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UK taxpayers lost £1bn on Royal Mail sale


The privatisation of the Royal Mail could have lost UK taxpayers around £1bn, according to a select committee of MPs.

Royal Mail shares were priced at 330p when 60% of the company was floated on the stock market; however these have since peaked at 663p per share, and they now stand at around 473p per share.

The report was conducted by the Business, Innovation and Skills select committee, who claimed that the government received poor financial advice and set the price of the shares too low because of a fear of failure.

Adrian Bailey, a Labour MP and chair of the committee said: “We believe that fear of failure and poor quality advice led to a significant underestimate of the demand for Royal Mail shares”.

He then went on to state that “if any minister loses that sum of money to the public purse then they really should reconsider their position”.

However, business secretary, Vince Cable criticised the report, claiming that it contains “factual errors and misunderstandings”.

He said the committee who published the report “have the benefit of hindsight, which we didn’t have at the time”.

Cable then added: “The price of shares is very, very volatile – these things go up and down and we’ve seen in the last few weeks the price of Royal Mail shares actually falling like a stone”.


The report highlighted further concerns about the sale of the company, stating that the committee was “disturbed” the taxpayer may not have benefited from the sale of ‘surplus’ Royal Mail assets.

These assets included three sites in London, which had a ‘hidden value’ of up to £830m, according to the National Audit Office (NAO).

The NAO recommended that these assets should not have been included in the sale of the company, or an arrangement should have been made where they could claw back the proceeds of any future sales of those assets.

There was also concern that the correct measures to ensure those who advised the sale did not have a conflict of interest.

Lazard, UBS and Goldman Sachs were advisers to the sale, and they were all included as ‘preferred investors’, meaning they all had shares allocated to separate parts of their business.

Lazard and the banks are believed to have made millions of pounds on behalf of their clients by purchasing the shares before selling them on for a profit, shortly after the company was floated on the stock market.

Mr Bailey said: "It's very important that when the government does sell off a government asset, it does so through a process that quite clearly demonstrates that nobody selling it, nobody advising it, has a conflict of interest".

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