NEWS
04/06/2015 15:03 BST | Updated 04/06/2016 06:12 BST

Royal Mail Stake To Be Sold Off

The Government's remaining stake in Royal Mail is to be sold off and billions of pounds more trimmed off Whitehall budgets as part of efforts to balance the books, George Osborne has announced.

The Chancellor said he would begin offloading the 30% holding - worth around £1.5 billion - within months.

Meanwhile, departments have found a further £2.5 billion of cuts for this financial year - and are selling off assets worth around another £500 million.

Unveiling the package to MPs, Mr Osborne insisted it showed ministers were "getting on with what we promised".

"When it comes to living within your means, the sooner you start, the smoother the ride," he said.

Treasury aides said the departmental cuts were a "first step" and equivalent to around 3% of spending outside the protected areas of the NHS, schools and international aid.

Cuts will be made to grants to the higher education sector while cash is also being clawed back from local government public health funding.

Heralding the Royal Mail sell-off - two years after the initial flotation - Mr Osborne said: "It is the right thing to do for the Royal Mail, the businesses and families who depend on it - and crucially for the taxpayer."

The Government has appointed Rothschild to advise the Department for Business on the sale of the Royal Mail stake. In 2013 ministers were advised by Goldman Sachs and UBS, and came under fire when the stock price soared.

Treasury aides refused to say whether the shares would be offered to the public, or restricted to institutional investors. However, no shares will be reserved for employees - who received 10% last time.

Shares in the company are down 2.8% today.

Other asset disposals planned by the Government include the Department for Transport selling off shares in land around King's Cross with an estimated value of £345 million.

The details emerged after the respected Institute for Fiscal Studies (IFS) again warned about the difficulty of finding the £13 billion of cuts needed to eradicate the deficit by 2018-19.

The head of the think-tank, Carl Emerson, told a briefing it was "misleading" for David Cameron to imply the process would be "easy" and just meant "saving £1 a year in every £100 that government spends".

"While not inaccurate, these numbers give a misleading impression of what departmental spending in many areas will look like if the manifesto commitment to eliminate the deficit by 2018–19, largely through spending cuts, while not cutting spending in many areas, is to be met," he said.

"Keeping to these, perhaps seemingly benign, spending totals will actually require deep cuts to some areas of government. This is because underlying pressures are increasing spending in other areas.

"Debt interest spending is forecast to rise as both government debt and the effective interest rate on that debt rises. Spending on public service pensions is forecast to rise as the numbers receiving such pensions grows. Spending on state pensions is forecast to rise as average state pension payments continues to rise. In addition commitments to increase spending in some areas, and not to cut other areas, increases the size of the cuts required elsewhere."

The protection being given to the NHS, schools and international aid meant other departments faced 15.3% cuts over the three years between 2015–16 and 2018–19, he said.