Royal Mail Sale

Lord Young of Norwood Green Excerpts

Wednesday 16th July 2014 Lords Chamber

Asked by

[Lord Young of Norwood Green]

To ask Her Majesty’s Government what recent assessment they have made of the value for money achieved from the sale of Royal Mail.

[Lord Popat (Con)]

My Lords, the Government’s overall objective in selling shares in Royal Mail was to protect the universal postal service by ensuring that Royal Mail has a sustainable and secure future. The sale raised £2 billion for the taxpayer and it enables Royal Mail to access the private sector capital that it needs to invest in growth. The sale guards against the real need for Royal Mail to request additional taxpayer support in the future.

[Lord Young of Norwood Green (Lab)]

My Lords, I thank the Minister for his reply, even though it was what I expected. If the enhanced share price, which today stands at 479.60p, was just market “froth”, can the Minister explain why the long-term priority shareholders sold their stakes for huge profits? Given that the National Audit Office has said that the business department’s desire to sell Royal Mail before the election next year resulted in a knockdown price that cost taxpayers £750 million, does the Minister feel that there are any lessons to be learnt for any future sale?

[Lord Popat]

My Lords, there are a number of questions in the noble Lord’s question. First, let me cover the share price. The share price for Royal Mail is very volatile. It reached £6.15 in January and stands at £4.79 as of this morning. The Government achieved their intention to ensure that Royal Mail started with core, long-term, stable investors who understood the business, along with some hedge fund participation to ensure liquidity in the aftermarket. This was absolutely real value for money and such a success story of this Government.