Mount Pleasant: Taxpayers might lose out, say MPs

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THE inclusion of the Mount Pleasant sorting office site in Clerkenwell in Royal Mail’s privatisation was heavily criticised by an influential group of MPs on Friday.

In a wide-ranging report on January’s privatisation of Royal Mail, the Business, Innovation and Skills Select Committee said it was “disturbing” that the government had ignored advice not to include the Mount Pleasant site, or at least include a provision to “claw back” any surplus value.

The privatisation has been roundly condemned for failing to raise the best possible price for the taxpayer.

Royal Mail was sold for £3.3bn, but shares immediately rose from the 330p share price to 455p, a valuation increase of £750m. Shares are currently at 489p and the sale is thought to have cost the taxpayer £1bn.

The sale included three surplus sites, one of them the eight acres at Mount Pleasant. Together these were valued at £200m.

Mount Pleasant is now the subject of a planning row, with Royal Mail proposing to build hundreds of luxury flats on the site, along with thousands of square feet of office and retail space.

With other new-build, luxury, one-bedroom flats selling in the area for around £1m, the site could now yield almost £1bn at high estimates.

Before the sale the National Audit Office had argued that there was a “hidden value” in the sites that could be as high as £830m, such were the vagaries of the London property market.

It said that the government should remove the sites from the privatisation plans, or at least include a clause allowing the taxpayer to claw money back should property prices increase. The government ignored this.

In its report the select committee, chaired by Labour’s Adrian Bailey, said that the government had considered the NAO’s recommendations, but rejected them as it might lower the sale price.

“We note the conclusion of the NAO that the government has not extracted the full value of the surplus assets owned by Royal Mail,” it said.

“What is more disturbing is that the government ignored established NAO recommendations, either to remove such assets from the privatisation process or to insert claw-back provisions on the future sale of the properties.

“The absence of claw-back provisions means that the taxpayer will not reap any benefit should the Department’s valuation be proved to be wrong.”