Every family in Britain is now facing a tax liability of £4,350 to prop up Britain’s banking system

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Robert Winnett

The Chancellor confirmed that the Government would pump an extra £25.5 billion into Royal Bank of Scotland, and declared that it was the only way to keep the business alive.

Taxpayers have poured a total of £53.5 billion into RBS, including the £20 billion part-nationalisation last year and another £8 billion that was set aside as insurance against further trouble in the future.

In total, the Government has put £74 billion of taxpayers’ money into the banks, including RBS, Lloyds and HBOS, since the start of the financial crisis last year.

The Conservatives claimed the latest bail-out equated to an extra tax liability of £2,000 for every one of the 17 million families in the country. This comes on top of the £2,350 to which every household is already exposed as a result of previous attempts to prop up the financial system.

It is likely that the new bail-out will have to be funded by government borrowing, which could only be repaid through swingeing cuts to public services or substantial tax rises over the coming years. However, despite consumers picking up the bill for yet more billions for the banks, experts said that the money would still not be enough to get them to increase lending to struggling home owners and businesses.

The bail-out of RBS, which was driven to the brink of collapse in 2008 after a series of reckless investments, now ranks as the biggest in the world.

It means the Government owns 84 per cent of what was, at the peak of the finance bubble, the largest bank in the world.

In total, the British Government’s exposure to RBS now stands at more than £250 billion, because in addition to supplying funds to keep it afloat, the Government has also underwritten many of its so-called toxic assets.

The Chancellor announced the move on Tuesday as part of a package that included a further investment of £5.7 billion for Lloyds Banking Group. More...