Royal Mail: Pricing of Shares
Debate between Lord Elystan-Morgan and Lord Popat
Lord Popat
My Lords, our key objective has been to secure value for money for the taxpayer and to develop a strong business. The taxpayer still has more than 30% of the shares and the universal service will be secured for a long time. The proposal included an indicative valuation of the company based on many instances and solely on information already in the public domain. Banks made their own assumptions of the Royal Mail’s future performance. Hence we agreed a price of £3.30.
Lord Elystan-Morgan (CB)
Presumably those who were invited to advise on the flotation price were not required to pluck a figure out of the air but would have been instructed to arrive at their conclusion on the basis of certain criteria. Will the Minister confirm that that was the case and will he spell out those criteria to the House?
Lord Popat
My Lords, as I said, our key objective was to secure value for money and to make sure that this flotation was successful. The nine banks that we appointed set out the criteria and gave us advice as to the value of the shares that we should pitch at. One criterion was to make sure that the future of the Royal Mail continues to be strong. The most important criterion was that institutional investors were able to invest money for the future of the Royal Mail.
Payday Loans
Debate between Lord Elystan-Morgan and Lord Popat
Lord Popat
My Lords, the consumers—borrowers from payday lenders—are of many different types. A large number of them borrow money from payday lenders as a short-term loan or in an emergency. Some use the payday lending system rather than a credit card; quite often a credit card is very expensive, and they have more control over borrowing from payday lenders than they would have over credit cards. Quite often there are customers who borrow money from payday lenders because the banks, for reasons of liquidity, are often not very keen to give short-term overdrafts.
Lord Elystan-Morgan
My Lords, the noble Lord, Lord Richard, is absolutely correct, is he not? For some years now, judges in our civil courts have had wide powers to cancel unconscionably unfair contracts and to rewrite the contract where the court considers that it is fair and just to do so. The powers are there; why are they not used?
Lord Popat
My Lords, the Consumer Credit Act requires lenders to be licensed by the Office of Fair Trading and we are passing these powers on to the new regime of the FCA in 2014. The noble Lord is right: quite often with heavy debt of this nature, the court tends to impose on the consumer a credit embargo or a county court judgment, and the consumer will often find it difficult to borrow money in the future.