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Comment: Royal Mail shares demand answers critics

Martin Flanagan. Picture: Adrian Lourie

Martin Flanagan. Picture: Adrian Lourie

  • by MARTIN FLANAGAN
 

THE wisps of smoke from Whitehall suggest strongly that the government and its financial advisers, in the home straight of the Royal Mail’s privatisation, will price the business at the top end of the range.

That would suggest a stock market valuation of comfortably more than £3 billion when conditional trading in the shares starts on Friday. The word in the City is that investor demand for the stock has been strong, and that only those bidding near the very top of the original 260p-330p price range stand a chance of getting shares.

Even the successful ones risk having their desired holdings scaled back given the demand. It is handy timing for Business Secretary Vince Cable’s appearance today before the business committee in parliament, with MPs on likely auto-pilot questioning whether the government is selling the 500-year-old Royal Mail too cheaply.

Cable can justifiably counter that the government has had a decent privatisation war this time round. It will have cannily got the float away before next week’s ballot on strike action by Royal Mail staff, and the higher price helps head off criticism that it has flogged the family silver on the cheap.

Even the worker disgruntlement looks muted, with apparently only a few hundred of the 150,000 staff opting not to take up free shares in the privatised entity.

Unlike the privatisation of the railways in the 1990s, the privatised Royal Mail will not have what has often appeared the intractable problem of “separating the wheels from the track”. It will remain an integrated business.

Firms should get behind apprentices

Hats off to the cluster of big companies launching a campaign to get 5 per cent of Britain’s payrolls involved in apprenticeships within five years. Britain’s shocking figure of one million unemployed 16 to 24 year olds is a justified cause for regret, even guilt, and anything to make a dent in it is to be welcomed. The idea is that all companies within the FTSE 350, and similar-sized private businesses, will be called upon to sign up to the “5 per cent Club” to get young people working on structured training schemes.

Giving some much-needed credibility to the industry-led initiative , it is spearheaded by some heavyweight businesses.

They include FTSE 100 engineer Babcock International, defence and security giant QinetiQ, the UK arm of global aerospace group EADS, missile manufacturer MBDA, and Renishaw, the engineering company.

The 5 per cent Club is also backed by the CBI employers’ lobby group. It is difficult to argue with Leo Quinn, chief executive of QinetiQ, who says getting measurably more unemployed young people into structured training schemes over the next five years is both a business and social imperative.

It is important to dispel the threat of pervasive disillusion in the younger generation. But the initiative could also benefit wider Britain, too. As Quinn says, skills enhancement spawns innovation, innovation leads to growth, and growth generates general prosperity.

As a country, we have looked enviously for decades at some other countries’ vocational training programmes, embodied, in particular. by Germany and some thrusting emerging economies in the Far East.

But it is time Britain stopped being “aspirational”, or less politely all mouth and no trousers, in the field of apprenticeships. We wish the 5 per cent Club the best.

 

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