Royal Mail Spin Fail

Even before the exchanges at Prime Minister’s Questions (PMQs) today, when Mil The Younger called Young Dave “the dunce of Downing Street” (Cameron then called Miliband and “Auguste” Balls “muppets” in return), the National Audit Office (NAO) conclusion that the sale price for Royal Mail shares was too low had taxed many Tories, to the extent that some spin was in order.

At first, Business Secretary Vince Cable did the defending, telling MPs that “The last thing I intend to do is apologise ... We've taken a loss-making public enterprise and turned it into a successful public company”. But Royal Mail was not loss-making when it was sold off. Indeed, operating profit in the 12 months to March 2013 had gone from £152 million the previous year to £403 million.

Labour shadow Chuka Umunna was unimpressed: taxpayers had been “disgracefully shortchanged to the tune of hundreds of millions of pounds ... Those [Cable] once referred to as spivs and gamblers are laughing all the way to the bank”. The Guardian noted “Royal Mail shares have soared more than 70%, trading at 565.5p on Tuesday, since their stock market debut at 330p a share in October”.

It then dawned on the Tories that blaming Cable would look a bit rich, given they are the senior Coalition partner: it would be admitting to all those back benchers who claim that the Lib Dem tail is wagging the Tory dog that they were right all along. So Dave let it be known that the sell-off was a Jolly Good Show, and this was duly reported by Sky News (“first for breaking wind”).

“David Cameron said the sale had benefited the taxpayer in three ways: it had generated money for the country, the Royal Mail was now a ‘profit-making company paying taxes into the Exchequer’ and Britain had a successful business”. We also got that at PMQs – but it was already a profit-making company and was already paying taxes into the Exchequer before being flogged off.

Would anyone like to make a pointless sacrifice on the Government’s behalf? Step forward Douglas “Kamikaze” Carswell to proclaim “The NAO assumes that because the value of Royal Mail is today 70 per cent higher than it was on the day it was privatised, the business must have been undersold. But might it not be that the act of privatising Royal Mail increased its value?”

But the price is predicated on Royal Mail being in the private sector, so Carswell’s argument, such as it is, goes in a circle. The share price has been shown to have been pitched too low. That Cameron spent much of PMQs banging on about how 140,000 Royal Mail employees are now shareholders is no more than a late, and lame, “look over there” gesture.

The NAO was right, and the Government wrong. An admission would be nice.