U.K. Bank-Sale Proceeds Should Go to Cut Debt

Ed Balls, the Treasury spokesman for the U.K.’s opposition Labour Party, said proceeds from selling off state-controlled banks should be used to reduce the national debt rather than in giveaways to voters.

The government took stakes of 41 percent of Lloyds Banking Group Plc (LLOY) and 83 percent of Royal Bank of Scotland Group Plc in late 2008 and early 2009, rescuing the companies from collapse. Both are currently trading at about half the average price at which the government bought the stakes.

In March, four people familiar with talks between the banks and Prime Minister David Cameron’s government said a sale could start as soon as next year. While Deputy Prime Minister Nick Clegg has called for the shares to be distributed to taxpayers, Chancellor of the Exchequer George Osborne may prefer a straight sale to raise funds that could be used to cut taxes before the 2015 election.

“Even as bank shares are falling again, David Cameron and Nick Clegg are still betting on a windfall gain from privatizing RBS and Lloyds to pay for a pre-election giveaway,” Balls told his party’s annual conference in Liverpool, northwest England today. “We will commit instead in our manifesto to do the responsible thing and use any windfall gain from the sale of bank shares to repay the national debt.”