HoC Royal Mail Oral Answers to Questions 24 Oct 2013

[TrueBlueTerrier]

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Philip Hollobone (Kettering, Conservative)

How many and what proportion of employees of Royal Mail opted out of the allocation of free shares.
Link to this: Individually | In context

Vincent Cable (Secretary of State, Business, Innovation and Skills; Twickenham, Liberal Democrat)

Of the approximately 150,000 employees who were eligible for free employee shares,
only 372 opted out of the scheme. Therefore, 99.75% of employees have accepted the shares that we offered them.

Philip Hollobone (Kettering, Conservative)

Is not the number of posties who have opted out of the scheme remarkably low? Despite the threats of industrial action and union militancy, is it not clear that the vast majority of Royal Mail employees have accepted the invitation from Her Majesty’s Government to take part in the biggest employee share scheme of any major privatisation?

Vincent Cable (Secretary of State, Business, Innovation and Skills; Twickenham, Liberal Democrat)

Yes, it is a very positive story. The engagement of almost every employee of Royal Mail is extremely encouraging. I seem to remember that under the last Labour Government we lost in the order of 2 million working days through industrial action in every single year. This is a big change for the better.

Barry Sheerman (Huddersfield, Labour)

May I remind the Secretary of State that before this privatisation every one of my constituents had a share in Royal Mail? It has been revealed that only a tiny number of people in most constituencies now have any shares at all and that the Prime Minister’s hedge fund friends own a lot of them.

Vincent Cable (Secretary of State, Business, Innovation and Skills; Twickenham, Liberal Democrat)

On the contrary, the share register is dominated by large long-term institutional investors, most of whom hold the savings of millions of our citizens.

Jonathan Edwards (Carmarthen East and Dinefwr, Plaid Cymru)

This afternoon, I am due to meet for lunch that great Welsh export and one of the world’s best rugby players, George North. As the Secretary of State knows, George North was bought by Northampton from the mighty Scarlets at a very reasonable price during the summer. Does he think that the hedge funds feel the same as Northampton Saints, because they have acquired the Royal Mail crown jewels at a cut price?

Vincent Cable (Secretary of State, Business, Innovation and Skills; Twickenham, Liberal Democrat)

No; in fact, the offer was framed in such a way as to ensure that the shares were acquired predominantly by long-term institutional investors. A few hedge funds are involved and, indeed, some hedge funds take a long-term view.

Seema Malhotra (Feltham and Heston, Labour)
Many small businesses and consumers across the country rely on local delivery offices such as the one in Feltham to pick up parcels and important letters. Will the Secretary of State confirm that there is nothing to prevent Royal Mail from selling off its local properties across the country and moving them to out-of-town locations that will be far more difficult to reach?

Vincent Cable (Secretary of State, Business, Innovation and Skills; Twickenham, Liberal Democrat)

I think I know the sorting office that the hon. Lady is talking about, because it is the one that serves my constituency. It was rebuilt and re-equipped three years ago, I believe, so it is wildly improbable that the Royal Mail will now want to sell it.

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Clive Efford (Eltham, Labour)

What assessment he has made of the value for money for the public purse of the recent sale of shares in Royal Mail.

Michael Fallon (Sevenoaks, Conservative)

Our overarching objective is to put Royal Mail in a position to be able to deliver the universal service on a long-term and sustainable basis. When considering value for money, we will assess the sale proceeds together with the long-term value of the taxpayers’ retained stake in the business and the reduced risk to the taxpayer of a stable company with access to private sources of capital.

Clive Efford (Eltham, Labour)

The shares were sold at £3.30 each and this morning they are selling at £5.32. Does the Minister agree that the taxpayer got a raw deal in the share sale, and does he accept full responsibility?

Michael Fallon (Sevenoaks, Conservative)

It is not unusual to see some share price volatility in the immediate aftermath of a sale. Let us be clear: this sale was popular, oversubscribed and successful. When the Labour Government tried to sell Royal Mail, they failed.

Adrian Bailey (West Bromwich West, Labour)

Will the Minister tell us how much money was paid to Lazard for so comprehensively undervaluing Royal Mail?

Michael Fallon (Sevenoaks, Conservative)

The fees paid to the Government’s advisers will be disclosed in the normal way to the National Audit Office, which is of course looking at this sale as they looked at the Northern Rock sale, but they compare favourably to the fees paid to advisers by the Labour Government in the sale of QinetiQ 10 years ago, when 10 senior managers were allowed to walk away with £107 million and no shares were sold to the public.

Ian Murray (Edinburgh South, Labour)

The Minister claimed that value for money for the taxpayer was central to the Government’s fire sale strategy for the national institution that is Royal Mail. Given that many investment banks valued the company at £1.7 billion more than the sale price, that the sale was oversubscribed 20 times over and that the share price has steadily risen to more than 60% of its initial value, why did the Minister reject raising the price range when he knew the offer was oversubscribed? Does the Minister agree with the Secretary of State that the loss of more than £750 million to the taxpayer is froth and ill-informed?

Michael Fallon (Sevenoaks, Conservative)

It is far too early to judge the long-term performance of the Royal Mail share price. With any initial public offering there will be volatility in the price and it is too early to make a judgment. As far as the banks are concerned, a whole number of banks were consulted on the value of Royal Mail. The value established was, I think, around the mid-point of the range of the advice we received.

[UnhappyGremlin]

There's one or two planted questions here.
Nothing unusual in that.
But Cable got some of the usual PR responses in there.
Reiterating some of the misinformation already trotted out.
Can't see him quitting anytime soon.
Hope I'm wrong.