How Osborne backed down on an RBS firesale

Having previously briefed that Osborne was planning a pre-election give-away of shares, the Tories changed tack after Balls's intervention.

It's now thought unlikely that George Osborne will use his Mansion House speech tonight to announce plans for a quick-fire sell-off of RBS, but that's not what the Tories were briefing a few months ago.

As recently as February, it was reported that Osborne had ordered Treasury officials to plan for a pre-election give-away of shares in the bank, with a source telling the Independent: "One of the options could be to put it in our manifesto – but then Labour could do that as well. Wouldn't it be much better if voters were getting a check for £400 a few months before election day?" Another Treasury figure suggested that selling the shares at a loss would be better than the "political headaches" associated with retaining them. A few days later, David Cameron confirmed that the government was examining the "interesting" idea of distributing shares to taxpayers and was reported to have ordered RBS executives to "accelerate" preparations for a pre-2015 sell-off. 

Then, in May, a minister close to Osborne suggested that it was "unrealistic" to expect the RBS share price to return to its 2008 level in the near future and that the government may have to sell the shares while they were "under water". Later that month, speaking to reporters in New York, Cameron refused to rule out selling the shares at a loss and said he was open "to all ideas and proposals".

It was soon after this, on 27 May, that Ed Balls intervened, warning in an interview with the Times that a loss-making firesale would "add billions to the national debt" and urging Osborne not to put "politics before economics". Osborne was later reported to be planning to use his Mansion House speech  to set out his strategy for an RBS sell-off, with the Treasury examining proposals from Policy Exchange on a share give-away.

But by mid-June, the government had started to rapidly shift its position. The Treasury insisted that it had no fixed timetable or share price in mind and Cameron remarked that taxpayers were "more interested than getting their money back" than the timing of a return to the private sector. Having previously talked up the possibility of Osborne unveiling plans for an RBS sell-off in his Mansion House speech, the Treasury now suggested that the speech would focus on the sale of Lloyds' shares and would not set out a firm timetable for privatisation for either bank. Then, on 18 June, Osborne himself told the Today programme that he wanted to make sure that "the taxpayer gets value for money" and that the return of RBS to the private sector was "a matter for the market". Having previously expressed a bias in favour of an early sell-off, the Chancellor had backed down, heeding the warnings of Balls and others that a firesale was not in the public interest. 

Score this one for the shadow chancellor. 

George Osborne leaves 11 Downing Street earlier today. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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