Govt defends Royal Mail share sale

The UK government has defended its decision to offer shares in Royal Mail at a low price when the postal service was privatised by the state towards the end of last year.

Business secretary Vince Cable was responding to a new report from the National Audit Office (NAO) released yesterday (April 1st), which accused the government of undervaluing the company, costing the taxpayer a lot of money.

But Mr Cable stated that it was a deliberate ploy by the government to set the share price of Royal Mail at a low level, as this was the best way to reduce the risk of it failing.

Mr Cable insisted the government was "right to take a cautious approach", but his opposite number, the shadow business secretary Chuka Umunna said it was "a first-class disaster".

"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," said the Liberal Democrat MP.

"A more aggressive approach to pricing would have introduced significantly greater risk and the advice that we received in this respect was unambiguous."

Calls for resignation

However, Billy Hayes, general secretary of the Communication Workers Union, called for Mr Cable to resign over the Royal Mail share sale, describing it as a "botched, panic sale" and the business secretary "should consider his position".

Mr Cable pointed out that the share sale raised £2 billion for the taxpayer, as well as a further £1.5 billion from the 30 per cent stake in Royal Mail retained by the state.

Amyas Morse, head of the NAO, noted the government was successful in meeting its goal of selling Royal Mail and it was also successful in getting the company listed on the FTSE 100. He said: "Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer."

By 10:26 BST today, shares in Royal Mail were down by 0.49 per cent on the start of the day.

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