Advisers discount Tory bank sale plan

25 February 2010 8:00 am | By Lee Jones

Conservative plans to encourage people on lower incomes to invest in discounted bank shares have been attacked as “silly electioneering” by advisers.

Shadow Chancellor George Osborne proposes the shares would be offered to younger people and those on modest incomes when the Government sells its stakes in the banks.

Osborne believes the plan offers “a golden opportunity” for people to start building savings. He says: “Taxpayers bailed out the banks, so they deserve a people’s bank bonus when the time comes to sell the Government shares.”

Liberal Democrat Shadow Chancellor Vince Cable says: “Actively encouraging people on very low incomes to invest in a volatile share market beggars belief. A young couple on low income is more concerned with putting food on the table than speculating on the stockmarket.”

Advisers are also highly critical of the plan. Evolve Financial Planning director Jason Witcombe says: “It sounds to me like silly electioneering rather than anything interesting. You should not encourage low income earners to save by asking them to invest in one or two risky shares.”

Brunning Newman Houghton director David Brunning considers people should be encouraged to save into a much more diversified and safe investment. He says: “This plan would entirely benefit the Government and I struggle to see how it would benefit individuals.

“In addition to the large amount of money they have invested into banks through tax, Osborne is now asking them to throw some more money at the banks to prop them up. I cannot see how this is appealing to people once they stop to think about it.”

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