Vince Cable's answers on Royal Mail privatisation branded 'superficial'

Select committee to recall Business Secretary to discuss his handling of the sell-off

Vince Cable will appear before a powerful committee of MPs for an urgent hearing, following growing concerns that the coalition has privatised Royal Mail on the cheap.

The Liberal Democrat Business Secretary will again face members of the Business, Innovation and Skills Committee after they felt he had given "incredibly superficial" answers over the pricing of Royal Mail shares.

Mr Cable will be questioned about suggestions that the 497-year-old postal service was undervalued by as much as 50 per cent. It emerged this weekend that two of the banks that pitched to advise on the privatisation in May told the Government that shares should be initially sold at 500p on the London Stock Exchange, which would have valued Royal Mail at around £5bn on its stock market debut.

But shares started trading at 330p on 11 October. Such was the rush to buy the stock that the price closed at 502.5p on Friday – allowing many to make quick a profit on initial acquisitions.

Katy Clark, the Labour MP for North Ayrshire and Arran who sits on the committee, told The IoS that she wanted to know the names of the banks that suggested the higher valuation and to see more information on the conversations that took place.

"I was underwhelmed by [Mr Cable's] responses at the committee hearing. I felt they were incredibly superficial," she said. "I would like to know how he came to a considered view [over the flotation price]." Ann McKechin, a fellow committee member and Labour MP for Glasgow North, added that the committee would meet privately on Tuesday to "determine where and when we will meet the minister again – it's not a matter of if, but when".

Mr Cable has argued that the price was reached following "a combination of rigorous market testing and extensive analysis of comparable companies". In a letter to the committee on Friday he claimed that "delivering value for money is about more than just the level of proceeds received on day one".

Mr Cable also blamed the threat of impending strike action as one reason for a depressed valuation. A ballot of around 115,000 Royal Mail employees ended in a vote in favour of a 24-hour strike, which will take place on 4 November. The Communication Workers' Union wants pay and working condition guarantees in the light of privatisation.

A Whitehall source said yesterday that the MPs now had "more ammunition". Mr Cable "wasn't able to substantiate a lot of what he said last time", added the source.

More than 20 banks pitched to advise Royal Mail on the flotation, with Goldman Sachs and UBS eventually appointed to lead the sale.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
film
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
News
peopleWarning - contains a lot of swearing
Travel
travel
Arts and Entertainment
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Austen Lloyd: Commercial Property Solicitor - West London

Excellent Salary: Austen Lloyd: WEST LONDON - An excellent new opportunity wit...

Recruitment Genius: Florist Shop Manager

£8 - £10 per hour: Recruitment Genius: A Florist Shop Manager is required to m...

Recruitment Genius: Appointment Maker / Telesales

£15000 - £26000 per annum: Recruitment Genius: One of the UK's leading supplie...

Recruitment Genius: Trainee Field Sales Executive - Dereham

£25000 - £30000 per annum: Recruitment Genius: This organisation is proud to b...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project