Wednesday, 16 April 2014

Government bungled Royal Mail sell-off

I have just realised that I had neglected to post my article in last week’s Cornish Guardian. It was as follows:

A few months ago, I was among a large number of people who condemned the privatisation of the Royal Mail by the Conservative and Liberal Democrat Coalition.

I did not support the sell-off in principle, but I was particularly angry that the shares were under-valued and that two-thirds of them were sold to “institutional investors,” including “sovereign wealth funds” in foreign countries, investment banks and hedge funds.

An investigation has now been carried out by the National Audit Office (NAO) and I am pleased that their report has rightly condemned the Government’s chaotic handling of the sell-off.

The NAO has confirmed that the shares were under-priced and, as a consequence, £1.4 billion was lost to the Treasury.

Six months before the sale, some “experts” had suggested a sale price of 867p while others, just days before the privatisation, had valued the shares at 510p.

The shares were actually sold at 330p each, and within eight weeks, the shares had increased in sale price to 600p.

One journalist put it very succinctly: how would you feel “if you sold your home for £330,000 on the advice of an estate agent, then found the buyer offloading it just weeks later for £600,000 … you'd feel pretty sore.”

As a British taxpayer, I do “feel pretty sore” and I am sure many of you share my dismay.

It seems that the Government was advised by “financial advisory and asset management firm” Lazard and Co., which pocketed fees of £1.5 million, while a syndicate of investment banks was also involved and received a further £11.2 million.

The NAO report has also revealed that peference was given to sixteen, as yet unnamed, “priority” investors, which the Government insisted would keep the stock for the long-term. But these “investors” were allowed shares originally valued at £728 million, but they had sold off nearly half of these shares within a matter of weeks for an obscene profit at the expense of the general public.

Many newspapers reports have concluded that the Government “could have achieved better value for the public” – how politely put – while leading members of the Coalition, such as the Prime Minister and the Business Secretary Vince Cable have attempted to downplay the controversy.

Mr Cable even claimed that “achieving the highest price … was never the aim of the sale” – but the reality is that his Government bungled a sale which they should never have sanctioned in the first place.

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