This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.theguardian.com/politics/2015/jun/04/chancellor-announces-extra-savings-royal-mail-stake-selloff
The article has changed 5 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| Chancellor unveils £4.5bn extra savings including Royal Mail stake sell-off | Chancellor unveils £4.5bn extra savings including Royal Mail stake sell-off |
| (35 minutes later) | |
| George Osborne has taken an early swipe at departmental budgets announcing £4.5bn of savings in this financial year through a sell-off of national assets – including the remaining stake in Royal Mail – and spending cuts. | George Osborne has taken an early swipe at departmental budgets announcing £4.5bn of savings in this financial year through a sell-off of national assets – including the remaining stake in Royal Mail – and spending cuts. |
| Departments have been ordered to find £3bn in savings, and the chancellor says he will also raise £1.5bn from the sale of the government’s remaining 30% stake in Royal Mail. | Departments have been ordered to find £3bn in savings, and the chancellor says he will also raise £1.5bn from the sale of the government’s remaining 30% stake in Royal Mail. |
| The cuts are in addition to the £13bn of cuts already announced for 2015-16 and the £30bn of cuts Osborne is due to announce in the emergency budget on 8 July for the following two years. | The cuts are in addition to the £13bn of cuts already announced for 2015-16 and the £30bn of cuts Osborne is due to announce in the emergency budget on 8 July for the following two years. |
| The announcement prompted an immediate warning from the Institute for Fiscal Studies. Carl Emmerson, its deputy director, said: “The risk of doing quick cuts is that departments cut what they can, which isn’t necessarily what they should.” | The announcement prompted an immediate warning from the Institute for Fiscal Studies. Carl Emmerson, its deputy director, said: “The risk of doing quick cuts is that departments cut what they can, which isn’t necessarily what they should.” |
| He pointed out that asset sales – which make up almost £2bn of Osborne’s planned £4.5bn in savings – make no long-term difference to the deficit, because they only generate a one-off windfall. | He pointed out that asset sales – which make up almost £2bn of Osborne’s planned £4.5bn in savings – make no long-term difference to the deficit, because they only generate a one-off windfall. |
| “We have a large deficit, and to reduce a deficit you need spending cuts or tax rises, so asset sales are not really helping,” he said. | “We have a large deficit, and to reduce a deficit you need spending cuts or tax rises, so asset sales are not really helping,” he said. |
| Osborne told MPs that the government had to act now to bring the deficit under control, but the shadow chancellor, Chris Leslie, accused the Treasury of panic and failing to provide full details to MPs. | Osborne told MPs that the government had to act now to bring the deficit under control, but the shadow chancellor, Chris Leslie, accused the Treasury of panic and failing to provide full details to MPs. |
| Osborne made the announcement during the Commons debate on the economy. | Osborne made the announcement during the Commons debate on the economy. |
| The government sold a 70% stake of Royal Mail in October 2013 at a rate of 330p and shares are currently trading at 526p a share. | The government sold a 70% stake of Royal Mail in October 2013 at a rate of 330p and shares are currently trading at 526p a share. |
| The £3bn savings Osborne announced will be focused on Whitehall departments outside the protected areas such as the NHS, schools and aid – the equivalent of around 3% of unprotected departmental spending this year. | The £3bn savings Osborne announced will be focused on Whitehall departments outside the protected areas such as the NHS, schools and aid – the equivalent of around 3% of unprotected departmental spending this year. |
| Osborne tried to minimise the impact of the cuts by saying it was expected that departments would be tightly managed so that instead of spending up to budget, departments deliver underspends. Departments across Whitehall including the Ministry of Defence, the Department for Education and the Department for Business, Innovation and Skills have agreed targets with the treasury to deliver. | Osborne tried to minimise the impact of the cuts by saying it was expected that departments would be tightly managed so that instead of spending up to budget, departments deliver underspends. Departments across Whitehall including the Ministry of Defence, the Department for Education and the Department for Business, Innovation and Skills have agreed targets with the treasury to deliver. |
