Clegg defends Cable over sell-off

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Nick Clegg has insisted Business Secretary Vince Cable is "not a share price expert" as he rejected criticism of the Royal Mail sell-off.

Mr Cable has been accused of costing the Government £1 billion by setting the share price too low.

According to Freedom of Information requests, the 21 banks pitching to work on the floatation valued the Royal Mail between £4 billion and £4.8 billion.

But Mr Cable eventually sold a 60% stake at 330p per share - valuing it at £3.3 billion.

That meant the sale raised £2 billion for the taxpayer, rather than a potential £2.9 billion if the higher valuation had been used.

Shares have soared to more than 580p this week.

Speaking on his regular LBC radio phone-in this morning, Mr Clegg defended his Lib Dem colleague - a former chief economist at oil giant Shell.

"Vince is not a sort of share price expert," he said. "He took advice from people who gave him a range, independently of what the fair share price should be.

"And actually, he set the share price at the very highest point in the range that he was given. Now, we will see over time how this company is valued."

He went on: "What I dispute is this idea that somehow Vince Cable single handedly plucked some arbitrary price out of thin air.

"He didn't, he did it following advice. It is clearly an imprecise, unpredictable science."

Downing Street insisted the Government had dealt with the Royal Mail valuation "in the right way".

A spokesman said: "I think when it comes to the sale of assets the right thing to do is to take and base decisions around independent advice in the way that the Government did.

"I think the right process was followed. I think we have gone about this the right way."

The spokesman sidestepped questions about whether the Prime Minister believed the Royal Mail had been sold at the right price.

He said: "I don't think the right thing to try and do is to get drawn to make comparisons with what the share price might be on any particular day.

"I think the right way to look at this is in terms of the long term of a plan which in the medium to long term brings private sector investment into this business as well as very significant employee ownership and that the broad investor base is what is needed in order for there to be a strong and successful company and I think that's what we have and I think that is why we have gone about it in exactly the right way."

Asked if the Prime Minister had confidence in the Business Secretary's handling of the deal, the spokesman replied: "Yes".

Shadow business secretary Chuka Umunna said: "Nick Clegg's claims that Vince Cable is not a 'share price expert' is looking like an understatement. While this may be true, it won't get David Cameron's Government off the hook.

"There are real questions to answer about a decision that could have cost taxpayers dearly.

"Nick Clegg said that Vince Cable followed independent advice and set the initial price at 'the very highest point' (which is) completely contradicted by the figures released from his own department.

"The average valuation provided by 21 banks to Government was of a range of between £700 million to £1.5 billion higher than the £3.3 billion the Tories and Lib Dems sold the company for.

"David Cameron and the Tory-led Government have not only flogged off a much-loved national institution, putting vital postal services which people rely on at risk, but they have done so at a price which could have left taxpayers short-changed and out of pocket to the tune of hundreds of millions of pounds, at a time when families are facing a cost of living crisis.

"We know that the Tory-led Government considered - and rejected - the option of a higher price."