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Government botched Royal Mail privatisation, says Labour
LABOUR has accused the government of a botched privatisation over its controversial sell off of Royal Mail, saying taxpayers have been short-changed by hundreds of millions of pounds.
Three months after the flotation, the opposition said the postal group's share price was more than 70 per cent higher than the 330p at the time of privatisation last October.
The price has remained above 500p, dramatically higher than the figure set by the coalition, said Labour, adding that Business Secretary Vince Cable had maintained that judgment should be passed on the sale price of Royal Mail after three months.
Shadow business secretary Chuka Umunna, said: "On the day the Royal Mail fire sale went ahead Vince Cable was clear that the Tory-led Government should be judged on the basis of the price of Royal Mail shares after three months.
"Three months later, the Business Secretary's dismissal of the sharp rise in share price as froth has been demolished and increasingly it looks like the taxpayer has been left short-changed at a time when services are being cut and families are struggling with David Cameron's cost of living crisis.
"We know that Vince Cable considered, then rejected, the option of floating Royal Mail at a higher price which would have brought in more cash for taxpayers.
"He still has serious outstanding questions to answer on the price he could have received three months ago in respect of what increasingly looks like a botched privatisation."
Business minister, and former Darlington MP, Michael Fallon told BBC Radio 4's Today programme: "It was a successful sale. You expect successful IPOs to go to a premium after they have been launched and that is no surprise.
Nobody has lost anything here.
"On the contrary, we have gained. We have gained a top-100 company, 10 per cent of it owned by the staff. It has got over 7,500 private investors in it.
"This is a business that successive governments have been trying to sell for 20 years. We have sold it and we have sold it successfully.
"We were told throughout the summer that it might be too difficult, that Royal Mail had been loss-making in five of the last 12 years and is prone to industrial action and was less profitable than its main postal competitors.
"We were told this was an extremely difficult and risky thing to do. We got the sale away, and the company is now one of our top 100 companies and I am very proud of that."
Asked whether the Government could have raised billions of pounds more by setting the sale price higher, Mr Fallon said: "We couldn't have. We took the best advice that was available to us.
"We wanted to get long-term institutional investors behind this business, so it never had to come back to the taxpayer again to sustain the six-day-a-week service that we all rely on. We didn't just want people who were going to speculate.
"The long-term institutions were very clear with us that they wouldn't have paid more than 330p."
Billy Hayes, general secretary of the Communication Workers Union, said:
"Three months ago we had Cable froth and now we have taxpayers left with a bad taste as hundreds of millions of pounds have been lost.
"The British public were against the sale of this great public service as consumers and now they know for sure they got a bad deal as taxpayers too."