Yahoo Finance Royal Mail Sell-Off: Cable Says 'No Apology'
Vince Cable has said the "last thing" he intended to do was apologise for the Government's undervaluation of the Royal Mail (Other OTC: ROYMF - news) .
The Business Secretary said the Government was right to take a "cautious" approach to the sale and had it not done so it would have put taxpayers' interests at risk.
The National Audit Office found that the "deep caution" shown by ministers when pricing shares in the Royal Mail last year has cost the taxpayer more than £1bn.
The shares were listed at 330p each and on the first day of trading alone, Royal Mail's new shareholders benefited to the tune of £750m - money which could have gone to the public purse. Today they were trading at 565p.
However, the Government has robustly defended the sale against fierce criticism with shadow business secretary Chuka Umunna branding the sale a "first-class disaster" and "botched privatisation" before demanding an apology.
Responding in the House of Commons, Mr Cable said: "The last thing I intend to do is apologise. What I do intend to do is to refer to what the report actually said as opposed to the spinning and the froth that is being generated around me."
He said: "A more aggressive approach to pricing would have introduced significantly greater risk and the advice that we received in this respect was unambiguous.
"There was no confidence that a sufficient number of buyers would offer a significantly higher price, a failed transaction and retention of the Royal Mail in public ownership would have been a very poor outcome for the taxpayer as the NAO report confirms."
The NAO report concluded the Business department should not have relied so heavily on their City advisers, while the Public Accounts Committee chairwoman Margaret Hodge accused Vince Cable's department of being "clueless".
The Government sold £2bn of shares in October, amounting to 60% of the company, and favoured priority investors such as Standard Life (LSE: SL.L - news) , Fidelity and BlackRock (NYSE: BLK - news) hoping they would be long-term investors.
In the event, the 12 priority investors sold all or some of their holdings, making a significant profit, within the first few weeks of trading.
Amyas Morse, head of the NAO, 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% 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 to the taxpayer."
The report does, however, say the Business Secretary was right to reject bankers' gold-plated valuations of Royal Mail of more than £9bn.
Critics of the sale have seized on the axing of 1,300 jobs and a hike in stamp prices in recent days as evidence of the folly of privatisation.
Unite national officer Brian Scott said: "This report is startling proof that the Government sold off the country's family silver on the cheap.
"The privatisation of Royal Mail was wrong in every way. The loser is the UK taxpayer and the tragedy is that money that should be flowing into the Treasury for schools and hospitals is going into the pockets of private investors."
Some 10% of Royal Mail was handed free to employees during the privatisation.
Taxpayers were left with a 30% stake that is now worth around £1.6bn.
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