Selling cheap...going ...going...gone!

JP Morgan, one of the world's largest investment banks told ministers ahead of the Royal Mail flotation that they could sell the postal business for £10 billion, around two and a half times more than the government finally received for it. Others pitching to sell the Royal Mail on behalf of the government had also priced the mail company as high as £7bn.

The government sold shares in Royal Mail for 330p each, valuing the business at £3.3bn. 

Private Road

For a few it will be the road to riches but for the many it is will result in a highay to hell

Miles of road in the UK:246,000
Miles of motorway: 2,200
Average annual car mileage in the UK: 8,430

Worldwide, somewhere from $50 billion to $150 billion worth of equity is waiting to be invested in infrastructure of all stripes (including assets like airports and water systems)

Thatcher presided over 42 privatisations, and in one of the final one decided to award the building of what was known as the North Birmingham Relief Road (now the M6 Toll) to a private company. To drive its 27-mile length costs a toll of £5.30 and it carries less than half the number of vehicles it was designed for. We no face a return to the era of turn-pike roads. In the early 19th century many toll-gates on the roads in Wales were operated by trusts which were supposed to maintain and even improve the roads, funding this from tolls. However, many trusts charged extortionate tolls and diverted the money raised to other uses. Even where this was not the case, the toll-gate laws imposed an additional financial burden on poor farming communities. The Rebecca Riots took place between 1839 and 1843 in South and Mid Wales.They were a series of protests undertaken by local farmers and agricultural workers in response to perceived unfair taxation. The rioters, often men dressed as women, took their actions against toll-gates,

A 2007 piece in Time magazine about American road privatisation: "Tolls often skyrocket under private owners, though with the blessing of elected officials, who avoid the political costs of raising tolls or taxes themselves. That's how privatised roads deliver double-digit returns for investors."

Jonathan Portes, director of the National Institute of Economic and Social Research, who worked on the water sell-off as a junior Treasury official in the 1980s, said that while road privatisation could offer economic and environmental benefits, water was "exactly the wrong model" to pursue. "at the same time, the industry was privatised under an excessively lenient regulatory framework that clearly led to shareholders making very large excess profits at the expense of consumers." - the profits accrued to the 22 private water companies which last year passed £1bn

Stephen Joseph, chief executive of the Campaign For Better Transport, said neither bus nor rail privatisation offered attractive blueprints either. The Government currently pays £5bn in an annual subsidy to the railways – compared with £1bn before the sell-off under John Major. Fragmentation of the different parts of the network has left fares in the UK 30 per cent higher than elsewhere in Europe while costs were 40 per cent more.
Bus deregulation and subsequent privatisation initially led to a sharp drop in use, particularly outside London, only recently rising with introduction of pensioner and disabled concessionary fares. "I don't think anybody, including the people who ran the buses, feel the way privatisation was done was a brilliant idea," he said. "What is needed is more integration. The danger is you will get bits of the infrastructure that the private sector will think it is able to make money out of," Mr Joseph added.

http://www.independent.co.uk/news/uk/home-news/roads-to-riches--or-highways-to-hell-7578152.html

http://www.guardian.co.uk/commentisfree/2012/mar/19/road-privatisation-david-cameron?newsfeed=true

http://www.time.com/time/magazine/article/0,9171,1673288-2,00.html

BBC memory lapse

The BBC reports " Making the Post Office the "people's bank" could secure its future and help those not served by banks, a coalition of MPs and interest groups is arguing.They are due to outline plans for a Post Bank, offering a wide range of financial services at its branches. ..."

Yet in the whole report by the BBC not one single mention of Girobank and its shameful sell-off to Alliance and Leicester for a pittance in 1990 .
Girobank had grown rapidly to become Britain's sixth biggest bank in a few years after its launch in 1968. Lets not forget these facts about Girobank .

According to wikipedia , It was the first bank designed with computerised operations in mind; the first bank in Europe to adopt OCR (optical character recognition) technology; the first UK bank to offer free accounts to individuals; and the first bank in Europe to offer telephone banking, beating the much trumpeted First Direct service by several years. It is widely credited for shaking up the UK banking market, forcing competitors to innovate and respond to the needs of the mass market...Although the Giro did offer personal loans through a third party, it did not offer many of these main services on its own behalf until after the relaunch in 1978. It added savings accounts, overdrafts, revolving credit accounts, credit and debit cards, and was instrumental in the formation of the LINK ATM consortium of smaller banks and building societies which led the commercial clearing banks to begin linking their own networks which they had hitherto refused to do. It was also quick to establish internet banking and mass market it to its customers. So although the Girobank ended up looking much like any other bank, it was clearly nothing like the type of bank it originally expected to be, but it had also been instrumental in changing the competitive nature of the banking market in the UK and had been a great innovator.

It will also be remembered according to The Guardian for introducing the first interest-paying current account in a move that forced the high street banks to fall into line.

If memory serves me right , it was sold for £300 -odd million yet surprisingly enough - not , Alliance and Leicester valued it in its following financial report at about a billion pounds .

Yet the BBC conveniently forgets this past privatisation of the Post Office assets failure and the then government's short sightedness when it is preently busy trumpetting Mandelson's attempts to sell off Royal Mail !!