DJ UK Opposition Plans Govt Bank Stake Sale To Public At Discount

LONDON (Dow Jones)-The opposition Conservative party would offer discounts on shares to U.K. taxpayers when it sells the government stakes in leading U.K. banks if elected, the party's economic spokesman said Sunday.

In an interview with The Sunday Times, George Osborne, who is the Conservative party's treasury chief, said his party would look to garner mass public interest in the bank stake sales in the way the government of Margaret Thatcher did with some of the privatizations of the 1980s.

"To get a large public offer off the ground you want to make a special offer to all people," he was quoted saying in comments confirmed by Osborne's spokeswoman.

"But there were back then and there can be in the future, special ways of targeting particular groups of people. We will look at special offers, discounted share sales and the like."

The Conservatives, led by David Cameron, are the current favorites to win an election which must be held by June 3, although their poll lead has slipped in recent weeks.

The U.K. government invested some GBP43 billion into the Royal Bank of Scotland and Lloyds Banking Group at the height of the financial crisis and has since raised those stakes.

The stakes are being managed by U.K. Financial Investments which has said it could take a number of years to divest the stakes.

The Conservative plan was attacked by Business Secretary Peter Mandelson as "headline grabbing incoherence."

"What I would say to George Osborne and David Cameron is that if the deficit really is the priority what an earth are they doing playing around giving away the assets and shares in RBS at knock-down prices at this stage, which would be at the expense both of the taxpayer as a whole and our future ability to reduce the deficit," Mandelson told the British Broadcasting Corporation.

The smaller Liberal Democrats opposition party also slammed the plan, calling it "electioneering at its most cynical."

"Actively encouraging people on very low incomes to invest in a volatile share market beggars belief," said Vince Cable, the Liberal Democrats economic spokesman.

A spokeswoman for Osborne said full details of the plan are still being worked out.

However, she said the Conservatives would only sell the bank stakes at a profit to the taxpayer and said the planned sales could take any time during the next parliament, which could last until 2015.

In the Sunday Times interview, Osborne again would not be drawn on how deep planned Conservative spending cuts would be this year or whether the party would raise taxes to pare down the deficit.

"People will notice a government that is getting a grip," he was quoted saying. "People will notice a new direction."

-By Laurence Norman, Dow Jones Newswires; 44-207-842-9270; Laurence.norman@dowjones.com

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(END) Dow Jones Newswires

February 21, 2010 07:25 ET (12:25 GMT)

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