Royal Mail privatisation - tax payer undersold

01 April 2014

A statement from The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:

"It is clear to me the Department for Business, Innovation and Skills undersold the taxpayer when it privatised Royal Mail. The share price closed up by 38% on its first day of trading which could have netted the taxpayer an additional £750 million.

I am frustrated the Department made a critical error by incentivising its private advisers to sell the shares on time at the expense of price - effectively setting itself up to fail.

The private advisers recommended not increasing the selling price before the first day of trading. With the sale 24 times over-subscribed this proved to be bad advice, with investors not taxpayers benefiting.

The fact the share price has increased by 72% since the Department sold the taxpayers’ share tells me the Department had no clue what it was doing.

I look forward to discussing this second class performance further when the Department appears before us on 7 May."

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