According to the Independent, Osborne has decided that continued taxpayer ownership of the bank is politically “untenable”, after a host of mis-selling scandals and rows over bankers’ bonuses.

Under one plan, every taxpayer or voter in Britain would be given shares in RBS that would be worth between £300-£400 at current prices.

Another option would be for phased disposal or attempts to place the shares in the market. This would allow the public to invest their own money in the company but at a discount to the share price at the time. The paper suggests a hybrid scheme could also be developed.

A senior government source told the Independent: “This is something which is being looked at very seriously and officials have been asked to come up with a range of options for us to consider.

“There is a realisation that there is no prospect of RBS’s share price rising to the level at which we bailed the bank out and it is not good for the bank or the government to hold on to our stake indefinitely. Obviously a give-away to taxpayers before the election, who after all paid for it in the first place, is very attractive.”

In 2008, the government invested £45.5bn in RBS to prevent the bank from collapsing. Its shares closed on Friday night at 344p, well below the 500p average at which taxpayers bought their 82% stake.