Mark Leftly: A second bite of the Royal Mail cherry - please don’t mess it up
Westminster Outlook Sadly for Vince Cable, if his five-year tenure as Business Secretary in this bastard hybrid of a government is remembered for anything, it will be for the messed up privatisation of Royal Mail.
The principle was right, but the execution shambolic. Ideological steadfastness is often viewed as an admirable trait, but as Thatcherism proved through its ruin of communities across the land, that counts for little if the detail of grand plans is not handled assiduously.
The House of Commons Business Select Committee has been working on its report into Royal Mail since the postal service started selling shares on the Stock Exchange last October.
This has been a dragged-out inquiry and has been somewhat superseded by the National Audit Office’s own authoritative report, published nearly three months ago. The NAO concluded that the taxpayer lost out on the best part of £1bn as the shares were massively underpriced at 330p each.
The media has also played its part, notably pressuring the Government to reveal the names of the 16 institutional investors granted preferential allocation of shares at flotation. They turned out to include the asset management arm of the very bank, Lazard, that advised the Government.
Lazard chief executive William Rucker denies there was a conflict of interest, but it’s a situation that stank – and it sets a dangerous precedent for future privatisations even if no harm was done in this instance.
The MPs should have a draft ready by early July and publish the final document before the summer recess. They will doubtless attack Mr Rucker’s argument, but that will all feel a little late given that nine months will have passed since Royal Mail became a public company.
More interestingly, I understand some members of the committee are keen to focus on why such a big stake – 70 per cent, including 10 per cent to posties – was sold on day one.
The 180-day “lock-up” that barred the Government from selling more shares, so as to help stabilise the stock, ended in April. Although there was some speculation that the Conservative rump of government ministers wanted to sell up as soon as possible, there has been little sign that the Coalition is prepared to dump the remaining 30 per cent this side of the general election.
This can only be read as an admission that the shares were indeed undersold and that even their recent trading price around the 500p mark is still not the right target price for what remains a near-monopoly on the crucial “final mile” of postal delivery.
Selling more of Royal Mail could still prove a windfall for austerity Britain. Hopefully the committee demands that the next business secretary doesn’t botch that sale as well.
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