Public lost millions in postal sale

The public spending watchdog has slammed the Government’s Royal Mail sell-off, claiming it short-changed the taxpayer out of hundreds of millions of pounds.
In a report published today, the National Audit Office (NAO), said the Coalition’s desire to get a prompt sale at a time of short-term market uncertainty and a threat of industrial action had resulted in it setting the low-end of the price range at a cautious level.
Some City institutions had valued Royal Mail at up to £10bn – equivalent to about 900p per share – but it plumped for 330p a share instead.
Royal Mail shares closed at 455p on the first day of trading, 38% above their offer price, meaning the Government could have netted the taxpayer an additional £750m – one estimate put it at closer to £1bn. Since then shares have risen by as much as 87%.
“The Department was very keen to achieve its objective of selling Royal Mail, and was successful in getting the company listed on the FTSE 100,” said NAO head Amyas Morse. “Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer.”
George Godber, a fund manager at Milton Group, told Radio 4 that he was “astounded” by the low price. “I thought it was significantly underpriced. In stock market terms, this was the London 2012 Olympic ticket moment, lots of people applied but very few got to go to the opening ceremony.”
The Government and its advising banks have already been dragged before parliamentary enquiries to justify Royal Mail’s price tag, but both insist the price was right.
In a response to the report Business Secretary Vince Cable said: “Achieving the highest price possible at any cost and whatever the risk was never the aim of the sale.
“The report concludes there was a real risk of a failed sale attached to pushing the price too high. And a failed sale would have been the worst outcome for taxpayers and jeopardised the operation of Royal Mail going forward.”

1 Comment on "Public lost millions in postal sale"