognition that development has to be sustainable for the planet in the long term; and a new commitment to strong institutions and governance, because these are essential to end conflict, protect the rule of law, stamp out corruption and insecurity, and hold governments accountable.”
The prime minister said the need to focus on the causes of poverty explains why Britain has been resisting pressure to place a commitment to reduce income inequality in the developing world in the panel’s report. He said: “We want to make a more equal and fair world. We want to have equality of opportunity right throughout the goals we set – whether it is about healthcare, whether it is about education.
“That is the most important form of equality that we need in our world – that frankly no one is left behind, everyone is given the chance to live a life out of poverty and make the most of their talents and their opportunities. It is that equality of opportunity that you will see flow through this very, very strong report.”
Yudhoyono and Johnson Sirleaf did not attend the press conference.
Prime minister describes allegations as ‘very serious’ and says those who manipulate prices will feel ‘full force of law’
David Cameron has warned that anyone found guilty of the “hugely concerning allegations” of oil price fixing should face the “full force of the law”.
Speaking in New York, the prime minister said the allegations were “very, very serious” and “major consequences” would follow as he pledged to ensure that laws passed in the wake of the Libor scandal would apply to oil price fixing in the future. He was also forced to try to explain why a similar investigation barely four months ago by the Office of Fair Trading (OFT) in Britain had come up empty-handed.
Cameron said: “These are hugely concerning allegations and, if true, very, very serious. The OFT is involved in this investigation, as I understand it, but we have to get to the bottom of what happened first before we can pass judgment on the way regulators have worked in the UK. But it is hugely concerning. An investigation is under way.”
“It’s totally unacceptable for firms to fix prices and force consumers to pay more. That’s why we are looking at how to extend this criminal offence to the energy sector to make sure that those who manipulate benchmark prices feel the full force of the law.”
The prime minister initially said that laws introduced in the wake of the Libor scandal could apply to alleged oil price fixing. Downing Street was forced to correct the prime minister and say this was not the case, but that the prime minister hoped the law could apply to oil price fixing in the future.
BP, Shell and the oil price reporting agency Platts all had their London offices raided on Wednesday by competition authority investigators who are concerned about collusion and manipulation of oil and biofuel product markets. The three companies – and Statoil of Norway – have all promised to co-operate fully.
Ed Davey, the energy and climate change secretary, confirmed that an official from the OFT accompanied colleagues from Brussels on the unannounced raids.
But he specifically mentioned that the investigation was not “directly linked” to the allegations of gas market manipulation raised last November by the Guardian, which Ofgem and the main City regulator, the FCA, are continuing to review.
The way petrol prices in Britain remain high even after falls in the value of global wholesale oil have long been a source of deep anger and frustration for motorists and motoring groups such as the AA.
Four months ago the OFT ruled out a full investigation into allegations of petrol price fixing after finding that competition in the sector was “working well” and that there was “very limited evidence” that pump prices rise quickly when the wholesale price goes up but fall more slowly when it drops.
Caroline Flint, the shadow energy secretary, described the alleged behaviour of the oil companies as shocking, while Robert Halfon, the Tory MP for Harlow, called for prison sentences for any executives found to have overseen any price fixing.
He told the BBC: “Last year we urged the Office of Fair Trading to launch a full inquiry into alleged price fixing by oil companies. I had a whistleblower approach me with a dossier which we put up on our website called petrolpromise.com and sadly, nothing was done.
“The Office of Fair Trading did a limp-wristed, lettuce leaf-type inquiry and they should have had a full inquiry. Now we’ve left it up to the EU to take action.”
The oil market-fixing probe has been compared by some experts to the Libor scandal, which saw the banks falsely reporting key interest rates used to calculate mortgages. It also comes after Seth Freedman, a price reporter and whistleblower, highlighted huge fluctuations in the British wholesale gas market on 28 September, which indicated there could be market abuse.
Flint asked Davey in the Commons for an update of the investigations by Ofgem and the FSA, which she failed to get. She then asked: “Can the secretary of state assure us we will not need another EC investigation to get to the bottom of what was happening in the gas market?”
The energy secretary said it would not be right to interfere in the workings of the UK regulators, whose independence was critical to their effectiveness.
PM’s comments fuel speculation that ministers might consider British Gas-style sell-off of government’s share in bank
David Cameron has raised the prospect that Royal Bank of Scotland could be returned to the private sector at a loss to the taxpayer through a share sale to the public.
Asked whether there were any circumstances in which the stakes in RBS and Lloyds Banking Group could be sold at a loss, the prime minister said: “On RBS I think the important thing is to return this bank to health, and there’s a strategy underway. It’s made some progress of selling down surplus assets and building up positive assets.
“And I keep a very close eye on this and want to make sure that progress is made as fast as possible.
“In terms of returning RBS to the private sector involving people in owning this bank in a genuine way, I’m open to all ideas and proposals. But it seems to me the primary question is getting this bank back into good health, and then obviously there are connections between the ownership and health but step one is to continue the path to health and step two is to think about ways of changing its ownership.”
The comment that people could be involved in “owning this bank in a genuine way” suggests the prime minister is open to the suggestion backed by some Liberal Democrats to hand shares to the 45 million adults on the electoral register or an idea expected to be contained in a report next month by Policy Exchange – No 10′s favourite thinktank – which is expected to suggest individuals could apply for shares that could not be sold until the share prices rise.
There is also speculation that the chancellor might consider a British Gas-style privatisation, where the public was able to buy shares rather than get free handouts.
At Wednesday night’s's share prices, the taxpayer stakes in both banks were worth £24bn less than the £65bn paid for them during the 2008 bank bailout. RBS is 81% state-owned and Lloyds, 39%.
Cameron’s remarks may be seen as the latest attempt by the government to prepare the ground to sell the banks off at a loss. Sources close to George Osborne recently blamed Alistair Darling for paying too much in the bailout of the banks, although the former chancellor has since written in the Financial Times that Osborne should avoid playing politics when it comes to selling off the banks.The clearest signal that the government is preparing the banks for sale came in March the Treasury linked the bonus for the Lloyds boss António Horta-Osório to selling off a third of the 39% taxpayer stake above 61p.
This is considerably lower than the average price of 73.6p but is the stock market price of the Lloyds shares when the government bought them rather than the actual price that the government paid. The Lloyds share price almost touched 61p on Wednesday before closing at 59.3p. RBS shares closed at 307p, below the 502p average price the taxpayer paid for them.
Horta-Osório will be at Lloyds’s annual general meeting on Thursday (thurs) where he may face questions about a potential privatisation of the bank.