Nick Clegg has admitted there is legitimate controversy over the sale of Royal Mail and said it was right to have intense scrutiny over the deal overseen by the LibDem Business Secretary, Vince Cable.
The deputy prime minister also said Cable had followed independent advice and that he had “done a good job”.
As Labour renewed its attack on the sale for short-changing the taxpayer by £750mn, Clegg said the fact that Royal Mail’s share price would go on to rise considerably could not have been predicted.
He said Cable has been “totally upfront” and “argued his case very strongly and very well” that he acted on the best advice available at the time.
Speaking on his weekly LBC radio Call Clegg show, he defended all Cable’s decisions but placed responsibility for the sale squarely on his colleague’s shoulders.
“The responsibility of Cable and the responsibility which he has successfully discharged is to make sure Royal Mail could stand on its own two feet,” he said. “Yes of course there is legitimate controversy and questions. Yes Cable and everyone in government should be put under intense scrutiny about the decisions.
“But I hope no one will doubt the fact that Cable took decisions based on independent advice, that he set the share price at the higher range, and given how much uncertainty there was, given this has been tried and failed in the past and given it’s important taxpayers aren’t constantly kept on the hook for bailing out Royal Mail, I think he’s done a good job.”
Clegg also denied there was any “whiff of collusion” about the fact the government’s adviser Lazard made millions of pounds from selling shares through a different arm of the business within days of the flotation, arguing there are “Chinese walls” - that mean the two divisions are completely separate.
Lazard, which was paid £1.5mn by the government for flotation advice, bought 6mn shares at 330p each on the day of the float but sold them within 48 hours at 470p to reap a profit of £8.4mn.
Margaret Hodge, chair of the parliamentary public accounts committee (PAC), said Lazard “made a killing at the expense of the ordinary taxpayer that lost £750mn on day one” of Royal Mail’s London Stock Exchange debut.
On Wednesday, Ed Miliband also accused David Cameron of having double standards after the government handed a “golden ticket” to hedge funds to make millions of pounds out of the privatisation of Royal Mail while imposing restrictions on postal workers.
The Labour leader highlighted the contrast between the lucky “priority investors” - six of whom sold their Royal Mail shares at a quick profit and postal workers, who are not allowed to sell their shares. The Bureau of Investigative Journalism reported on Monday that one of the investors was the Landsdowne hedge fund, whose co-head of development strategy, Peter Davies, was George Osborne’s best man.
Miliband said: “What we have discovered today is one rule for the postal workers and another rule for the hedge funds. Who runs these hedge funds? They have been very coy about who runs these hedge funds. None other than the chancellor’s best man runs one.
“So why is it? It is one rule if you deliver the chancellor’s best man’s speech and it is another rule if you deliver the chancellor’s speech.”