Osborne set to offer cut-price share deal

The Shadow Chancellor said his "people's bank bonus" would reward taxpayers for the 850bn ploughed by the Government into propping up crisis-hit financial institutions.

During the financial crisis, the Government nationalised Northern Rock and took stakes in the Royal Bank of Scotland and Lloyds Banking Group in return for bailing them out.

Cut-price shares would be offered to everyone with extra discounts for target groups, Mr Osborne indicated – in a conscious parallel with Margaret Thatcher's wave of privatisations.

Tory officials warned that the sale could only happen at a time when the Government stood to make a profit – which experts recently suggested could be as long as five years away – and that institutional sales would also form part of the package given the sums involved.

Bank regulation would make them safer investments by preventing "irresponsible" behaviour, they suggested but critics dismissed the plans as a cynical gimmick that put taxpayers' money at risk.

Chief Secretary to the Treasury Liam Byrne said: "When it comes to the shares in the banks the public expect us to focus on getting their money back. That means selling them at a time and way that maximises their value, not an irresponsible and expensive political gimmick."

Liberal Democrat economics spokesman Vince Cable said: "Dangling this prospect, when UKFI (the Government investments manager) has said it will take at least five years before the likes of RBS are back in private hands, is Tory electioneering at its most cynical. They have no understanding of the economy they are aspiring to run."