Postal Services Bill

My Lords, Amendments 13A and 14 cover two complementary points; I shall deal with the first aspect and my noble friend Lord Young of Norwood Green will deal with the second. The key words in Amendment 13A are ““initial public offering””. In the event that a sale is by means of an IPO, the relevant disposal should take place only in circumstances where different tranches are put forward one after the other. I shall relate that to the experience of the big wave of privatisations in the 1980s, which had some clear lessons. The sale could be to a single entity but, if one reads the report by Mr Richard Hooper of 2010, one sees the presumption of some likelihood that an IPO will be the modus operandi—in other words, there will be a sale of shares to the public. Incidentally, in this case all the arguments that we have heard about concealing the price would evaporate, because for an IPO there is an offer price and share traders would decide whether to buy at that price and how much to buy. However, in the heyday of privatisation in the 1980s, privatised companies were consistently sold at too low a price. That was the experience for British Airways, British Gas and British Telecom, where the undervaluation on the first day of trading amounted to over £2 billion—£2 billion of our money went somewhere else. Indeed, it has been estimated that, for 1986 alone, the average share issue premium on major share issues was 7 per cent, but on privatisation issues the average premium on the first day of trading was 77 per cent. Tony Blair pointed out at the time that—to vary ““The Importance of Being Earnest””—if something was negligent at 7 per cent, what is it if that suddenly becomes 77 per cent? I am not suggesting that the circumstances for selling Royal Mail will be exactly analogous; the forecasts of offer price and outcome are hard to judge. However, the experience remains relevant. That is why I propose that a sale by an IPO should be phased in tranches, with no more than 30 per cent sold before 31 July 2012 and no other shares to be disposed of before 31 July 2013. I have already talked about the critique of revealing a price; I do not know whether the Minister will repeat that contention, but the notion that revealing a price is difficult does not apply to an IPO, where shares are at a set price. I trust that the Minister will accept that to carry out the sale by tranches will be a more certain way to protect the public interest. If she has arguments against that, I will be interested to look at them and see what the rationale is; we will have to study them and think about it. It is incumbent on her to state the arguments explicitly and not just keep repeating them like Pavlov’s dog, so that we can consider what she has said carefully before we return on Report to what we believe—until convinced to the contrary—is a compelling case.