Every UK household has more than £3,000 invested in Royal Bank of Scotland and Lloyds (LON:LLOY) shares, admitted UKFI, the government agency looking them for us, as it spelt out ways of selling them and the problems involved. So why not just give each household its shares?

A mass distribution would save the hundreds of millions of merchant bank and underwriting fees we’ll have to pay. It will also save UKFI deciding whether to sell now or later and worrying if banks will perform and the stockmarket rise. Indeed, it would make the agency redundant entirely.

It would not only hand the investment to the people who have paid for it – we, the taxpayers – it would hand them the decision-making too. And it would make people feel they have got something for their massive outlay, whereas if UKFI sells the shares the proceeds will disappear into Treasury coffers never to be seen again.

There would have to be safeguards, of course. Russia privatised its industry this way and the people immediately sold their free shares to the oligarchs at knockdown prices. A giveaway of UK bank shares must avoid a disorderly market and protect the innocent from themselves, but as Lloyds and RBS are already quoted, people would know what the fair price was.

And the government could give out the shares on the basis that a quick sale would incur a tax at income-tax rates, possibly with a taper than made them tax-free after, say, five years. That would encourage people to hold and thus give a potential nest-egg to boost pensions. They might even be handed out with a special ISA wrap.

Any tax received from those who sell quickly would help reduce national debt as well as potentially boosting consumer spending with the proceeds. However, cutting government borrowing need not be an objective: the debt that stays on one side of the national balance sheet would be balanced by the population’s greater wealth.

A better counter-argument is that handing every household £3,000 of shares is not equitable. Some people have contributed more of the debt to save the banks than others. A flat windfall would be a redistribution of wealth that helped the less-well off – which is either socially beneficial or fundamentally unfair, depending on your political standpoint.

Regrettably it will not happen however. I made the suggestion directly to UKFI’s chief executive and chairman as they produced their report on the problems with share placings, public offers or complex exits such as exchangeable bonds. Regrettably they agreed to respond only if they were not quoted. Just accept that however neat the solution, it won’t happen.

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