Labour Slams 'Dodgy Claim' on RBS

The Government's claim that the sale of its majority stake in the bailed-out Royal Bank of Scotland will not see the taxpayer lose out is like boasting about the great deal you got on your car having lost money on your house, Labour has said.

Shadow chancellor Chris Leslie told MPs the Treasury could not pretend it was not making a loss on RBS because it was making a gain on completely separate assets.

He also demanded to know why the Chancellor was not present in the Commons to deliver the statement himself after announcing a series of policies in his Mansion House speech last night. Some backbench Labour MPs could be heard asking where he was, with some suggesting he was suffering with a hangover following the bash in the City.

Mr Leslie asked: Shouldn't he have the courtesy to come to the House of Commons and answer questions for himself on what might well be one of the most important financial decisions of this Parliament?

Taxpayers deserve to know more about what's going on here and why is it that when there are difficult questions, the Chancellor always blames someone else or sends someone else?''

Treasury minister Harriett Baldwin was given the responsibility for delivering the statement in the Commons.

Mr Leslie went on: Taxpayers who bailed out RBS during the global financial crisis want their money and will rightly be suspicious of any rush to sell.

We come to this extremely dodgy claim that if you roll everything together, you stand on one leg, you squint a little bit and then you look at RBS losses, they are not really that bad.

Isn't that a bit like saying I have sold my house and lost a fortune but don't worry I have got a great deal on the car?

Come off it - you can't pretend that you are not making a loss on RBS just because you are making a gain on completely separate assets elsewhere.''

Ms Baldwin, Exchequer secretary to the Treasury, said RBS's problems and its slow recovery had been one of the biggest drags'' in the British economy.

She said: This Government was not responsible for the bail-out of the RBS or the price paid then for shares bought by the taxpayer.

But we are responsible for getting the best deal now for the taxpayer and doing whatever we can to support the British economy.

There is no doubt that starting to sell the Government's stake in RBS is the right thing to do on both counts.

That is not just our judgment, it is the judgment of the governor of the Bank of England.''

She told MPs the independent review by Rothschild had confirmed that - taking into account all of the bank asset sales and the fees received - at the current valuations, taxpayers could expect to make #14 billion more than they paid out.

She said: So in the coming months, we will begin to sell our stake in RBS. It is the right thing to do for British businesses, British taxpayers and the British economy.

When you take all of the bank interventions in total, Lloyds, Northern Rock and the scheme fees, we are making sure that taxpayers get back billions more than they were forced to put in.''

Given the size of the stake, Ms Baldwin said the sales would take some years'' andlikely involve'' all types of investors.

She said: With such a complex investment case, we have to start with institutions. But as the Chancellor said, there is no reason why ordinary investors - in other words members of the public - should not take part in due course.

This Government has a long-term plan to make the UK economy the most prosperous of all the world's major economies ... and for that prosperity to be shared widely across our one nation.

These steps we are announcing today are a key part of achieving a new settlement for our public finances and for our financial services industry and will help us secure that bright future for all.''

Mr Leslie said Labour had always supported the eventual return'' of RBS to the private sector, but warned of the risk to the taxpayer of premature sale.

He asked: Isn't it essential that the Treasury gets back as much money as possible to help pay down the national debt?

Why the rush when the share price is so far below break-even? RBS had to be bailed out urgently, but it doesn't have to be sold off at the same speed.''

He also warned Ms Baldwin not to give the impression that Mark Carney, the governor of the Bank of England, had told ministers the price is right now, insisting he has made clear that questions of valuation are entirely for the Government''.

Mr Leslie added: Before members opposite start pretending that the RBS rescue was somehow not a matter of consensus at that time, we are not going to let them rewrite history on this.

The truth is the Chancellor didn't oppose the urgent rescue of RBS at the market price back in 2008, the National Audit Office said that the rescue price was justified and the IFS say it was not obviously unfavourable to taxpayers.

You know full well what the consequences would have been if the bank had gone under.''

He pressed Ms Baldwin to clarify what the Government accepts the break-even share price for the bank to be, suggesting the figure of a potential £7.2 billion loss could be an understatement, and on when the sale would begin.

Ms Baldwin joked that the Chancellor was not dodging'' any difficult questions because Mr Leslie had not posed any. She also criticised Labour'swoeful'' track record on bank regulation.

The then Labour government injected #45.5 billion into RBS - taking a 79% stake in the bank - to prevent its collapse in the wake of the global financial crash of 2008.

In his speech last night, George Osborne said the decision point'' had been reached in light of the conclusion of the Rothschild review that the loss to the taxpayer would be more than offset by the profits on other bank share sales, including its stake in Lloyds. He admitted that it stands to make a loss of about #7 billion if the entire stake is sold off in one go.

But he cited an analysis by Rothschild finding there would be an overall profit of £14 billion if all the Government's remaining shares in all the bailed-out banks were sold. RBS saw its stock market value rise by as much as £900 million after the Chancellor's announcement.

Shares climbed by around 2% though some City analysts questioned the timing of the announcement and one expert suggested it was unlikely that taxpayers would ever get all their money back.