Today Vince Cable, our very own Liberal Democrat economics guru and Secretary of State for Business, is to appear before a parliamentary committee to account for his handling of the privatisation of our Royal Mail. Here are some of the things he needs to explain.
- First and most obvious, why were the shares of this publicly owned asset, first nationalised by Oliver Cromwell I believe, flogged off to private owners at a 30% discount? They were priced at £3.30 and promptly rose to £5.50 when placed on the market, thus robbing the public treasury of £2.2bn. Dr Cable initially dismissed the price difference as "froth" but six weeks later it's still there, and rumour has it that the value of the Royal Mail's property has not been properly taken into account, so there's uncounted potential for asset stripping.
- The floatation was supervised by the investment bank Lazards. Are they and the other banks involved going to be sued for the bad advice they've given, or asked to return some of the £12.7million they've been paid, or to be struck from the list of firms eligible to advise governments in future?
- Why were the sovereign wealth funds of Kuwait, Singapore and Abu Dhabi offered shares when British retail buyers and pension funds could have taken the lot, which would at least have kept the bonanza in the family?
- Why was one of the merchant banks advising on the price also allocated a proportion of the shares? Surely that defines "conflict of interest" just as much as being a Liberal Democrat and supporter of Bradford City defines optimism (as my friend John Cole would put it.)
And there is every expectation that, now our postal delivery service it is in the hands of short-term profit-maximisers, the prices will rise even further, the extent and quality of the service will be reduced and pay and working conditions will deteriorate.
Post Script (added 29th November, 2013)
Well, from reports in the papers the committee seems to have taken a very Panglossian view . The bankers all feel they did a good job and Dr Cable said, ". . .this has been a very professional well managed and successful operation."
I wonder, if he were to sell his house, the estate agent valued it at £330 000, so he sold it for that, and the buyer sold it the following week to someone else for £550 000, he would think the estate agent had done a good job for him?