Miliband slams Royal Mail "rip-off"

Thursday 01 May 2014

Privileged City investors were given a "golden ticket" to buy Royal Mail shares and then sold them on day one of privatisation, ripping off the taxpayer Ed Miliband has claimed.

Speaking at Prime Minister's Questions, the Labour leader challenged David Cameron to explain how the firms had become involved and why they were allowed to sell immediately when postal workers had to wait three years.

The Prime Minister insisted the privatisation of Royal Mail had been a success and said Mr Miliband was reading from the "same old Labour" script.

Mr Miliband referred to reports yesterday naming some of the institutional investors, and ask ed: "How were these lucky few chosen?"

Mr Cameron replied: "What we are talking about is an exercise in privatising the Royal Mail, which has been a success for our country. A business that lost £1 billion under Labour has now paid money back to the taxpayer, is making profits and the people we should be praising are the 140,000 employees of Royal Mail who are now under this Government shareholders in the business they work for."

Mr Miliband said: "No answer to the question. The Royal Mail share price is currently 50% above the level it was sold at. Only you would want congratulations for losing the taxpayer £1 billion. Now, each of these chosen few investors were given on average 18 times more shares than other bidders on the basis, in the National Audit Office's words, they would provide a stable, long-term shareholder base. Can you tell us what assurances in return for their golden ticket these investors gave us, that they would hold the shares for the long term?"

Mr Cameron said: "You say people were given shares - they paid for shares. Second, you raise again this issue there was some sort of agreement, there was no agreement. But at the end of the day, you should be recognising that a business that lost money, that you tried in government to privatise but failed, is now in the private sector, making money, succeeding for our country and its employees are now shareholders. Isn't it interesting that with the growth in our economy, the fall in unemployment, the reduction in the deficit, you are reduced like old Labour to complaining about a successful privatisation."

Mr Miliband insisted he was "raising an issue about the rip-off of the taxpayer which the British people know when they see it".

"The reason this matters is because the sale was grossly undervalued - shares sold for £1.7 billion at privatisation are now worth £2.7 billion," Mr Miliband said. "And who cashed in? Twelve of the 16 so-called long-term investors made a killing worth hundreds of millions of pounds within weeks. Yesterday, the representative of the bank that sold the shares said there was an understanding 'with those investors... about their long-term commitment to Royal Mail'. So why were they allowed to make a fast buck?"

Mr Cameron replied: "We are getting lectures on taxpayer value from the people that sold our nation's gold at the bottom of the market. You talk about ripping off the taxpayer when it was you who left an 11% budget deficit after the biggest banking bailout in Britain's history.

"I have to say, these are exactly the arguments that Michael Foot made about the privatisation of the National Freight Corporation. They are exactly the same arguments as Neil Kinnock made about British Telecom and British Airways. It pleases the backbenchers, it excites the trade unions but it is utterly, utterly meaningless. Are you recommitting to renationalising the Post Office? No. Of course not. It's just playing to the gallery because you can't talk about the success of our economy."