Labour’s Chuka Umunna launched an attack on Vince Cable last night, claiming the Business Secretary was deliberately “talking down” the value of Royal Mail in order to defend himself against the damning report by MPs on the “botched” privatisation of the company.
Having been accused by a Business Select Committee of overseeing a process that left taxpayers shortchanged by £1bn on the Royal Mail sale, Mr Cable spent yesterday claiming that the risks to the organisation’s finances posed by encroaching competition and the declining postal market meant it was not a strong prospect for investors.
Mr Cable was also stressing that at the time the Government’s advisers were marketing the float, there was the prospect of possible in- dustrial action that could have dented the company’s profits even further.
The Chancellor, George Osborne, was also sending out similar messages in interviews yesterday.
However, Mr Umunna told The Independent: “They are proclaiming the privatisation was a success – well I’d hate to see what failure looks like.
“But, as if that weren’t bad enough, the response of Vince Cable and the Department of Business has been to talk down the company.
“I think that’s outrageous at a time when the taxpayer still owns 30 per cent of the company.”
He added that Royal Mail’s future was nowhere near as threatened as the Government was claiming, with its industrial relations issues resolved, increasing profits and the modernisation programme having been implemented successfully.
Royal Mail, however, has been lobbying regulators hard to make it tougher for new entrants to compete with it on the more profitable delivery routes. The company fears that it will be unable to fight off rivals in lucrative town centres yet still be left having to deliver to the far-flung rural destinations as demanded by its pledge to continue offering a universal postage service from Land’s End to John O’Groats.
Shares in Royal Mail were sold to investors at 330p and shot up 38 per cent on their first day of trading amid frenzied demand. Big investors continued buying even as the shares carried on rocketing, until they peaked at 615p in January.
They have since dipped back and stood at 476p at last night’s close.