Friday, 1 August 2014

Royal Mail privatisation cost taxpayers £1bn

Taxpayers lost-out on £1bn because the UK Government underpriced the privatisation of Royal Mail.

That was the major finding last week in a highly-critical report published by the House of Commons committee on Business, Innovation and Skills. The committee concluded that Tory-Lib Dem Ministers had been so determined to push ahead with privatisation as quickly as possible they had failed to get value for money for taxpayers.

Royal Mail was privatised in October of last year when the UK Government sold 60% of the publicly-owned asset. Shares were priced at 330p, giving the company a value of £3.3bn. However, on the first day of trading, shares jumped by 38% and continued to rise. Currently, Royal Mail is valued at £1.4bn above the price for which the government sold it.

North Ayrshire & Arran Labour MP Katy Clark is a member of the committee on Business, Innovation and Skills. Speaking to the3towns, she said, “This report confirms what we have known ever since Royal Mail was first floated on the London Stock Exchange. The government sold Royal Mail on the cheap. Priority investors have made multi-million pound profits purchasing under-valued shares and selling them on: taxpayers have lost around £1billion.”

Of the Committee’s investigation into the privatisation, Ms Clark said, “After hearing from Ministers and representatives from Lazard, the company that conducted the valuation of Royal Mail, it is clear that little, if any, consideration was given to value for money for the taxpayer when deciding the share price. The report backs-up the view that I, and many others, have had for some time that this was an ideologically-driven privatisation in which the interests of city investors were above those of taxpayers and Royal Mail customers. It has been a shambles from start to finish.”

Billy Hayes, General Secretary of the Communication Workers Union, noted, “The Business, Innovation and Skills Select Committee's damning report shows the extent of the government's incompetence in the privatisation of Royal Mail.”

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