Much of the comment on the sale of Northern Rock to Virgin Money has so far focused on whether the deal represents good value for money for the Treasury. The sale, worth an initial £747m, has left the government facing a loss of approximately £400m, and has been criticised for selling taxpayers short.
This criticism was also levelled at the privatisations of the Thatcher governments, which were widely seen to have ‘sold off the family silver’ for less than it was worth. But, as I have argued in a forthcoming article in Twentieth Century British History, the privatisations of the 1980s were about far more than raising money for the Treasury. Many in the Conservative Party had long advocated the extension of share ownership as part of the creation of a ‘property-owning democracy’, and the sale of the nationalised industries appeared to offer an opportunity to do just that.
The desire to achieve wider share ownership was evident in the way that the privatisations were conducted. Not only were the share sales heavily promoted on television and in the press – with one campaign famously urging the viewer to ‘Tell Sid’ how easy it was to buy shares – but they were also structured in such a way as to favour the small investor over the City. The number of shares available to institutional investors was strictly capped, and even these shares were subject to ‘clawback’ if demand from the general public proved to be greater than expected. Shares were also set aside for the employees of the privatised industries, who were each entitled to an allocation of free shares and a sizeable discount on any further shares they wished to buy.
Many of the politicians involved in the privatisations judged their efforts to extend ownership to have been enormously successful. They pointed to the many millions of people who had successfully applied for shares, and argued that share ownership had enhanced their lives by giving them more power and more choice. Mrs Thatcher even went so far as to compare share ownership with the franchise, telling her fellow Conservatives that if the great reform of the nineteenth century had been the extension of the franchise then ‘the great Tory reform of this century is to enable more and more people to own property’. Privatisation had been nothing less than ‘a crusade to enfranchise the many in the economic life of the nation’.
The distributist instinct of the Thatcherites is widely shared among present-day Liberal Democrats. Yet despite politicians from both coalition parties discussing the possibility of using the government stake in the banking sector as the basis for a further expansion of share ownership, the sale of Northern Rock to Virgin Money suggests that this is an opportunity they are prepared to pass up. While this method of sale undoubtedly offers a quicker and easier means of disposal than a 1980s-style privatisation, it also indicates how far the present government have stepped back from the radicalism of that period and pours cold water on suggestions that in office David Cameron is reinventing himself as a Thatcherite.
The coalition that Cameron leads is certainly not Thatcherite – it is far more conservative than that.