I have been contacted by a number of constituents regarding the potential sell-off of the Royal Bank of Scotland (RBS).
In June 2018, the Government sold off a 7.7% share in RBS at a huge loss of over £2 billion. This was both unwise and unnecessary. It provided poor value for money for the taxpayer and reduced the Government’s ability to reform the banking sector.
Hundreds of small businesses have been damaged by the actions of RBS Global Restructuring Group, which has been accused of deliberately bankrupting companies to strip them of their assets. As Business Secretary in the Coalition Government, Vince Cable commissioned an independent review into RBS GRG. It found that “businesses are completely in the dark as to what is happening around them until it is too late. Most worryingly, the businesses affected are often perfectly viable and but for the action of the bank, would have been able to positively contribute to UK growth.”
That is why Liberal Democrats have been calling on the Government to establish a full public inquiry into RBS GRG and create an independent tribunal with the powers to award compensation of more than £150,000 to victims. The public stake in RBS should be used to put pressure on the bank to provide justice to the victims of the scandal.
As it is unlikely that RBS can ever be sold off by the Government at a profit, my party has called on the Government to use its shares to drive change within the banking system, and during the 2017 General Election, we campaigned to “require the major banks to fund the creation of a local banking sector dedicated to meeting the needs of local SMEs.” As Liberal Democrat Treasury spokesperson Susan Kramer argued in 2015, this could be achieved by breaking up RBS into several regional and community banks that would focus on providing low-cost credit to small businesses.
Should, however, RBS be sold off, we believe that the revenue raised should be ring-fenced to create a ‘Citizens Wealth Fund’. By actively investing in stocks, bonds and physical assets, the fund would enable the whole country to benefit from the returns to investment that are typically only available to the wealthy. The money could then be spent on our vital public services or be returned to citizens in the form of an annual dividend.
I wrote to the Chancellor of the Exchequer to put forward the concerns raised by constituents and I include below a copy of the response I received.