THE Government could have achieved better value for the taxpayer through its controversial privatisation of Royal Mail, according to a new report which revealed that most investors given priority to buy shares, sold them shortly after, making a profit.
The National Audit Office (NAO) disclosed that 12 priority investors sold all or some of their holdings within the first few weeks of trading. Critics of the privatisation said the spending watchdog offered "startling proof" that the Government sold off the country's family silver "on the cheap".
But Business Secretary Vince Cable said the report showed that the Government achieved what it set out to do – securing the future of the universal delivery service through a successful sale.
The NAO said Mr Cable's department took a "cautious" approach to a number of issues which led to shares being priced at a level "substantially below" the initial trading price.
On the first day of trading last year, Royal Mail's shares closed at 455p, 38% higher than their price sale, representing a first day increase in value of £750m for the new shareholders.
The Government could have retained 110 million more shares, worth £363m, at the offer price, while still privatising the business, said the report.