Cameron readies to raid our bank accounts
The easiest money to spend is always other peoples’. Prime minister David Cameron has thus decided to raid private bank accounts to fund his Big Society concept of volunteering.
The money he intends to purloin is in apparently dormant bank accounts but there is a long tradition of governments poking a hand down the back of the sofa to see what coins they can find to boost current spending. Selling cut-price council homes to tenants was an early way to bribe voters with their own money; privatising the nationalised industries through share sales to the public followed and when that portfolio was empty, the government refilled its coffers by selling such things as 3G mobile-phone licences.
Once the public had grown used to receiving something for nothing, others looked at what old institutions could be handed over. Most building societies thus turned into banks during the 1990s to give the public a further windfall with many mutual life assurance companies following. The life companies then raided their “orphan assets” to boost their own reserves while giving customers a share so that they would approve the plunder.
Purloining the bank accounts of people who have forgotten they own them or who have died follows that tradition.
But Mr Cameron might like to reflect that it is four decades of living off windfalls that has got the country into the financial mess it is now in. The concept of funds falling from nowhere encouraged both the population and the government to live beyond their means.
Receiving free equity in a council home, cheap shares and windfalls from financial service firms artificially boosted out cashflow without increasing our earnings or productivity. Proceeds from privatisations and asset sales did the same for government. Now, with no more coins down the back of the sofa than these dormant bank accounts, we are having to live within our means and both voters and state are facing severe austerity measures.
And raiding these dormant bank accounts damages the banks that have effectively used this money as free capital. That said, the sums are not large: once people are alerted to old accounts being grabbed by government the claims will flow in and the £400m in the banks will shrink fast.
Expect to see a new small industry in chasing lost accounts – just like the small industry that will set up to help volunteering groups spend Mr Cameron’s new-found money. Isn’t it funny how spending cuts always involve spending money?
