How the government lost a billion pounds of your money (and how Labour could have stopped them)

George Osborne wants you  to go into the next election thinking that – regardless of your views on his choices – he’s a competent steward of the British economy. Today, the National Audit Office have shot a postal van size hole in that claim, by confirming that the government sold off the Royal Mail for more than a billion pounds less than it’s now worth. The government lost £750 million in a single day. As the Guardian reports:

“Royal Mail’s shares spiked 38% on their debut on the stock market on 11 October – the biggest one-day rise in a privatisation since British Airways in 1987 – as investors tried to buy up more than 23 times the number of shares available.”

These were clearly shares that were spectacularly undervalued and in high demand. It’s been obvious since that painfully expensive day one that the government hade a huge and ideologically motivated error. Unrepentant, they’re still claiming that the Royal Mail sell off was a success. I’d hate to see how much a failure would have cost us.

Labour figures – led by Chuka Umunna – will be out in force today arguing that this is exactly what they said would happen. And Umunna is right, today’s report has vindicated the arguments he was making last year, such as when he said on September 12th that:

“This treasured national institution is being sold off on the cheap to get income quickly.”

Yet Umunna and Labour – whilst rightly drawing attention to the fact that the privatisation of the Royal Mail was bungled from day one, and rammed through as a public sector fire sale for ideological Neo-Thatcherite reasons – should also accept that they could have put a stop to the Royal Mail fiasco. Labour’s position back in September was that selling it was a mistake, with Umunna saying:

“If you think about the profits the Royal Mail are now making, there’s no need for it to be privatised. What privatisation will do is destroy the UK’s universal postal service.”

And yet Umunna and Labour had an opportunity to put a stop to the sale, and decided against it. If Labour had not only opposed privatisation, but also committed to bringing the Royal Mail back into public control after the election, then the sale would never have gone ahead, and the Royal Mail would still be owned by the British people.

The government deserve the lion’s share of the blame for the terrible mess that the Royal Mail sale became. It allowed those who could afford to buy shares to make a quick buck off an undervalued state business – as Tory governments so often do. It transferred money from cash-strapped government coffers to those of private individuals. It lost over a billion pounds. But Labour could have put a stop to this foolish fire sale, and didn’t. For that, Labour must take a small share of the blame for the losses confirmed today too…