Financial News

  • 10 July 2014, 22:33

Cable Stokes Coalition Tension With Sale Probe

A review of the process for privatising state assets ordered by Vince Cable has sparked irritation at the Treasury amid an escalating row in Westminster over the 3.3bn sale of Royal Mail.

Sky News has learnt that the Business Secretary's decision to commission Lord Myners to examine options for future stock market sales of Government-owned businesses has provoked dismay among some Treasury officials.

Mr Cable's review was announced on Wednesday, just hours after Sky News had revealed that MPs on the Business, Innovation and Skills (BIS) Select Committee were poised to publish a critical report on last year's Royal Mail sell-off.

The report will accuse Mr Cable, his City advisers and the Shareholder Executive, which manages state-owned assets, of neglecting their responsibilities to ensure that taxpayers received value-for-money from the postal operator's sale.

In response, Mr Cable said that Lord Myners would chair a panel of experts to look at whether the process leading to initial public offerings (IPOs) of shares could be improved.

The Business Secretary said he was responding to a recommendation in an earlier National Audit Office report that such a review should be carried out.

He said it would help him "assess whether changes are needed to the current system the Government operates for the sale of its assets".

Some Treasury officials are said to be irritated that Mr Cable launched the review without consulting more widely in Whitehall about its terms.

Government asset sales are usually conducted with input from multiple departments including both BIS and the Treasury.

A Treasury source said the bookbuilding process for selling shares in Government assets would be of limited use in future because few other state-owned companies would be suitable for stock market flotations.

The officials are also understood to have expressed frustration that Lord Myners, a respected City Minister at the Treasury during the latter part of the last Labour administration, was asked to carry out the review.

A BIS source said he was aware of the Treasury's views about Mr Cable's announcement but added that it was a response to the NAO report.

The Treasury could not be reached for comment.

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