It is always a step in the right direction when the state privatises. Any rolling back of the state will be a public boon, as the state is intrinsically wasteful and anti-social. So both state ownership and state regulation is usually a waste of both time and money. But to fully privatise the state needs to withdraw altogether. In most so-called privatisations it has failed to do that, usually insisting that what it sells off continues as an entity as well as to be regulated by the state. It often still taxes the public to subsidised the supposedly privatised entity. But to truly sell off would be to allow the resourced sold to be used in whatever way the buyers saw fit.
With the recent shedding of the Royal Mail there have arose some moaning by quangos and Labourites about how the taxpayers might have been better off had the politicians staked a higher price. But that is to grumble about a few pounds that seem silly when we consider that a state liability has been well shed.
What needs to be done here is to also shed the state spending watchdog too. The National Audit Office, the UK name for this supposed watchdog, says that too much emphasis was put on quickly selling the Royal Mail off before the next election. Had they hung on, they might have got a better price, but the so-called watchdogs do not seem to give any consideration of the saved cost of holding onto the Royal Mail by an early sale. Moreover, if the Labourites win the next election then they may well have decided to retain the Royal Mail in state ownership, so that would continue its burden on the taxpayers. Instead, they feel the rapid rise of Royal Mail shares that are today, Tuesday, 1 April 2014, show some 70% increase of the sale price of 330p back in October 2013. It allows some people to think that the National Audit Office is doing a good job after all whenever it makes such “criticisms” of the government. It helps to obfuscate it as an organisation of sinecures.
The government sent a spokesman to BBC’s Today programme this morning to reply to them, or at least to the news item Business minister, Michael Fallon, replied that the sellers, his department, were right to be cautious. He said: “We could have got a higher price but we would have taken a bigger risk of people not subscribing to the shares and the Royal Mail share collapsing.”
But later in the day at the House of Commons, the Labourite Shadow Business Secretary, Chuka Umunna said that investors were laughing all the way to the bank, for they had gained hundreds of millions of pounds at the taxpayer’s expense.
The midday news announced that there had been calls for Vince Cable, the head of campaign to sell off the Royal Mail, to resign but that he had replied that a failure to sell it off would have been worse yet for the tax payers.
There had been a 38% increase in the price from 330p to 455p in the first day, arise of 750m for the new shareholders. Some shares were given to the Post Office workers to keep them sweet. They had planned a strike that they later called off but the government cited this strike-threat as one reason they set the price low. Many earlier attempts to privatise the Royal Mail had failed over the last few decades. They wanted it to get into the top hundred firms and it had. So that was a success, its spokesmen were reported on the midday news as saying.
Amyas Morse, the head of the National Audit Office said the government was too keen to get the firm into the FTSE top hundred. But Cable replied that it had never been the aim to get the highest price, and that aim was not a risk free quest. It clashed with th aim they had. The aim had been, indeed, the FTSE hundred. He went on that the 30% share would bring in money to the state. But he did not say that as nationalised it was always a burden on the taxpayers as he remains something still of an old Labourite himself. But it maybe is going to earn for the state rather than costing the state but it is not totally privatised if state shares are retained.
It had been feared by banks advising the state, like USB and Goldman Sachs, that there would be a lack of demand owing to uncertainty and complexity but the actual demand was 24 times larger than expected. The current government aims to lower state ownership to below 50%.
Margaret Hodge, the chairman of the Public Accounts Committee said that the sharp rise in the Royal Mail’s share price since the sale showed that Cable and his team had no idea what they were doing. But they did sell it off to people out to serve the public on the market rather than to attempt to rule them by the state. So it had been moved from an institution that taxes people into a market organisation that seeks to serve the public.