Doubts cast on George Osborne over RBS sell-off as Andrew Tyrie questions £14.3bn profit claim

The chairman of the Treasury select committee last night cast doubt on chancellor George Osborne’s claims taxpayers stand to make a £14bn profit from the 2008 banking bailout.

 

Osborne unveiled plans on Wednesday to start selling a 79 per cent stake in Royal Bank of Scotland (RBS) – but at a loss to taxpayers who bailed out the bank. 

 

But a report published by advisory firm Rothschild, cited by Osborne, said a £7.2bn loss on the sale would be cushioned by a gain made on the sale of other state-owned assets like Lloyds.

 

Overall, it estimated a £14.3bn surplus for the Treasury from its interventions in the banking sector. 

 

 

Andrew Tyrie, who was re-elected to lead the influential committee yesterday, raised questions over the figures , saying it missed out the cost of funding the bailouts – estimated to be £17bn by the Office of Budget Responsibility.

 

“This would benefit from a great deal of qualification,” he said. “It excludes the cost of funding the bailouts….And it treats fees paid in exchange for a service as if they were income, or recoveries.”

 

Shares in RBS rose modestly, gaining 1.9 per cent to close at 361.5p yesterday after the sell-off plans were unveiled.

 

The government would need to sell shares at 407p to break even on its £45bn 2008 recapitalisation of the bank. The first sale of shares is set to come in the next 12 months but could be as soon as September. 

 

Osborne’s plan to sell shares for less than the government paid was also criticised by the opposition Labour Party.

 

Shadow chancellor Chris Leslie said: “Taxpayers who bailed out RBS want their money back in full and will rightly be suspicious of any rush to sell.” 

 

The US government is estimated to have made a $17.6bn gain from its intervention in the financial services sector during the 2008 crisis under the Troubled Asset Relief Program (TARP).