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Osborne lays out austerity plans to raise £4.5bn – Sale of Royal Mail included

2 min read

04 June 2015

Chancellor George Osborne has set out plans to pay down the UK's deficit, which involves selling the government's remaining 30 per cent stake in Royal Mail.

Osborne recently announced his plans to raise an extra £4.5bn from Whitehall without increasing income tax or VAT – something he said would not be an easy decision. He told ministers that timing was crucial: “The time to fix the roof is when the sun is shining.” 

The Labour party has accused him of “ripping up” his economic plan by springing the announcement on MPs. However, the chancellor argued that Britain spends more than it collects in taxes and that it won’t be fixed by economic growth alone. As with any challenge, he said, the sooner you get on with it, the better.

This would involve cutting an extra £3bn from budgets. Both the Department for Business, Innovation & Skills (BIS) and Department for Education agreed to achieve spending cuts of £450m by the end of 2015. The Department of Health will cut £200m, while the Department for Transport will bring forward the sale of land around King’s Cross, which will raise £345m.

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Every department, apart from the NHS, as well as schools and foreign aid, has been ordered to find savings worth of three per cent.

Osborne also vowed to complete the privatisation of Royal Mail, which began in October 2013 with sale of 70 per cent of the state’s ownership. He claimed that selling the remaining 30 per cent would raise £1.5bn and would go towards reducing debt.

Rothschild has been appointed to advise the Department for Business on the sale.

“It is the right thing to do for the Royal Mail, the businesses and families who depend on it,” Osborne said. 

He claimed the announcement showed the government was “getting on with what was promised”, and that he would press ahead with his austerity programme, despite the Organisation for Economic Co-operation and Development (OECD) suggesting that the cuts may be too harsh

The OECD urged the government to even out its plans over a longer period in order to “lower its impact on growth”.