Friday, 19 April 2019

The Royal Mail property privatisation scam is really paying off (at the public expense)

After I pointed out Vince Cable's pivotal role in flogging off the Royal Mail at miles below its true value a couple of hard-right pro-privatisation astroturfers turned up with a novel argument aimed at defending the sell-off.

Their argument says that Vince Cable and George Osborne flogged off Royal Mail for 330p per share, and after initially soaring to 445p on the first day (because investors realised how under-valued it was) six years later this share price has receded to 260p.

Their argument goes along the lines that 2013 was actually a good time to sell off Royal Mail because six years later in 2019 the share price has fallen by roughly 20%.

What this argument completely ignores is what has been happening at Royal Mail since it was flogged off in 2013.

One of the main revenue streams the new capitalist owners have found is flogging off chunks of Royal Mail land to property developers for £hundreds of millions.

It's estimated that they've already raked in over £400 million in land sales. That's over half of the £787 valuation of the entire Royal Mail property portfolio at the point of sale, raked back in by selling off just a few chunks of inner city prime building land!

For example a 2.7 acres Royal Mail site in Battersea was sold to developers for £101.2 million, but the Tory/Lib-Dem coalition priced it at just £12.9 million.

The neoliberals in government flogged this piece of prime building land off at less than 13% of its real value, meaning the other 87% of the value of this public land went straight to the new private owners.

Another example is the 6.25 acre Mount Pleasant sorting office that was valued at £29 million by the Tory/Lib-Dem government at the point of sale, then flogged off for £193 million just a few years later. A cool £164 million profit for the new corporate owners from Vince and George's deliberately under-valued sale of public land.

That's almost £300 million of Vince Cable and George Osborne's £787 million valuation of the entire freehold Royal Mail property portfolio recovered through the sale of under 10 acres of Royal Mail land!

So did the new corporate owners reinvest these massive property windfalls in the Royal Mail business? Maybe to diversify in the face of collapsing demand for hand delivered letters?

Of course they bloody didn't. They paid it out in bloated executive salaries and shareholder dividends that have exceeded £1 billion since the privatisation!

The last Royal Mail boss just quit with a huge £2.7 million golden goodbye, and his replacement was welcomed with a staggering £5.8 million tax-free golden hello! All paid for not through successful operation of the business, but through selling off public land that was acquired at miles below its true value.

The owners of Royal Mail know that the postal delivery business is not a brilliant money spinner in itself, but that the Royal Mail property portfolio is an absolute goldmine of prime building plots in towns and cities across the nation.

Royal Mail is being asset stripped before our very eyes, with what was publicly-owned land until 2013 being flogged off for massive unearned corporate profits.

They're not doing anything smart, or innovative, or productive to "earn" this cash, they're simply gorging themselves on the vast difference between what the Tory/Lib-Dem coalition said the Royal Mail property portfolio was worth when they flogged it off, and what it's actually worth.

And the incredible thing is that defenders of this maniacal neoliberal zeal for privatisation that sees our public land flogged off at a tiny fraction of its true value will concoct ludicrous little fairy stories about how it was all good, and fine, and proper because the share price happens to have fallen slightly after six years of absolutely brazen asset stripping!

And the sad thing is that some people will be so gullible, and so averse to considering the facts for themselves, that they'll actually mindlessly believe this abject neoliberal nonsense that everything is fine and dandy, and that Osborne and Cable actually did us all a wonderful favour by flogging off our land at a ridiculous fraction of its real value.

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Anonymous said...

So who are behind the investment company that bought Royal Mail? What are their links to Osborne, Cable and the wider Conservative and Lib dem parties or their families?

Unknown said...

I was wondering the same thing, who benefited from the Sale of The Royal Mail?

Unknown said...

No mention of Brown the one eyed clown selling gold at silver prices? Afraid your inane ramblings will only strike a chord with momentum and the Liebour bullies. Liebour wont see a term in government for the next two generations at least. The swivel eyed lunatic is unelectable.

Anonymous said...

Yeah they were saying that last time mate,result was rather different,if the P.L.P had campaigned like the members did and released funds to the C.L.P's Labour would have won.

Abdur Rawat said...

You're wrong on Mount Pleasant. Only part of it was sold for £193m.

Abdur Rawat said...

Royal Mail sold the land to house builder Taylor Wimpey for £193 million. The 129-year-old Royal Mail office will continue to operate alongside the new Postmark development.

Anonymous said...

It was sold at the prevailing price for gold at the time, not 'silver prices' - gold is generally 100x the price of silver.

The FT say he was right to sell the gold:

There is also the less reported reason for selling the gold, which was to rescue banks who had got into trouble shorting the gold price:

Anonymous said...

Yup all fair comments, let's hope Jeremy can find the time to mention it to the tory party once he is done helping them end the English econemy, split the United Kingdom and return Ireland to civil war. The soon to retire leader of the lib dems could get quite the ear bashing from the "opositon" leader over his buckling and aiding the tories.

stanleytoms said...

You didn't even know about this yet you want more information about the owners?
Why don't you go and find out instead of expecting everything to be handed to you on a plate?