RBS is a loss-making albatross – Philip Hammond should sell the taxpayer's stake to fund the NHS

Next month, the chancellor will deliver his first budget against a backdrop of worsening post-Brexit economic news and yet somehow try to perform a magic trick to find some money for the pressure-hit NHS.

Philip Hammond won't be the first, or last, chancellor to deliver a grim budget to the House of Commons. But perhaps his burden would be lessened by casting off the disastrously loss-making Royal Bank of Scotland (RBS).

The lender, which is 72% owned by the taxpayer, has just reported a £7bn ($8.8bn) loss, confirming that it will be in the red for the ninth year running and worse than the previous year. Despite this, RBS chief executive Ross McEwan will take his £1m bonus for 2016 and the bank will, in total, pay out bonuses of £343m.

In a bizarre choice of words, McEwan says the bank has been on a "remarkable journey" – some way to describe losses of more than £58bn since 2008 - but will, he claims, return to profit in 2018. In order to do this, there will be eye-watering cost-cutting, job losses and branch closures.

Why should the government – and indeed the taxpayer – put up with this loss-making albatross any longer? It was right to nationalise RBS in 2008 when, in the midst of global financial meltdown, its imminent collapse would have ruined the UK economy. Yet as Britain prepares itself for Brexit and struggles with the pressures of the NHS amid other public services in need of support, it makes no sense for the government to continue its stake.

The chancellor has indicated he does not want the government to give back its stake in RBS to the markets – not least because the taxpayer would never recoup what it paid for it. But privatising the lender would, nevertheless, raise an estimated £20bn, the kind of money the NHS could use right now.

Calling for the sell-off last year, Richard Davies, a former economic adviser to Hammond's predecessor George Osborne, suggested the money could be used as a buffer to cushion the impact of Brexit, if necessary. Davies also pointed out that "vital brainpower" in Whitehall was being used up to deal with RBS when it could be diverted into preparing the UK for withdrawal from the EU.

At the very least, McEwan could acknowledge the dire state of the UK public finances by showing restraint in the £343m bonus bill for RBS executives – albeit 75% smaller than it was in 2010, but still too high for a largely taxpayer-owned bank.

McEwan is asking every one of us taxpayers to trust him when he says the lender will be back to black next year. But given this has not happened so far, and that there are outstanding and potentially high-cost legal issues with the US Department of Justice, is this really believable?

It is very likely that next year's results will be even worse, and the amount of money the government could make from privatisation would be even lower.

The chancellor, who is setting out his stall as a fiscal hawk, may be reassessing his opposition to privatising RBS. In less than two weeks, he will have to justify to Parliament why the taxpayer remains so heavily committed to the loss-making bank.

Jane Merrick is a freelance journalist and former political editor of The Independent on Sunday. She writes an allotment blog, www.heroutdoors.uk. Follow : @janemerrick23