Free Private Island: Why Britian Now Belongs to Someone Else by James Meek

sacrificing a likely future gain (they’re not allowed to sell for three years) of thousands of pounds. The remainder of the shares, 52 per cent, were put up for sale at £3.30 each. Investors small and large stampeded to buy a stake; the allotment set aside for private buyers was oversubscribed by seven times, for big institutions, twentyfold. Only the very smallest investors, those with less than £750 to spend, got what they’d asked for, while a single hedge fund and the government of Singapore got large stakes. Those in between were left short. There’d been nothing like it since the speculative frenzy of the big Thatcher-era privatisations in the 1980s. The government made £1.7 billion from the sale; the share price roared upwards till, by December, it had nearly doubled. The government was accused, from both ends of the political spectrum, of naivety and incompetence, of selling a British folk treasure on the cheap. The
Daily Mail
described Goldman Sachs, the financiers handling the sale for the government, as a ‘giant Wall Street investment bank that is notorious internationally for its greed’ and accused it of prioritising ‘its favoured clients in the big City institutions … it is now clear that the offer price was ludicrously undervalued.’
    Politically, it’s easy to see why the government sold Royal Mail cheap. Of the two risks to the sale – that eager investors would make a killing, and that the sale would flop because investors thought the price too high – ministers and civil servants knew, because it had happened before, that the first outcome would be a short, intense storm, soon to blow over, whereas the second would haunt the Cameron–Clegg regime forever with the stigma of incompetence. More than that: if you’re a politician in favour of privatisation, a debate about the price of shares means you’ve already won, because the debate about privatisation itself is over. Alternatives to the simple opposition of state ownership versusprivatisation – the creation of a Royal Mail Trust, for instance, run on commercial lines but not for profit, or a John Lewis-style, employee-owned enterprise, both of which would have kept the company’s debt separate from the government’s – were never debated. And while the furore over the share price drew all the attention, in the background, something far more significant for Royal Mail’s future was happening.
    There was always something fantastical about the flotation. Right up to the moment of its disposal, the company had been portrayed by free marketeers and Tory commentators as a doomed behemoth, a pre-Internet, pre-Thatcher throwback, a state-milking army of overpaid, underworked, Luddite ne’er-do-wells jamming the cogs of the British economy. Suddenly, almost overnight, at the very moment it became too late to have second thoughts about the sale, the Royal Mail became a priceless national asset, its shares like gold, like Apple stock, with hard-nosed moguls from the world of big finance and nerdy stock pickers in suburban bungalows trampling over each other to get a piece. How to explain the dissonance? Was it that privatisation happened to coincide with an upturn in Royal Mail’s fortunes, or was there something evidently transformative, in the Midas sense, about privatisation itself?
    While I was wondering about it, at home one foggy day in London, a letter slipped through my door. It was from Royal Mail and seemed to offer their answer in support of the first proposition. ‘We love parcels,’ it said on the outside. It was a circular promoting new sizes and prices for small packages sent by mail. The Internet has devastated the letters business, but you can’t send objects down a wire, and the boom in Internet shopping has seen a corresponding boom in parcels, so much so that it looks to be starting to compensate for all those lost letters – so much so that Moya Greene, the head of Royal Mail, has spoken of offering deliveries