National Audit Office report finds "Government guilty"

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National Audit Office report finds "Government guilty" on Royal Mail privatisation says CWU

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The CWU welcomed the National Audit Office's (NAO) report released today (Tuesday) stating the Government failed to provide value for money on the sale of Royal Mail - saying it proves the sale was a "get rich quick" scheme which offered no value to taxpayers.

A number of revelations have exposed the Government's incompetence during the privatisation of Royal Mail in October last year. It was revealed last month that 21 banks initially valued Royal Mail at over £3.9billion with one bank valued the company at £8.67billion. In the end, the 60 per cent stake in Royal Mail sold for £3.3billion.

Almost half the share allocation of sixteen "priority" investors - who the Government intended to have a long-term stake in the company - had been sold off within a few weeks of the IPO at a substantial profit. At the end of January 2014 only six of these priority investors remained among the largest shareholders with only a 12% collective stake.
The process the Government put in place to sell off Royal Mail did not deliver best value for the taxpayer and the Government should consider whether "alternative methods of accessing equity markets" would have achieved better value
"Taxpayer interest" was not clearly prioritised in the role of the independent corporate finance adviser (Lazard & Co) who was incentivised just to achieve a sale
The timing of the sale was "inflexible and took place under conditions of considerable uncertainty" and "gave limited time for Royal Mail to demonstrate a profitable track record"
Although three highly valuable "surplus" London properties (sites at Mount Pleasant, Nine Elms and Paddington) were disclosed in the company's prospectus, the NAO believes that "the basis on which Royal Mail was sold did not fully recover the value of these sites". Furthermore, the Government could have included arrangements to "claw back" a share of the sale proceeds of such surplus assets but they decided not to pursue this.


CWU general secretary Billy Hayes said: "Today, the National Audit Office's report has exposed the Government's privatisation of Royal Mail for what it was - a political opportunity for a government that had committed itself to selling off this national asset regardless of whether it was a good deal or not. Vince Cable can no longer hide behind his claims of 'froth'. The froth has gone cold as report after report condemns the sale for what it was.

"This report finds the Government guilty by an independent body that shows it failed on a number of counts - it's clear the Government should have listened to us when we called for alternatives to selling off Royal Mail. It was never about establishing a long-term shareholder base and all about making a quick buck for city investors.

"There are so many aspects to Royal Mail privatisation highlighted in this report that had appalling results. This further supports the view that the Government was desperate to get rid of Royal Mail because it fitted with their agenda. The sell-off was never about getting the best deal for taxpayers.

"It makes a mockery of the Government's line that we're all in this together. Before the Government sold off Royal Mail, 70 per cent of the public said they were against the move. Yet they continued regardless. The report reinforces that this was a fire-sale package created for political purposes which is simply not good enough and continues to put the future of Royal Mail at risk."

Read the full report: The Privatisation of Royal Mail for more information. http://www.nao.org.uk/wp-content/upload ... l-mail.pdf" onclick="window.open(this.href);return false;