In the November Economic and fiscal outlook we certified the Treasury’s approach for calculating the overall direct net cost or benefit to the taxpayer of the interventions taken to stabilise the financial sector. This is highly uncertain and will depend in large part on the eventual sale price for the government’s shareholdings in RBS and LBG, which it is not possible to predict with any confidence.

The Treasury’s approach therefore uses market prices to value these shares. On the basis of latest market prices this implies a loss of £1.6 billion on these investments. The Treasury then uses the Asset Protection Agency’s central projection of a net benefit to the taxpayer from Asset Protection Scheme of £5 billion, including fee income. The aggregate costs of all other interventions are not expected to be material once fees, income and recoveries are taken into account. Overall, this implies an estimated eventual benefit to the taxpayer of £3.4 billion.

Any sale of shares would have an impact on public sector net debt. However, no estimate of this has been included in the central forecast given the significant uncertainties around this, and as there is no firm plan for when, how and at what price such sales would take place. This exclusion therefore represents a risk to the forecast of public sector net debt.