Myths, lies and untruths: The Scandalous Sale of Royal Mail

[TrueBlueTerrier]

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“There’s no way we will sell Royal Mail ‘on the cheap’”. That was the promise made by the Department of Business, Innovation and Skills over a year ago in its Royal Mail: Myth-busters factsheet.

Yet we now know that is exactly what Vince Cable did. Indeed, most of the ‘myths’ the department tried to bust have now come to fruition.

Last October, Cable dismissed the share jump as “froth and speculation”. In the Independent last week he claimed, “it has taken a year for much of that froth to subside”. But even at the current share price (of 391p) Royal Mail was undersold by nearly half a billion pounds (£0.37bn to be precise).

That’s not froth, it’s scandalous.

Cable cannot just shrug off this substantial amount of money. He lost half a billion pounds on the way to the Stock Exchange. If a postman or woman had lost a valuable package so carelessly on their delivery round they’d be sacked. But not those in Government, or their City advisors, who have managed to dodge responsibility for the bungled sell-off for the past twelve months.

The sale of Royal Mail still remains deeply unpopular with the public, especially as the privatisation of a 500-year-old treasured public institution was at the expense of taxpayers and for the benefit of big corporate investors. And now we are seeing the effects of the Government’s ill-thought privatisation firsthand – the threat to the sustainability of the universal postal service.

Royal Mail has been vocal in the past few months on this issue, asking watchdog Ofcom how it is meant to continue to deliver a ‘one price goes anywhere’ delivery service when competitors are undercutting it on all sides.

This unregulated competition is making a large dent in the amount of letters and parcels going through Royal Mail’s delivery centres. With so much business going elsewhere, the Government’s assertion a year ago that “competition is beneficial, and should not undermine the provision of the universal postal service” has been proved to be utter nonsense.

Prior to privatisation Cable claimed Royal Mail was in need of private investment. But this wasn’t about transforming the business – which made £440m last year – but about the Coalition reducing much-loved institutions to monetary value.

Vince Cable favoured the 16 so-called ‘priority investors’ who were supposed to be there for the long-term. They were allowed to buy shares worth £728m based on what was said to be a gentleman’s agreement that their investment was for the long-term.

Many of these priority investors were in fact hedge funds looking for short term profit – they reneged on their promise, and half of their share allocation was sold off within a few weeks at a substantial profit. Six priority investors sold all of their holdings in the first few weeks of trading.

The sale of Royal Mail was not about delivering the best value for the taxpayer but just to achieve a sale. Lazard advised government against raising the price of Royal Mail shares to investors even though the allocation of shares was more than 23 times oversubscribed. Lazard’s investment arm Lazard Asset Management sold its six million shares within days of the IPO securing an £8million profit.

The assertion that privatisation was necessary for Royal Mail to maintain the universal postal service is simply wrong. Hedge funds aren’t well known for their public service ethos. Not only are Royal Mail profits now in private hands, but we can expect more pressure from corporate shareholders to cut costs and run postal services down.

The sale of Royal Mail was wrong in principle; it was unnecessary and has cost the British taxpayer dearly. It’s not enough to get rid of a public institution at any price. In fact, it’s an insult, to the people who work there and to the great British public.

[pants123]

on word,,,,,,,,,,,,,, CAPITALISM,,,,,,,,,,,, THE RICH LINE THEIR POCKETS AT THE EXPENSE OF THE PEOPLE OF THIS COUNTY...

DELIVERY IS BEING SLAUGHTERED BY THESE A HOLES...... that to nice really to say, they are SCUM...

[barbario]

Our Union said this would happen and they were right. What else did they predict is now in the pipeline.?