Undervalued sale of Royal Mail meant 'taxpayers lost £1bn

A report said that the government feared failure and acted on bad advice over the Royal Mail stock market floatation.

13:13 11 July 2014

Taxpayers may have lost out on £1 billion due to the undervalued sale of Royal Mail.

According to the Department for Business, the reports submitted by MPs contained “factual errors and misunderstanding" while the Innovation and Skills select committee said that the government feared failure and acted on bad advice over the stock market floatation of the firm.

Shares for Royal Mail were just priced at 330p but the figure now stands at 473p.

Business Secretary Vince Cable told the BBC: "They now have the benefit of hindsight, which we didn't have at the time. We sold at a price that was regarded as the best that could be achieved in the context in which we sold it."

He added: "The point we have stressed, and I've stressed over and again, that the price of shares is very, very volatile - these things go up and down and we've seen in the last few weeks the price of Royal Mail shares actually falling like a stone."

Meanwhile, Labour MP and committee chair Adrian Bailey, said: "We believe that fear of failure and poor quality advice led to a significant underestimate of the demand for Royal Mail shares.” 

"I do think if any minister loses that sum of money to the public purse then they really should reconsider their position."