Commenting on the sale of Royal Mail, the President of the Adam Smith Institute, Dr Madsen Pirie, said:

"The sale of Royal Mail was well handled.

"It was the first major privatization in two decades, and the aim was not to raise the greatest possible sum for the government, but to turn a state-run corporation into a successful and flourishing private business.  

"No-one knew what the "correct" price was for Royal Mail, any more than they did for BT, British Gas and the dozens of others.  Since they had not traded in the private sector, or had to attract private investment, no-one knew how they would be valued.  Government took expert advice knowing that it would be, at best, an estimate.  It covered itself by retaining a proportion of the shares so it could gain later from any increase in value.  In the case of Royal Mail it has retained 30% for later sale at a higher price.

"The pricing was cautious, as it was in the earlier privatizations, because government wanted a successful launch into the private sector more than it wanted the highest possible price.  

"We now have a successful private company holding its own in a competitive market, a company that has become one of the UK's leaders, and one whose future prospects look good.  This was a successful sale, and those who carp about not gaining the maximum possible price simply do not understand what privatization is all about.  It isn't about selling off stuff for the top price; it's about building up companies that can thrive by providing goods and services in a dynamic competitive market."

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778 207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.