| The largest savings are to come in the Department for Transport with savings of £545m including the sale of land around King’s Cross. Defence is expected to provide a further £500m, but the Treasury insisted the cuts did not mean the MoD spend would fall below 2% of GDP, the Nato target. | |
| An MOD spokesman said the £500m amounted to 1.5% of the overall defence budget. He said: “This agreement will not impact on the baseline defence budget, manpower numbers or current operations. The UK will continue to spend 2% of GDP on defence in this financial year.” | |
| The non-schools part of the DfE is due to find £450m, as is the BIS with the savings focused on higher education and further education. | |
| The already hard-pressed Ministry of Justice is cutting a further £250m, and local government is to lose £200m as a result of a failure to spend an equivalent sum last year provided by the Department of Health for public health. | The already hard-pressed Ministry of Justice is cutting a further £250m, and local government is to lose £200m as a result of a failure to spend an equivalent sum last year provided by the Department of Health for public health. |
| Osborne said he was getting on with what he promised – reducing the deficit – adding that this is how you deliver lasting economic security for working people. “As everyone knows, when it comes to living within your means, the sooner you start the smoother the ride,” he said. | Osborne said he was getting on with what he promised – reducing the deficit – adding that this is how you deliver lasting economic security for working people. “As everyone knows, when it comes to living within your means, the sooner you start the smoother the ride,” he said. |
| Defending the sale of the remaining stake in Royal Mail the chancellor said: “That business is now thriving after we gave it access to investment from the private sector in the last parliament. | Defending the sale of the remaining stake in Royal Mail the chancellor said: “That business is now thriving after we gave it access to investment from the private sector in the last parliament. |
| “There is no reason we should continue to hold a minority stake. That stake is worth around £1.5bn at current market prices. Of course, share prices fluctuate. The final value will depend on market conditions at the point of sale. | “There is no reason we should continue to hold a minority stake. That stake is worth around £1.5bn at current market prices. Of course, share prices fluctuate. The final value will depend on market conditions at the point of sale. |
| “We will only sell our stake when we can be sure we’re getting value for money but let’s be clear: holding over 1 billion of Royal Mail shares in public hands is not a sensible use of taxpayers’ money. By selling it, we help that important national business to prosper and invest in the future while we use the money we get to pay down the national debt and pay less interest on that debt as a result. | “We will only sell our stake when we can be sure we’re getting value for money but let’s be clear: holding over 1 billion of Royal Mail shares in public hands is not a sensible use of taxpayers’ money. By selling it, we help that important national business to prosper and invest in the future while we use the money we get to pay down the national debt and pay less interest on that debt as a result. |
| “It’s a double win for the taxpayer, for we on this side never forget that it is not our money or the government’s money; it’s the money people work for and pay in taxes and entrust in us to spend wisely.” | “It’s a double win for the taxpayer, for we on this side never forget that it is not our money or the government’s money; it’s the money people work for and pay in taxes and entrust in us to spend wisely.” |
| Emmerson said that while privatisations might be sensible for other reasons, such as the belief that the private sector can run things better, the government loses an asset as well as gaining some cash, so “it does reduce cash debt, but you’re not really improving the indebtedness of the country”. | Emmerson said that while privatisations might be sensible for other reasons, such as the belief that the private sector can run things better, the government loses an asset as well as gaining some cash, so “it does reduce cash debt, but you’re not really improving the indebtedness of the country”. |
| If Whitehall achieves the new savings targets of about 3% on unprotected departments, the IFS believes Osborne will have another 12% left to find from unprotected departments over the next three years, instead of the IFS’s previous estimate of 15%. | If Whitehall achieves the new savings targets of about 3% on unprotected departments, the IFS believes Osborne will have another 12% left to find from unprotected departments over the next three years, instead of the IFS’s previous estimate of 15%. |