Cable’s Royal Mail sale was crony capitalism at its worst – now we need a windfall tax to get our money back

We all know the gut-wrenching feeling when you get ripped-off. Whether it’s getting a new coat and then seeing it in the sales for half-price a week later, or when you see a story about an old computer console you threw in the bin years ago now being worth hundreds of pounds to some hipster collector type (and by the way Nintendo 64s are going for over £100 online).

Being on the end of a bad deal stinks – and the British public have just been done over to the tune of £381m.

In 2013, Islington council warned the Tory-led coalition – which sold off the 497-year-old publicly-owned Royal Mail – that it had grossly undervalued potential development sites.

As Vince Cable packaged up the Royal Mail for sale, three prime development sites in Central London were valued at £43.5m. Fast-forward to today, and the Royal Mail is enjoying the proceeds of an end-of-summer bonanza sale, which means that former publicly owned land has been sold for private profit to the tune of £425.5m.

In Islington, the Royal Mail sorting office site at Mount Pleasant has been sold at a mere 565 per cent above the “book value” it was given at the time of privatisation, helping them to bank a cool £163.5m profit.

Two other sales in Central London – Paddington and Vauxhall Nine Elms – have also been sold in recent years, meaning Royal Mail has made a staggering £381m profit on land sales.

Why does this matter? The answer is because it typifies why so many people feel let down by Tory-facilitated crony capitalism. Ordinary people have been ripped-off twice by this move. Taxpayers have seen a public institution sold for far below its value, and for the benefit of corporate investors, while at the same time local people in need of affordable new homes will miss out.

Mount Pleasant could and should deliver hundreds of genuinely affordable homes for people on low and modest incomes. In 2013, independent analysis showed that a commercially viable development could be built while delivering 160 council homes and another 130 genuinely affordable homes. However, thanks to the then mayor of London Boris Johnson’s decision to “call-in” the plans and rubber-stamp a developer-friendly deal, 75 per cent less affordable housing will now be built.

I am calling on the chancellor to impose a “windfall tax” on the Royal Mail Group to recoup part of the excessive profits it has made from the sale of former publicly owned land. This money could then be used to help build more genuinely affordable homes. Estimates show that the £381m profit the Royal Mail has made could help deliver around 1,250 council homes in Islington.

If you ever want to understand why the public are so angry with a country that seems rigged against them and are turning to the Labour Party for real change, it is because of sorry stories like this.

Richard Watts is leader of Islington council.