‘Millions lost to taxpayer’ in latest Royal Mail sell-off

MINISTERS were accused last night of costing the taxpayer tens of millions of pounds by selling shares in the Royal Mail too cheaply – for a second time.

One critic dubbed the debacle ‘sell- off groundhog day’ while a top bank privately told clients the shares were worth far more than their price tag.

It is reminiscent of the shambles surrounding the initial privatisation almost two years ago, which cost the taxpayer an estimated £2.3billion.

The latest furore could have cost the public purse a further £450million.

On Wednesday night, the Government sold half its 30 per cent stake in the postal service, but limited the sale to City firms, barring the public from buying.

One of three banks selling the shares for the Government for 500p each was Bank of America Merrill Lynch.

Days earlier, the Wall Street giant said it expected them to hit 600p, but they could even rise as high as 775p.

In a note issued on Monday – intended only for wealthy clients and City funds but seen by the Daily Mail – the bank told investors it was a great opportunity to buy into Royal Mail.

This week’s sale raised £750million as the Government off-loaded 150million shares. But it could have raised £1.2billion – £450million more – if the shares had been sold at 775p.

Labour MP Adrian Bailey, former chairman of the Commons business select committee, said: ‘It’s quite astonishing. Has the Government not learned its lesson? This is a sell- off groundhog day.’ He pledged that, if re- elected as the committee’s head next Wednesday, he would ‘open up the issue again of the sell-off to see if there are any lessons that can be learned for Royal Bank of Scotland’.

Shares in Royal Mail closed last night at 499p, down 17.5p on t he day. Ben HarrisQuinney, chairman of Tory think-tank the Bow Group, said: ‘It seems a strange time to sell, but this is obviously coming with a tranche of Treasury-boosting measures.’

He has previously criticised the first privatisation as ‘catastrophically under-valued’.

This week, the Chancellor pledged to begin selling the Government’s 80 per cent stake in RBS. Royal Mail’s privatisation in October 2013 was beset by controversy.

A host of banks advised ministers to sell shares for 330p while privately saying they were worth much more.

The National Audit Office estimated the scandal cost taxpayers £2.3billion in lost revenues. The Government has since changed its chief adviser from Lazard to Rothschild. But it kept Bank of America and Goldman Sachs to sell the shares into the market and also used JP Morgan.

Mr Bailey said: ‘They made a change, but i t does seem that they moved from Peter to Paul.’

Royal Mail has been boosted by the failure of rival Whistl and improving market conditions.

A spokesman for the Department for Business pointed to the £750million raised for taxpayers. He added: ‘There have been a wide range of views from analysts on the price Royal Mail could reach in the future – both lower and higher.

‘The Government and its independent advisers considered all the evidence before deciding it was a good opportunity to get value for money.

‘We have a significant remaining stake, so can benefit from any potential future upside.’

‘Can they not learn a lesson?’