Local MP Katy Clark has challenged Tory Prime Minister David Cameron to explain why Royal Mail was sold to private sector investors at a knock-down price.
Ms Clark, a strong and vocal supporter of retaining Royal Mail in public ownership, used Prime Minister’s Questions in the House of Commons to flag-up that the UK Tory-Lib Dem Government’s privatisation had cost the general republic in excess of £1billion.
Royal Mail was floated on the London Stock Exchange on October 15, having been valued four months earlier by investment bank JP Morgan at around £10billion. However, when the UK Government began to sell-off the profitable organisation, it valued shares at 330p each, giving Royal Mail a total value of just £3.3billion. On the first day of trading, prices rose to 489p per share and, by last Thursday (October 31), had reached 545p – meaning taxpayers had already ‘lost’ over £1billion since shares were first traded.
At Prime Minister’s Questions Katy Clark asked David Cameron if he believed Royal Mail had been undervalued when it was sold-off.
Speaking later, Ms Clark told the3towns, “With each day’s trading on the London Stock Exchange it becomes clearer and clearer that the privatisation of Royal Mail has been a poor deal for taxpayers. When I questioned the Prime Minister on whether he thought Royal Mail had been undervalued he failed to answer the question. Given that his rush to sell Royal Mail at the earliest opportunity has cost the public over £1billion it is easy to see why.”
The MP for North Ayrshire & Arran said banks that advised the UK Government on the privatisation of Royal Mail had made profits of around £29million as the share price has risen. “At best this Government is guilty of gross incompetence of the highest order, short-changing the taxpayer and boosting the income of those who helped them to do so,” she added.
Katy Clark is a member of the House of Commons committee on Business, Innovation and Skills, which later this month will question Vince Cable MP, the Business Secretary, in relation to the privatisation of Royal Mail. Representatives of the banks that advised the UK Government on the sell-off will also be called before the committee.
In response to Ms Clark’s question on whether or not Royal Mail had been undervalued when it was privatised, Prime Minister David Cameron said, “Considering that Royal Mail in the past was losing billions of pounds, the whole country is far better off with Royal Mail in the private sector. I just talked about flip-flops and here is another from the Labour Party. Who said that we needed to privatise Royal Mail in the first place? Anyone? Where is Peter Mandelson when you need him? Labour said that we needed private capital - I agree; they said we needed private management - I agree. It has taken this Government to deliver the policy.”