Fallon outclassed by Umunna over Royal Mail float

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Labour’s Chuka Umunna command of mass psychology is impeccable

Could Chuka Umunna be a Tory double agent? It is hard to imagine a better promoter of the Royal Mail privatisation. Tall, charismatic and just a bit hip, the Labour business spokesman is outclassing Conservative counterpart Michael Fallon. If Mr Umunna is a Fifth Columnist, his command of mass psychology is impeccable. To small investors, there is no buy signal stronger than a prominent socialist insisting a privatisation is horribly underpriced.

You do not even need to have been around during the 80s heyday of such spats to spot the cue. As any London cabby will tell you this week (regardless of whether you are listening), a giveaway for small investors is bad for Labour, which increases the chances the Tories will provide one.

That limits the repercussions for George Osborne if shares in Royal Mail rise to a steep premium when they start trading. So does the 30 per cent stake in the postal group that the state is bound to retain.

At the top end of a range of 300p-330p per share, the stock would be priced at a midpoint between rivals in earnings terms. The question is whether bulls, inspired by Mr Umunna and by rallying confidence, will loft them to about 406p on Friday, the price anticipated by bets laid with financial bookie IG Index.

That 23 per cent premium would invite uncomfortable comparisons with estate agency Foxtons, whose shares enjoyed a similar first-day surge. But IG’s price is based on a few hundred wagers, typically of less than £100, and is thus thinly based.

Besides, if the retail tranche of the Royal Mail float is heavily subscribed, Mr Osborne can always increase its size, and his own popularity. No wonder Mr Umunna is cross. Or is pretending to be.