1st Apr 2014 06:50
LONDON (Alliance News) - The National Audit Office said on Tuesday said that the privatisation of Royal Mail PLC did not achieve the best value for the taxpayer.
The spending watchdog said the government's "deep caution" and emphasis on completing the sale within this parliament led to a sale price that short-changed the taxpayer.
The UK government's sale of a 60% stake in Royal Mail last October for 330 pence per share has been heavily criticised as too cheap, with shares now more than 85% higher, closing at 563.00 pence on Monday.
Royal Mail shares closed at 455 pence on the first day of trading, 38% above their offer price, meaning that the government could have netted the taxpayer an additional GBP750 million.
The National Audit office said the timing of the sale was relatively inflexible and took place under conditions of uncertainty, being affected by Royal Mail staff threatening strike action at the time.
"It was concerned about meeting its objective of allowing Royal Mail access to private capital and the ability to achieve a sale, reflecting the uncertainties created by industrial relations and prevailing market conditions," the audit office report said.
However, the report did note that the postal company is now a profitable business with much improved cash flow, following substantial intervention by the government, starting with a transformation programme in 2007.
It added that the privatisation has reduced taxpayer risk to support the universal postal service but that the government continues to hold the ultimate responsibility.
The UK government continues to hold a 30% stake worth roughly GBP1.7 billion and has said it achieved its key objectives in the privatisation.
By Tom McIvor; [email protected]; @TomMcIvor1
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