Member Article

Government underestimated the value of Royal Mail, MPs say

The Government acted on poor advice and was too fearful of failure when it launched the flotation of Royal Mail, a committee of MPs has said.

The BIS Select Committee’s report into last year’s privatisation of the Royal Mail found the Government had significantly underestimated demand and undervalued assets.

It stated: “It is clear that the Government met its objectives in terms of delivering a privatised Royal Mail with an employee share scheme. However, it is not clear whether value for money was achieved and whether Ministers obtained the appropriate return to the taxpayer.

“We agree with the National Audit Office that the Government met its primary objective. On the basis of the performance of the share price to date, it appears that the taxpayer has missed out on significant value.”

At the time of flotation, Royal Mail shares were priced at 330p, but increased as high as 618p per share, and now stand at around 473p.

MPs criticised professional firms, including Lazard, UBS and Goldman Sachs, for their failure to gauge demand at higher prices and their subsequent advice to government.

This was posted in Bdaily's Members' News section by Tom Keighley .