Clegg defends Cable in Royal Mail sale row

Business Secretary Vince Cable. Picture: PA

Cable has been accused of costing the UK government £1 billion by setting the share price too low.

According to Freedom of Information requests, the 21 banks pitching to work on the flotation valued the Royal Mail at between £4bn and £4.8bn. Cable eventually sold a 60 per cent stake at 330p per share – valuing it at £3.3bn.

That meant the sale raised £2bn for the taxpayer, rather than a potential £2.9bn if the higher valuation had been used. Shares have soared to almost 590p this week.

Speaking on his regular LBC radio phone-in yesterday Clegg defended his Lib Dem colleague – a former chief economist at oil giant Shell.

“Vince is not a sort of share price expert,” he said. “He took advice from people who gave him a range, independently of what the fair share price should be.”

He went on: “What I dispute is this idea that somehow Vince Cable single handedly plucked some arbitrary price out of thin air. He didn’t, he did it following advice. It is clearly an imprecise, unpredictable science.”

Downing Street also insisted the UK government had dealt with the Royal Mail valuation “in the right way”.

A spokesman said: “I think when it comes to the sale of assets the right thing to do is to take and base decisions around independent advice in the way that the government did.”