BUSINESS Secretary Vince Cable has insisted Royal Mail is still in a “fragile” state and was not sold off on the cheap, after he was described as relying on “Alice in Wonderland facts” to defend the privatisation.
Mr Cable and his Conservative deputy Michael Fallon both denied that the taxpayer had lost out on £1 billion from the sell-off when they appeared before the Business, Innovation and Skills select committee.
But MPs from both sides tore into the two ministers over the sale, with questions over whether it represented value for money for the taxpayer.
Labour committee chairman Adrian Bailey said it was an “astonishing assertion” to claim the shares were sold for the best price, and Tory MP Brian Binley said the ministers had been let down by experts who advised on the sale.
But Mr Cable said that there was still a “very high level of volatility in the share price” and suggested it was difficult to determine if the stock debuted too low at 330p. Royal Mail shares rose to almost 620p but were today trading at 518.5p.
Mr Cable also warned that Royal Mail was “not a blue-chip company”, and “external circumstances” could hit the share price at any time.
‘Alice in Wonderland’
Katy Clark, Labour MP for North Ayrshire and Arran, told the ministers: “You were the custodians of a public asset. The impression that’s been given is that you were not going to let anything stand in the way of selling off this asset as soon as possible and anything that might cause delay was just going to be swept aside.”
But Mr Fallon told her: “Hindsight is a wonderful thing, but I’m quite confident we got the best price we could at that particular time bearing in mind all the circumstances.”
Mr Bailey responded: “That’s absolutely Alice In Wonderland. The fact is that you didn’t get the best price, because on the day of sale the share prices soared. That’s just an astonishing assertion.”
Labour committee member Willie Bain, the MP for Glasgow North East, said: “I think the public will be flabbergasted that ministers are happy with the advice that has been tendered given that they have foregone hundreds of millions of pounds as a result of this flawed transaction.”
He added: “No one put the long-term return to the taxpayer first.”
But defending the sell-off, Mr Cable insisted: “We were overwhelmingly concerned with the long-term interests of the taxpayer. That is what drove the whole process.”
Mr Fallon added: “Two years ago we had a loss-making Royal Mail. Today we have one of Britain’s top 100 companies, with every prospect of a secure future and able to deliver on a sustainable basis the six-day-a-week service that our constituents rely on. That’s a success.”
‘Lessons to be learned’
The Business Secretary said that he accepted that there were lessons to be learned about the way privatisations were handled, but insisted he had nothing to apologise for over the Royal Mail sell-off.
He said: “Hindsight is a wonderful thing, but on the basis of the facts we had, the information we had, the knowledge we had of the company, this was a successful transaction.
“We don’t apologise for it and don’t regret it.”
He added: “The lesson to be learned from this whole exercise is ‘is this the best system for getting the maximum value for taxpayer assets?’
“We accept the need to look at different methods and I suspect we may come back to the conclusion that the IPO route was the only one that made any sense.”
The evidence from the ministers was dismissed by the Communication Workers Union.
CWU general secretary Billy Hayes said: “For Cable and Fallon to continue to claim industrial action was the main reason they sold Royal Mail at a low share price is utterly ridiculous.
“The Committee heard that ‘relatively few days had been lost to industrial action’. The shares were 24 times oversubscribed so for the Government to say they wouldn’t have been able to get a good deal for the taxpayer is wrong.
“To compare the sale of Royal Mail, a publicly-owned institution, to Facebook, which is a private technology company demonstrates, that the Government had no understanding of how much the British people cared about their postal service nor did they understand that they were selling a public service.”