UK government to sell off 30 per cent Royal Mail stake
UK Chancellor George Osborne announces plans to sell off government's remaining 30 per cent stake in Royal Mail.
In a bid to further reduce the budget deficit, UK chancellor George Osborne revealed plans to sell the remaining 30 per cent stake in Royal Mail. The shares are currently worth £1.5 billion and the sale will begin later this year, Mr Osborne announced on Thursday.
The plans were detailed alongside £3 billion worth of debt-reduction measures, which highlight the Conservatives' pledge to wipe out national debt.
"I am today announcing that the Government will begin selling the remaining 30 per cent shareholding we have in the Royal Mail,” Mr Osborne told MPs. "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 announcement met some criticism from MPs, with Labour accusing Mr Osborne of casting aside his long-term economic plan, with the SNP saying there was “real danger to the postal service”. In addition, the SNP cited a threat to the universal service obligation, which is of “huge importance to Scotland”.
New adviser Rothschild
Meanwhile, the government has picked investment bank Rothschild as the new adviser to oversee the sale of its stake, after it met controversy when following the directions of previous adviser Lazard.
After pricing shares at 330p at the initial public offering in 2013, the stock price soared to close at 455p on the first day of trading, leading to accusations from politicians that the British taxpayer had been sold short on the deal.
However, this time round, the government will only sell the shares when it can ensure it's getting value for money.
Business secretary Sajid Javid commented: "We have plenty of time to work on this. I don't think it's the kind of thing we want to rush into in anyway," as he explained that the selloff would happen within the lifetime of this parliament.
He said his "overriding concern" was to "get the best possible deal for taxpayers".
Ambitious spending cuts
Elsewhere, Mr Osborne announced roughly £2.5 billion worth of departmental spending cuts, all part and parcel of his plan to oversee £13 billion of savings made from government departments by 2017/18. However, many have labelled the large cuts to be ambitious and unfeasible.
"Meeting these spending plans will be far from easy," said Carl Emmerson, deputy director of the Institute for Fiscal Studies (IFS).
"£3 billion will be tough to find in a single year but it's relatively small compared with the very tough target the chancellor has set himself," added Paul Johnson, director of the IFS.
The think tank has also explained that the public spending cuts of one per cent a year in 2016/17 and 2017/18 will be far more difficult to achieve than the Conservatives suggested in their general election manifesto.