Sir Vince Cable: I knew Royal Mail couldn’t deliver
Sir Vince Cable said he had been 'vindicated' by the collapse in Royal Mail's share price since its stock market debut
CREDIT: CHRIS WATT https://www.telegraph.co.uk/business/2019/11/30/sir-vince-cable-knew-royal-mail-couldnt-deliver/
30 NOVEMBER 2019 • 8:00PM
The Lib Dem architect of Royal Mail’s privatisation has said he knew the “Postman Pat” business was in trouble when it was sold to hundreds of thousands of ordinary investors six years ago.
Sir Vince Cable, business secretary in the coalition government, said he had been “vindicated” by the collapse in the former state monopoly’s share price since its stock market debut.
He said: “What the share price shows you is that this wasn’t a very sound business. We knew that this was a business that was going to struggle.”
Sir Vince came under fire in the immediate aftermath of the float as Royal Mail shares surged by more than a third on the first day of trading. However, the company’s value has plummeted and now sits more than a third lower than its initial price, despite the efforts of boss Rico Back to turn the business around.
Sir Vince, the former Lib Dem leader who is stepping down as an MP at this election, insisted that Royal Mail’s privatisation had delivered for taxpayers if not shareholders.
He said: “It’s been a big success in the sense that the Royal Mail was in serious difficulty. In the world of email, Postman Pat is as much a part of us as the stagecoach. In order to do that the Royal Mail needed to borrow – it wasn’t going to come from the government.”
Mr Back, who succeeded Moya Greene last summer, plans to invest around £500m-a-year on expansion in the growing parcel market as the decline of letter deliveries accelerates ahead of forecasts. Analysts fear the plan could wipe out profits in the short-term, however.
Royal Mail also faces the threat of industrial action over Christmas strikes in what would be the first postal strike in a decade. The company is currently battling the CWU, which says the company has broken its promises to its 140,000 members, through the courts.
Shane O’Riordain, Royal Mail’s managing director, said: “We have honoured the agreements to the letter. We just ask in return for a commitment to change at pace.”