Selling more family silver

JamTomorrow

Vital Youth Team
#1
Another day and another public asset (this time Royal Mail) sold off on the cheap, so investment institutions can make a quick buck. Private investors have been limited to £750 worth of shares and nothing more, no matter how much you applied for. It only gets worse for private investors (those who may have invested their savings and pensions) who wanted to take advantage of the 6% interest rate on dividends, because if you applied for more than £10k worth of shares you got nothing.

Yet, here is the kicker. That would be acceptable and highly agreeable if all the shares were going to private investors, just ordinary members of the public. They are not, with a staggering 69% going to 'shadow banking' who will not be limited in the amount they receive.

So why the £750 limit on public investors? Simple - the government expects them to sell and make a quick profit, leaving the investment institutions to buy the shares back at a lower rate than they should be. On the first day of proper trading (16 October) shares leapt to £4.90, as members of the public tried to sell their stock. By the 28th of October they had risen to £5.55. According to Panmure Gordon, the only broker to speak out about the government's undervaluing before the sale, reckon they could leap to £5.70.

This means that the company (if only using the first day trading price) was unvalued by £1.6billion by the government. This government often likes to focus on those who claim benefits, as people who are always out to cheat the system. This undervaluation will cost the taxpayer MORE in three days than benefit fraud does in a year.

This is a sale for investment institutions, as ministers tried to raise the value of the company at the last minute but were warned off by investors who threatened to pull the plug because they wanted it on the cheap. They know the government artificially inflated the profits of Royal Mail by doubling the price of stamps and stripping away the pension fund. And, to keep it profitable, services will suffer.

The Business Select Committee is rightly worried that Royal Mail may lobby Ofcom to lessen its 'Universal Service' obligation. The obligation that means you can send anywhere in the UK. The Royal Mail is now a private company. It has a duty to its shareholders to maximise profits. It will likely maintain 'Universal Service' but will introduce undulating price differentials that could make it impossible for most to send to certain parts of the UK.

It is another piece of family silver sold on the cheap, so that a future government will never be able to buy it back. It will hit small business and rural areas hardest - the people this government considers its supporters.

It should have stayed public.

Beware - the shadow bankers are stepping out.


http://www.huffingtonpost.co.uk/benj-spirohughes/royal-mail_b_4174756.html?icid=maing-grid7%7Cuk%7Cdl9%7Csec3_lnk3%26pLid%3D219677
 

The Fear

A Wise Man (once sat next to him)
#2
It also seems to have gone pretty much under the radar. As you say, last time all the countries assets were sold off too cheaply, at least they aimed it at the public and not just private investors.

Still, we've lined a few of the ultra riches pockets, makes you feel all warm and fuzzy doesn't it?

Sadly a lot of pensioners and families on the breadline won't be feeling quite so warm this winter.
 

Wurzel

Alert Team
#3
We have a thread about this already. As for it being sold too cheap it is the concensous among market experts that that will not be known for some time.
 

OnMeHeadFred

Vital Reserves Team
#4
It has been estimated that Royal Mail was sold for £0.7bn cheaper than its market value. In private hands it will be allowed to make £2.8bn without paying any tax. The tax-payer has been left with a pension liability of £9.5bn.

Under no stretch of the imagination can this be seen as a good deal for the tax-payer.

But that is not the point because the privatisation is ideologically-driven and should be judged on that basis.

Royal Mail workers are a glaring anomaly when it comes to pay and conditions which the government were willing to pay any price to put right.

Royal Mail workers set a standard for pay, pensions and conditions, which other similar workers aspired to and which stood in the way of the government's intention to drive down pay and conditions to the very least the market could stand and with an over-supply of low-skilled workers, it is hoped that wages and conditions will be driven even lower than they are now.

While the likes Amazon are using zero hours contracts and part-time work and no pensions, Royal Mail workers were seen to be enjoying the sort of privileges which only special elite workers (MPs and top civil servants) are considered worthy of.

With an influx of a few million Bulgarians and Romanians about to begin in January the government were determined to remove any anomalies from the labour market and Royal Mail was the worst example.

All low grade council workers and NHS employees have been systematically stripped of their pay and conditions through contracting out and the use of agency workers.

The government is waging a war against the unskilled and low-paid and selling Royal Mail was an essential battle on the way to achieve a final victory.

It may have cost the tax-payer billions but it is a victory for private business.

If the Conservatives can win the next election, they will scrap the minimum wage and their victory will be complete.
 

The Fear

A Wise Man (once sat next to him)
#8
Wurzel - 1/11/2013 16:08

Politics one I think.
Ah right, ok, noted. Easy to have missed that one, think I will leave this one free now as we have probably moved on in other thread. Not been in this week as been head buried in contracts!!

:35: