Government spends nearly £5bn to fix Royal Mail privatisation scam

Labour MP for Oldham West and Royton Michael Meacher puts it well: “The latest revelation  that Goldman Sachs advised floating the Royal Mail at £3.30 a share, but now puts a price target on the shares 6 weeks later of £6.10 per share, is clear cause for a public inquiry.   Either Goldman should be forced to pay back the fee they received for this sham exercise or, if they were simply following government pressure to underplay the price in order to ensure the IPO was fully taken up, the government should be held to account for knowingly under-selling a prized and treasured public asset by no less than 85%.  The government’s determination to fix the price as low as reasonably possible in order to give maximum boost to the privatisation, regardless of the enormous loss to the taxpayer, is shown by the announcement just now made that Royal Mail’s operating profit doubled to £283m in the first half of the year, a fact that both the government and the financial advisers must have been aware of.   It was large enough to raise the Stock Exchange value of the company to £5.7bn.   The share price, already at over 70% above flotation, has been further massaged by a £45m VAT credit and lower depreciation charge plus £50m lower transformation cost than last year.

Now the government has rigged the market further.   On Thursday they announced that, on top of the £1.34bn public funding already committed for Post Office ‘modernisation’, they were now making available an additional £640m for the 11,500 post office branches. – though the CWU believes that some 4,000 postmasters will be compulsorily made redundant as a result of their service being transferred to a local supermarket or other retailer.   Altogether this £2bn plus the £2.8bn under-pricing suggests that the government, so short of money that they resort to the bedroom tax and using Atos to deprive disabled people of benefit even when they patently can’t work, can nevertheless find up to £5bn to bolster their ideology.

Ominously, however, the government and the privatised company have already, just 6 weeks after pre-sale promises that the universal service would unquestionably be preserved, begun to row back on any such commitment.   Moya Greene, the chief executive, no doubt with government clearance, has warned that ‘unfettered’ expansion of competition in delivery could render the universal service unsustainable.   She gave notice of her (and the government’s) intention after TNT Post UK had already extended its delivery network from West London to Manchester, though this could well have been expected in advance anyway.    The one quiet voice in all this has been the Labour Party which in the light of this massive market fix should be making clear it will bring the Royal Mail back into public ownership, which is what a substantial majority of the public wants, and at a price which reflects the initial IPO offer, not the windfall gains manipulated by the government for its own ends.” (http://www.michaelmeacher.info/weblog/2013/12/blatancy-of-royal-mail-privatisation-scam-now-revealed/)

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