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Ben Chu: Public private palaver

Posted by Eagle Eye
  • Tuesday, 8 December 2009 at 11:16 am
Does the Government think the Royal Bank of Scotland is in the private sector? This quote from the Treasury's guide to the Asset Protection Scheme seems to suggests so:

"The Government is clear that banks are ultimately better off in the private sector and that temporary public ownership should only ever be used as a last resort. How well assets and liabilities are managed drives overall value and the public sector is not generally well equipped to manage such large, complex and international pools of assets on a permanent basis. The delisting of a bank under temporary public ownership also complicates the eventual exit by removing the price mechanism at which it would eventually be returned to the private sector."

But as the Treasury makes clear in the same document: "The Government's economic interest in RBS will rise to 84 per cent". So the state can own 84 per cent of a business and it can still be a private concern?

Something doesn't add up here. Until recently the Government was attempting to sell of a 30 per cent stake in the Royal Mail to a private sector partner. And yet the Business Secretary Lord Mandelson maintained that the Government was committed to a "publicly owned Royal Mail".

Lord Mandelson
Public or private?

But surely if a private sector stake in RBS of 16 per cent puts it in the private sector in the Government's eyes, then a 30 per cent private stake in the Royal Mail would put it doubly in the private sector?

Of course it's all nonsense. If the Government's plans for the Post Office had gone ahead, the result would have been part-privatisation. And RBS is now, in practical terms, publicly owned. Yet for reasons of politics and ideology, ministers will not admit that reality.

photo: Department for Business Investment and Skills



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