The government is set to offload its remaining 30 per cent shareholding in Royal Mail, as part of £4.5bn worth of cost-saving measures aimed at bringing down public debt.
As part of Whitehall’s budget review process, the remaining Royal Mail shares will be sold off, completing the privatisation that began with an initial public offering of shares in October 2013.
The stake currently has a market value of £1.5bn and sales are due to begin later this year.
Rothschild has been appointed by the government to advise the Department for Business, Innovation and Skills on the transaction. It holds a 30 per cent stake in the company, with the remaining 70 per cent held by a combination of employees (10 per cent) and private investors.
The form of the sale will be announced in due course, but the government said the transaction will be designed to deliver best value for money to the taxpayer.
Shares in Royal Mail were initially floated at 330p per share and were trading at £5.26 at market close yesterday. On today’s news however, the shares dropped 3.33 per cent to 508.5pence
Meanwhile, the chancellor said that departments outside of protected areas like the NHS, schools and aid have responded to the Treasury’s call for them to rapidly identify options to reduce spending this year.
On top of the Royal Mail sale, a further £3bn worth of savings this financial year were identified, which the government said was a “significant” first step toward the belt tightening required and is equivalent to around 3 per cent of unprotected department spending this year.
| Department | Savings (£m) |
| Education non-schools | 450 |
| Department for health non-NHS | 200 |
| Transport including King’s Cross property | 545 |
| CLG Communities | 230 |
| Business, Innovation and Skills | 450 |
| Home Office | 30 |
| Justice | 249 |
| Defence | 500 |
| Foreign and commonwealth office | 20 |
| Energy and climate change | 70 |
| Environment, food and rural affairs | 83 |
| Culture, media and sport | 30 |
| Work and pensions | 105 |
| HM Revenue and Customs | 80 |
| HM Treasury | 7 |
| Cabinet Office | 17 |
| Total | 3,066 |
According to the Cabinet Office, in the last financial year, the Department for Works and Pensions had a departmental spend of £7.02bn, meaning that the £105m cut represents 1.5 per cent of its spend.
HMRC identified £80m of cuts, which represents around 2 per cent of its departmental spend of £3.9bn.
Chancellor George Osborne said: “Further savings in departments this year – and selling our stake in the Royal Mail – is getting on with what we promised. Reducing the deficit – that is how you deliver lasting economic security for working people.
“For as everyone knows, when it comes to living within your means, the sooner you start the smoother the ride.”
ruth.gillbe@ft.com
