George Osborne announces Royal Mail sell off

George Osborne has announced that he will sell off the government's remaining stake in Royal Mail while making £3billion worth of cuts this year to all unprotected government departments.



The Ministry of Defence, the Department for Education and Business, Innovation of Skills will be at the forefront of the cuts and share the burden of nearly £1.5billion worth of spending reductions between them.

The £500million worth of cuts to the Ministry of Defence will prove particularly controversial as it will raise concerns that the government is unlikely to commit to spending the Nato target of 2 per cent of national income on defence.

The Chancellor also announced that the government will sell off it's remaining 30 per cent share in Royal Mail, currently worth £1.5billion.

The previous sell off of the government's stake in Royal Mail in 2013 proved hugely controversial amid claims that it had been undervalued by up to £1billion.

The Treasury has said that each ministry must find savings amounting to £3billion or more before the Budget on July 8.

Mr Osborne said: “I am today announcing that the Government will begin selling the remaining 30% shareholding we have in the Royal Mail.

“It is the right thing to do for the Royal Mail, the businesses and families who depend on it – and crucially for the taxpayer.

“Further savings in departments this year – and selling our stake in the Royal Mail.

“Getting on with what we promised. Reducing the deficit – that is how you deliver lasting economic security for working people.

“For as everyone knows, when it comes to living within your means, the sooner you start the smoother the ride.”

The savings are three times higher than anticipated in this year Budget by the Office for Budget Responsibility.

It came as the Institute for Fiscal Studies claimed that spending cuts twice as deep as the Conservatives claimed in their manifesto because giveaways and the cost of protecting the NHS, schools and aid budgets.

The Institute for Fiscal Studies said that the Tories were "misleading" when they claimed that the government would need to make £13billion worth of cuts to government departments.

In fact, balancing the Budget will require £33billion or cuts with unprotected departments being cut by 15 per cent over the next three years or 37% since 2010.

If Defence spending is protected, which means it would still fall below 2 per cent of Britain's national Budget, the cuts to other departments would be £37billion.

Private shareholders to be locked out of Government's £1.5billion Royal Mail sale

Banks and City pension funds are to get preferential treatment in the £1.5billion sale of Royal Mail, leaving private investors empty-handed, The Telegraph can disclose.

Whitehall sources said the Government was likely to offer the shares at a small discount to the market price large City institutions to keep the costs of the flotation down.

The banks and City investors will then be able to sell on the shares to small private investors at a profit.

Labour attacked the plans, saying the decision to give “preferential treatment to City speculators” was “short-changing” the public.

Labour’s shadow Business secretary Chuka Umunna said: “Last time ministers flogged off Royal Mail shares, they gave preferential treatment to City speculators, who went on to make a fast buck whilst the taxpayer was royally short-changed.

“Now, disgracefully, they appear determined to do the same again, dishing out shares to their friends in the City, passing over the ordinary investor.”

The two Labour MPs – Adrian Bailey and Iain Wright - in line to chair the House of Commons’ Business committee said they would order investigations of the sale.

Mr Bailey said: “The sale is likely to lead to another bonanza for the City. The public is being short-changed.”

Mr Wright added: “The idea of a shareholding democracy is obviously rubbish. They have learned nothing from when they sold it off last time. It beggars belief.”

For most of us being a share holder in big companies is a joke.

As a small share holder you are regularly ridden rough-shod over by the 'big boys' and eventually you likely find yourself being forced out.

The only way the small investor can make money from sell-offs like this is to buy, then sell on at the first profitable opportunity. Of course, it'll be the 'big boys' that buy your shares!