British taxpayers lost out on £1bn during the controversial privatisation of Royal Mail because the firm was sold off cheap, according to a group of MPs.
Parliament's Business, Innovation and Skills (BIS) committee drew the conclusion in a report after months of taking evidence from government ministers, civil servants and the financial sector.
The committee accused the government and the banks advising it on the Royal Mail floatation of failure to properly assess demand at a higher offer price than the 330p a share chosen and that they did not give enough consideration to maximising value for money for taxpayers.
Around £2bn was generated for taxpayers by the October 2013 sale and the government retains a 30% stake in the business. But shortly after the sell-off, the share price rocketed to as high as 618p, but at the time of publishing it had fallen back to 474p.
"It's not at all clear that the government's sale of Royal Mail has brought an adequate and appropriate return for taxpayers," said Adrian Bailey MP, chairman of the BIS committee.
"This was the most significant privatisation in years. We believe that fear of failure and poor quality advice led to a significant underestimate of the demand for Royal Mail shares."
The BIS committee also hit out at the sale of Royal Mail's "surplus" assets, such as three sites in London valued by the business department at around £200m but reported by the NAO to be worth as much as £830m.
Bailey said that because no provision was made in the privatisation to claw back future gains from the sale of these assets it "may also mean the taxpayer losing out once again".
And the committee said that the government's target investors – such as pension funds who it thought would hold on to the shares in the long-term – sold off their holdings quickly to take the profits and run.
"In order to establish greater clarity on the issue, the committee calls on the government to publish a list of the preferred investors which includes information on which investors sold their shareholding, when, and at what share price," said the MPs.
The government has repeatedly defended the sale, insisting it was successful because all of the shares were sold off at a price their investment bank advisers – UBS, Goldman Sachs and Lazard – had told them was the top of the range they could realistically get.
"We sold at a price that was regarded as the best that could be achieved in the context in which we sold it," Vince Cable, business secretary and the minister responsible for the sale, told the BBC.
"The point we have stressed, and I've stressed over and again, that the price of shares is very, very volatile. These things go up and down and we've seen in the last few weeks the price of Royal Mail shares actually falling like a stone."