George Osborne used the number, calculated in an “independent report” by Rothschild, the investment bank, to help to justify his decision to sell Royal Bank of Scotland at a £7.2 billion loss.
However, once the government’s financing costs of providing the bailouts are included, the taxpayer is about £4 billion in the red, The Times.
In its report Rothschild conceded its estimate of the taxpayer’s recoveries was “stated before the cost of funding the operations”.
Andrew Tyrie, who is set to be re-elected as chairman of the Treasury select committee, said that the report “would benefit from a great deal of qualification. It excludes the cost of funding the bailouts. The OBR put this at £17 billion and it treats fees paid in exchange for a service as if they were income, or recoveries”.
Lord Myners, the former Labour City minister, accused the Treasury of misleading parliament by providing incomplete information. “It should be looked at in the round. The price paid, fees and the cost of funding,” he said.
The National Audit Office said last year that “the money needed to make the interventions was provided by longer-term funding in the form of gilts (interest-bearing government bonds purchased by investors for periods of up to 50 years), at a cost of just under 3 per cent a year”.
According to Rothschild, the amount injected into the banks was £107.6 billion. On the NAO data, that would cost about £3 billion a year to finance. The taxpayer bailouts were made between six and seven years ago, putting the government’s cumulative funding cost at about £18 billion.
A Treasury spokesman said: “The methodology used is the same as that used by the independent OBR.”
It is not the first time that the chancellor has presented a loss on the taxpayer’s bank stakes as a profit. In 2013, the NAO urged him to use a more appropriate methodology after claiming to have made a profit on the sale of £3.2 billion Lloyds shares.
The NAO said that, once financing costs were included, the state made a small loss. Including such costs “would provide the basis for a more informed public reporting of outcomes immediately after future sales”, it said.
The details of the Rothschild analysis showed that, at the current RBS share price of 361½p, the taxpayer would be £13 billion out of pocket on its 79 per cent stake in the bank, which cost £45.8 billion.
