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Cable under pressure over Mail sell off

By Western Daily Press  |  Posted: April 02, 2014

By Alan Jones

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The Government is under continued pressure over its controversial privatisation of the Royal Mail amid demands for "priority" investors who made money from the sale to be publicly named.

Business Secretary Vince Cable faced calls to consider his position following publication of a report by the National Audit Office which made it clear that the coalition could have achieved better value for the taxpayer.

Mr Cable clashed in the Commons yesterday with his shadow, Chuka Umunna, who described the privatisation as a "first class disaster" that has seen taxpayers "short changed" out of hundreds of millions.

People the Business Secretary once referred to as "spivs and gamblers" are "laughing all the way to the bank", said Mr Umunna.

Brian Scott, a national official of the Unite union, said: "The Government must name the 16 priority investors they did a deal with. The UK taxpayer needs to know why they were selected as priority investors.

"It is unbelievable that any government thought it could reach a gentleman's agreement with rapacious investors who were out to make a fast buck."

The National Audit Office (NAO) disclosed that 12 priority investors sold all or some of their holdings within the first few weeks of trading.

The NAO said Mr Cable's department took a "cautious" approach to a number of issues which led to shares being priced at a level "substantially below" the initial trading price. On the first day of trading last year, Royal Mail's shares closed at 455p, 38 per cent higher than their price sale, representing a first day increase in value of £750million for the new shareholders.

The NAO revealed that six priority investors sold all their shares within weeks of trading, while a further six sold part of their holdings, and four others increased their holdings.

The 16 priority investors were allocated £728 million worth of shares, while another 94 institutions were given £570 million worth.

Those which sold their shares made a "substantial" profit, said the report.

Asking an urgent question about the privatisation in the Commons, Mr Umunna said: "You know it's April Fool's Day when a report is published by the National Audit Office saying 'the department could have achieved better value for the taxpayer' and then ministers go out on to the media and then come to this House and then declare their privatisation a success.

"They must think we're all fools.

"This report delivers a damaging verdict on the Government's botched privatisation and it has left taxpayers disgracefully short-changed to the tune of hundreds of millions of pounds."

Mr Cable replied: "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.

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

Labour MP Adrian Bailey, who chairs the Business Select Committee, said the report underlined allegations that the Government sold Royal Mail "at any cost", and added that Mr Cable should consider his position.

David Cameron insisted that Britain was "much better off" with the privatised service, which is generating extra money for the Exchequer.

At a press conference in No 10, the Prime Minister said: "A decade ago this company was losing money and people thought that it was in an unrecoverable situation.

"I would argue the British taxpayer has benefited in three ways from the changes we have put in place and the privatisation that has taken place.

"There is the benefit of a sale of Royal Mail and the capital receipt, there's the benefit that this is now a profit-making company paying taxes into the Exchequer and thirdly, this is a successful company doing well, doing well for Britain."

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