It is easy to claim now that Royal Mail was underpriced. Without the benefit of hindsight, caution was justified

To present the Royal Mail flotation as an out-and-out debacle is to make two questionable assumptions

The shadow Business Secretary, Chuka Umunna, settled into a familiar stride in the House of Commons yesterday, lambasting the Government’s privatisation of Royal Mail as a “first-class disaster for the taxpayer” and, metaphorically at least, waving aloft a copy of a National Audit Office report to prove it.

The review published by the government-spending watchdog yesterday certainly does not make the easiest of reading for Vince Cable, the responsible Secretary of State. On the plus-side came confirmation that the Government has “achieved its key objectives”, namely to raise private capital, introduce commercial discipline and lessen the chances that the recently ailing behemoth will need further Treasury support. But the NAO also concluded that more money could have been raised from the sale, if only Mr Cable had been at once bolder and less inclined to listen to the City.

The numbers are undeniable. From an opening price of 330p per share, Royal Mail stock rocketed to 455p within a day and is now trading at a robustly healthy 560p-plus. But the criticisms do not stop there. Investment bank claims that there was not sufficient demand to support a higher price has also raised eyebrows. As have the revelations about the activities of so-called “priority investors”. The 16 companies were given bumper allocations of stock in the expectation that they would form a stable, long-term ownership bloc (unlike those pesky hedge funds). Yet more than half the shares were sold within weeks, to cash in on soaring prices.

Cue tirades against government ineptitude, if not actual collusion, and outrage at the hundreds of millions of pounds allowed to slip through Treasury fingers. Even with the NAO’s conclusions to hand, however, the rights and wrongs are not as clear as they might seem.

To present the Royal Mail flotation as an out-and-out debacle is to make two questionable assumptions. The first is that privatisations are always successful and that the Coalition’s “caution”, as the watchdog termed it, was therefore undue. Lord Lawson – who was Chancellor in 1987 when a stock-market crash left newly floated BP stock the best part of 70p under water – might beg to differ. Although another Black Monday might not have featured in Mr Cable’s calculations, the very real prospect of industrial action was not to be overlooked lightly.

The second faulty premise is a direct result of the first. While it may now seem obvious that the shares would have sold for more last October, the effects of hindsight and the “froth” (to use the Business Secretary’s description) along the way are impossible to judge.

The episode does throw up technical questions about the process by which investment banks gauge potential investor interest and thereby set flotation prices. The issues raised are not unique to the sale of state assets, though. And the fact remains that Royal Mail had only recently turned the corner after years of losses and faced the possibility of a rumbling industrial dispute. Had the first privatisation for decades failed it would have been devastating, not least in the cost to the public purse. The retrospective notion of extra money for the taxpayer is a tempting one, and difficult to disprove. But Mr Cable was still right to be cautious.