The British public made their feelings very clear from the beginning on the subject of privatising the Royal Mail and it’s fair to say they were not in favour.
However, since the sale went ahead, Labour have made their feelings clear on the subject indicating that they believe the sale was ‘botched’ from the very beginning. Three months on from the sale, share prices have risen by as much as 70%, which some would argue has cost Britain thousands of pounds.
However, Business and Enterprise Minister Michael Fallon has claimed that the sale was a complete ‘success’. The government believe that they have secured the Royal Mail a real chance at having a profitable future and have in turn saved the tax payer thousands by avoiding a bail out.
Were the government misled by investors?
It would seem that British tax payers are justified in their anger over the way the privatisation was carried out. Initial share prices were originally at 330p but after just 3 months, the share prices have rocketed to a distasteful 561p. This rapid increase in share price has left the government with some very awkward questions to answer. For example, why were the shares sold so cheaply in the first place?
Government ministers have defended their actions regarding the privatisation by attempting to glorify the sale as a success. In a recent interview with BBC Radio 4’s Today Show, Mr Fallon expressed that the Government were not in a position to haggle over pricing as investors were just not prepared to pay a higher price as the company was simply not profitable enough. When asked about the rise in share prices, Mr Fallon stated “it’s very easy to look back in hindsight”.
However, the debate is set to continue until the National Audit report on the Royal Mail scandal is finally released this spring. The report should address all concerns regarding the sale and any potential losses.
Tax payers short changed by the Government
It does seem that despite the Governments best attempts to shrug off the questions regarding Royal Mail share prices, we as the British tax payer have been left short changed. Had the Royal Mail privatisation been better considered rather than rushed into, we could have secured far better share prices which would have benefited tax payers as well as Royal Mail. The sale of this once great public service seems to have been completed in sheer panic, allowing investors to simply take advantage of the Governments fears of a bail out.
In a time of economic austerity, Labour have argued that the Government should have done more to up the bids by investors, helping to reduce the extreme cuts already made by David Cameron’s party. Bill Hayes, General Secretary of the Communication Workers Union has summed up the situation expressing that the British public have been “left with a bad taste as hundreds of millions of pounds have been lost”.