Today I held a debate on Community Banks in the House of Commons. I used the debate as chance to unveil my idea for reforming our banking system. A key part of my proposal is that shares in Royal Bank of Scotland should be distributed to the public free of charge.
ITV have covered it HERE, where you can also watch a clip of my speech.
If my plan went ahead it would create around 45million shareholders, the largest in history, dwarfing the 10million shareholders that were created during the 1980's through the sell off of BT and British Gas.
It is crucial to remember that the Government didn't bail out the banks, the public did. It was their hard earned tax money that kept the banks afloat now it's time they shared some of the rewards too.
My plans would see taxpayers get an effective rebate in the form of the shares but also more importantly, help restore confidence in the banking industry. The truth is British banking is broken. The public is quite rightly fed up with a system which has became overwhelmed by small vested interests and personal greed.
What better way to repair it than by giving every member of the public a say in our state owned bank. Yes people could sell if they wanted too, but the force of having 45 million British taxpayers holding banking shares would help transform the banking system.
Banks are there to serve the public, something they have totally forgotten.
Under my plan the public would take on shareholdings whilst the bank itself was not sold but instead broken up and used to form community banks.
We should decentralise the branch management and use it to form the basis of devolved local community banks - a local bank for every city and every county. Linking these new banks with the local Chamber of Commerce.
We have golden opportunity with RBS to transform the banking system.
If we adopted my model lending decisions would be made by managers who understood the economy around them better than anyone at London head office ever could. These managers - embedded in their local economy - could base their judgements on knowledge of people and businesses without being overruled by a computer or centralised targets, with their success being intertwined by the success of the local economy.
How would it work? My plans would see all 45 million people on the electoral roll given shares. Those shares would entitle them to a shareholder of a local bank made up of the broken up RBS. Each 'local bank' would coincide with a County or City Council. Effectively creating the Bank of Northumberland for example with every adult in Northumberland acting as a shareholder. The banks lending powers would be limited to persons and businesses within the Council boundary. With residents as shareholders, the banks administration would be run by the existing council to save costs.
