Labour Urge Vince Cable To Answer Royal Mail 'Fire Sale' Questions

Chuka Demands Answers Over Royal Mail 'Fire Sale'
Shadow Business Secretary Chuka Umunna takes questions during a visit to TTP group in Melbourn, Cambridgeshire.
Shadow Business Secretary Chuka Umunna takes questions during a visit to TTP group in Melbourn, Cambridgeshire.
Chris Radburn/PA Archive

Vince Cable has come under pressure to explain a number of "unanswered" questions over the government's controversial part-privatisation of Royal Mail.

Shadow business secretary Chuka Umunna said 16 priority investors picked by the government to buy shares last year should be named, along with details of any arrangements to make sure they would not sell their allocated shares early, as most of them ended up doing.

Umunna wrote to the business secretary asking for correspondence between the government and banks advising on the sale to be published.

The move followed furious exchanges in the House of Commons, when Labour leader Ed Miliband branded the Prime Minister "the dunce of Downing Street" for selling a majority of the company for £1.4 billion less than its current valuation.

Conservative MP Brian Binley later branded Cable "foolish" over the "unethical and immoral" part-privatisation of the Royal Mail, in an interview with the Huffington Post UK.

A National Audit Office (NAO) report found that Royal Mail's privatisation left taxpayers short changed by £750 million as ministers were "too cautious" in their pricing of the business at just 330p-a-share.

The public spending watchdog said that the government's desire for a successful Royal Mail sale, by ensuring investors were not put off by a prohibitively high price, "resulted in the shares being priced at a level substantially below that at which they started trading".

On the first day of trading last year, shares closed at 455p, 38% higher than their sale price, representing a first-day increase in value of £750 million for the new shareholders. The price later hit 618p before falling back, and shares were trading at around 560p today.

Umunna said: "Taxpayers have been left hugely short changed by the government’s Royal Mail fire sale, while stamp prices have gone up and vital postal services which consumers and small businesses rely on have been put at risk."

He wrote: "To provide clarity in this matter, please can you confirm:

  • Who were the sixteen priority investors selected by the government, and what formal or informal arrangements were made to ensure that they would form part of a long-term and supportive shareholder base?
  • Will you now publish correspondence and details of discussions between the government, the banks advising on the sale and these priority investors in the run up to the sale?
  • What correspondence has there been between the government and these priority investors since Royal Mail was privatised, and will you publish it?
  • What percentage of Royal Mail shares allocated to priority investors is still held by these priority investors?
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