Treasury to make loss on RBS shares

GEORGE Osborne was last night urged to come clean about the huge loss taxpayers are likely to incur on Royal Bank of Scotland.

Caroline Flint, a Labour MP and member of the Commons Public Accounts Committee, said the chancellor needs to have an ‘honest conversation’ with the public.

The intervention came as the Treasury permanent secretary turned the spotlight on RBS by predicting the Government will have to consider selling the High Street giant at a huge loss.

Shares in the bank are trading at less than half the ‘break-even’ price of £5.02 paid by the former Labour government during the £46bn taxpayer rescue in 2008.

But Sir Nick Macpherson suggested the Government may have to sell while they are still in the red as holding on to them for much longer will damage both bank and the economy.

‘My experience of running banks is that the longer they stay in public hands, the greater the likelihood that you will lose value,’ he told the Financial Times.

He added that it was ‘going to be tricky’ for the Government to fulfil its plans to sell off its remaining £19.2bn stake before the next election.

The Office for Budget Responsibility predicted last month that the Treasury will incur a £16.4bn loss from the sale over the course of this Parliament.

The news came as RBS said it is axing another 400 jobs and closing 32 branches as it fights its way back towards a profit.

The cuts will all affect the Natwest brand, with clerical staff facing redundancy across the North and the Midlands.