Business secretary Vince Cable has come out to defend the privatisation of Royal Mail in the face of criticism from the National Audit Office (NAO).
A report from the NAO published earlier today accused the government of rushing the sale of Royal Mail and causing the taxpayer to lose out.
Amyas Morse, head of the National Audit Office said:
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. Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer. The Government retained 30 per cent of the company. It could have retained even more and allowed the taxpayer to participate further in the rapidly increasing share price and thus limit the cost of to the taxpayer of its cautious approach.
Shadow business secretary Chuka Umunna called the sale “a first-class disaster”, but Vince Cable insists that the government’s cautious approach was the right one.
The price of Royal Mail shares rose 38% to 455p on the first day of trading, with demand 24 times the maximum number available to investors, which meant that the taxpayer lost out on £750 million on the sale.
In the months since launch, the share price has risen at total of 70% to to 564p, but managers from two of the banks advising the government, Goldman Sachs and UBS, on the sale told MPs last year that uncertainty and complexity in the deal caused them to advise on a conservative estimate. However many have questioned Goldman Sachs were able to advise on the deal, when Goldman Sachs traders were some of the big winners from the undervaluing of the shares according to the Mirror.
Goldman Sachs and UBS – said market uncertainty and the complexity of the deal led them to a conservative price when they were questioned by MPs in November last year.
have risen by 70% since the floatation on the stock market in 2013