10th January 2014
Labour has accused the Government of short-changing taxpayers by hundreds of millions of pounds with its ‘botched’ sell-off of Royal Mail three months ago writes Philip Scott.
The privatisation of Royal Mail back in October, was the highest profile and most controversy UK IPO in decades. After initially offering shares to the public at 330p, the stock has remained above 500p since. As a result of the dramatic rise in value of the shares, the business was elevated in December to the UK’s benchmark index, the FTSE 100.
On Wednesday the shares closed at 562p, more than 70% higher than David Cameron’s Government’s offer price.
Interviewed on the BBC’s Today Programme on the day the Royal Mail privatisation took place in October, Business Secretary Vince Cable dismissed the jump in the price of Royal Mail shares as “froth”, asserting that the sale price should be judged three months after its privatisation.
At the time, he said: “You get an enormous amount of froth and speculation in the aftermath of a big IPO of this kind. It is of absolutely no significance whatever. What matters is where the price eventually settles and if we look back at this in three months’, six months’ time, or indeed years to come, that’s what we’re really interested in.”
As well as an inquiry by the BIS Select Committee, Vince Cable now faces probes from the National Audit Office and the Public Accounts Committee.
Chuka Umunna MP, Labour’s Shadow Business Secretary, says: “We know that Vince Cable considered, then rejected, the option of floating Royal Mail at a higher price which would have brought in more cash for taxpayers. He still has serious outstanding questions to answer on the price he could have received three months ago in respect of what increasingly looks like a botched privatisation.
“Three months later, the Business Secretary’s dismissal of the sharp rise in share price as ‘froth’ has been demolished and increasingly it looks like the taxpayer has been left short changed at a time when services are being cut and families are struggling with David Cameron’s cost of living crisis.”