Buried on Budget Day 2016
March 17, 2016
Much of 2016’s post-budget analysis has focused on a headline-grabbing but arguably regressive sugar tax, the continued downward revisions of GDP, and Osborne’s surprisingly generous tax giveaways to corporations, businesses and the wealthy – which may yet cause a £56 billion hole in his so-called economic “plan”.
There are some notable exceptions, for example the Women’s Budget Group have shown that women are shouldering far more of the blight of austerity than men, whilst Platform have demonstrated why a further £1 billion in Big Oil subsidies is a terrible policy both economically and environmentally.
Yet amid all the hubbub, hoo-har and humdrum, a number of key stories were categorically buried on budget day that may well have serious consequences for the future of the British economy.
At 5:45pm while the political talking shop was in full swing and everyone else was heading home for the evening, Sky News quietly published an exclusive analysis of newly-released official data – and the findings are absolutely explosive.
Based on asset sale forecasts from the Office of Budget Responsibility, the Government is proposing to sell the remaining shares in RBS at a loss of almost £22 billion – recouping barely half the £45.5bn poured in to save the bank from collapsing in 2008.
To put this scandalous loss in context, Gordon Brown lost the British public around £2 billion with his sale of British gold reserves in the early noughties. The episode is still remembered with apoplexy and anger, and is often touted as a sign of Labour’s profligacy and economic ineptitude.
By comparison, Osborne’s proposed losses on RBS are almost 11 times as great, and yet almost no one has batted an eyelid.
This gigantic loss is scandalous for the Chancellor and ruinous for the public purse, particularly given that the disabled and the poor are being made to disproportionately suffer from yet another £3.5 billion of cuts to public services – on top of the additional £12 billion announced last year.
But this scandal is about more than just the booked loss on RBS shares. Ultimately, the £45.5bn is a “sunk cost” that the British public will simply never get back in full – particularly with RBS shares trading so woefully for so long.
Instead, the real travesty of the affair is that in RBS we have a state-owned bank in our hands, which could be used to support businesses and society in much the same way that other developed countries do.
Our ownership of RBS provides a golden opportunity to forge a people-focused bank that invests sustainably, regionally and responsibly, rebalancing our economy and improving prosperity for those most hit by the financial crisis.
Instead, Osborne is crashing ahead with an ideological policy to wash his hands, cut public services, and dump our assets on the lowest bidder.
So far the Government has ducked scrutiny and avoided almost all debate on how best to make RBS a better bank for Britain – despite 82% of the public agreeing that RBS should work in the public interest.
Current policy is based on the unexamined belief that banks can only and should only be held in the private sector – despite considerable evidence to the contrary, including the events that led up to the financial crisis itself.
Worse still, such an approach is only likely to worsen Britain’s most-pressing and potentially damaging long-term economic issue – our continuing decline in productivity growth, and the resultant worsening of our already woeful trade balance.
A reformed, publicly-focused RBS could invest in the regions, in the green transition, and in low-growth low-return stable infrastructure assets – helping to reverse decades of underinvestment and a steadily worsening current account deficit that is screaming out for some genuine long-term thinking.
Instead this Chancellor is being allowed to toss away our ownership and sit back as the banking system fails us all yet again.
Burying bad news on budget day is as old as the red box itself, but when that rips off the public and endangers our economic security it’s more than just a dereliction of duty from the Chancellor, it’s a wholesale betrayal of the nation.