A split appears to be emerging within the coalition over the future of Royal Bank of Scotland reports The Guardian.
It is believed that Liberal Democrat Vince Cable is arguing that it should be nationalised to bolster lending to small businesses, but the business secretary, who has made no secret of his belief that 100 per cent control of RBS compared with 83% now would boost lending, appears to be failing to win the support of Cabinet colleagues, including the chancellor, George Osborne.
The bank, which is due to report a first-half loss on Friday, is arguing that it is lending as much as it can, but Cable is thought to feel that Osborne could do more to foster lending given the lack of growth in the economy.
The Treasury is adamant that full-scale nationalisation, which would cost another £5bn, is not on the cards. “We are committed to repairing and returning RBS to full health so that it is able to support the UK economy in the future, and the current strategy is working to achieve that. The government’s policy has always been to return RBS to the private sector, but only when it delivers value for money for the taxpayer,” the Treasury said.
In March, Cable wrote to David Cameron to urge him to use RBS as a vehicle for lending to small businesses. Cable gave a speech shortly afterwards acknowledging the problems with EU state aid.
Last week, the Lib Dem peer Lord Oakeshott wrote in the Guardian: “If RBS, the worst non-lender by far, won’t do its basic job, we must nationalise it”.
But the RBS chief executive Stephen Hester indicated in an interview with the Guardian last week that his aim remained to loosen the state’s ties on the bank. He expects the bank to exit the asset protection scheme -set up to insure £300bn of the bank’s most toxic assets (loans) – later this year.
The business secretary is thought to feel emboldened by the botched lending schemes already introduced by Osborne who presided over an economy which contracted by 0.7 per cent in the last quarter. A national loan guarantee scheme has already been replaced by funding for lending which was launched this week.
