POLITICS

George Osborne 'Casually' Loses Taxpayers £1billion In RBS Shares Sale

04/08/2015 10:39 BST | Updated 04/08/2015 10:59 BST
Yui Mok/PA Wire
Chancellor of the Exchequer George Osborne delivers his speech at the Lord Mayor's Dinner for the Bankers and Merchants of the City of London at Mansion House, in the City of London.

George Osborne has been accused of “casually” losing taxpayers £1billion today after shares in RBS sold at two-thirds the price the Government paid for them.

Shadow Treasury minister Barbara Keeley laid into the Chancellor after speculation the shares were being traded at 330p each – a 34 per cent reduction in the 500p paid per share by Labour in 2008.

Last night a Treasury spokesman was claiming the initial sale of five per cent of the Government’s RBS shares would secure the “the best value for the taxpayer”.

Labour leadership contender Jeremy Corbyn branded the move a "disgrace", and stood by his view that RBS should nationalised.

Speaking on BBC Radio 4’s Today Programme this morning, Ms Keeley said: “We’re in a situation, the estimate was if the price [was] of £3.30 then there would be a loss of £1billion on the sale – there’s so much more that could be done with £1bn, it’s cavalier for it to be casually lost overnight in this way.”

Labour Chancellor Alistair Darling pumped in £45.5billion of public money into RBS in 2008/09 at the height of the banking crisis – a move supported by then Shadow Chancellor George Osborne.

In June, Mr Osborne announced the Government would begin selling its 79 per cent stake in the bank, and last night some £2billion of shares were sold to City investors at the lower price.

The loss of £1billion comes as the Government is seeking to reduce public spending, especially welfare payments.

According to the Institute for Fiscal Studies, Mr Osborne’s most recent Budget will leave the poorest tenth of families £800 worse off by 2019.

The £1billion figure represents a twelfth of the total welfare savings sought by the Government.

Alternatively, the billion could fund 2.3million people's disability living allowance per year.

It could also cover the costs of 26,000 nurses or 12,000 hospital doctors for a year.

The money could potentially fund the building of two hospitals - Birmingham’s Queen Elizabeth hospital that opened in 2010 cost £545 million.

It is not the first time the Government has been accused of selling off a public asset at a loss.

Last year, then-Business Secretary Vince Cable was deemed to have lost taxpayers £1billion from the selling of Royal Mail shares at below the market rate.

In a statement, Mr Corbyn said: "It's a disgrace that Osborne is selling off RBS shares tonight at a sizeable loss to the taxpayer. It's inexplicable that he is forcing the sale through now and especially in August when markets are least active."

Mr Corbyn recently tweeted: "We need to take RBS into public control." Aides to Mr Corbyn confirmed that remained his view.

Economic Secretary to the Treasury Harriet Baldwin defended the sale, saying the Government had acted on the advice of the Governor of the Bank of England Mark Carney.

Also speaking on the Today programme, she said: “Why now? The Governor of the Bank of England has written to say now is the time to start the process. The business of the Bank of England Governor is the wider health of the banking sector and the economy and of course the Chancellor takes the bank of England’s advice very very seriously.

“In [George Osborne’s] judgement, when he receives a letter from the Bank of England saying that it's time to start the process of returning RBS to the private sector he thinks that that is important advice to heed.

“There are obviously going to be people who said we should have started earlier and Labour who said we shouldn’t have started at all but that would be to disagree with the advice of the Bank of England and also to delay the point at which we start this process of returning RBS to the private sector.”