Royal Mail sale ‘lost taxpayers £1bn’

<p>MPs have criticised the amount Royal Mail was sold for.</p>

A committee of MPs has criticised the government for undervaluing the Royal Mail during its sale.

Headed up by Labour MP Adrian Bailey the committee stated that taxpayers could have lost out on about £1 billion thanks a "significant underestimate" by the government. The Business, Innovation and Skills select committee suggest that when the Royal Mail was floated on the stock market the decision was taken on bad advice.

Members stated that the shares had been undervalued and property owned by the Royal Mail was mispriced, especially when 60 per cent of the organisation was privatised in October. At the point of stock flotation, shares in the Royal Mail were priced a 330p but this increased to a peak of 618p but has since fallen to 473p.

Speaking to the BBC, Mr Bailey said: "We believe that fear of failure and poor quality advice led to a significant underestimate of the demand for Royal Mail shares. Ultimately the blame must lie with the government. The buck stops with government.

"But it's quite clear they were very badly advised and obviously it does calls into question the whole process by which the advisors were appointed and the quality of advice the government received."

Business secretary Vince Cable defended the government's decision and explained that the Royal Mail was sold at a price which was regarded as the "best that could be achieved". He noted that £2 billion had already been paid to taxpayers and stressed that share prices are very volatile.

Earlier in the week, Mr Cable accepted the demands from the National Audit Office and ordered a review of the listing process which has the organisation believes has cost the taxpayer millions of pounds.

Royal Mail's share price currently stands at 473.90p as 08:58 on July 11th, after experiencing a 0.15 per cent drop.

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