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UK's Cable says Labour 'irresponsible' to talk up Royal Mail value

Britain's Business Secretary Vince Cable speaks at the Liberal Democrats autumn conference in Glasgow, Scotland September 16, 2013. REUTERS/
Britain's Business Secretary Vince Cable speaks at the Liberal Democrats autumn conference in Glasgow, Scotland September 16, 2013. REUTERS/

By William James

LONDON (Reuters) - British Business Secretary Vince Cable accused the opposition Labour party of irresponsibly talking up the value of shares in the Royal Mail postal service, a day before order books close on Britain's biggest privatisation in decades.

Despite the threat of strike action from delivery staff and criticism from opposition lawmakers, the government is close to completing the sale of a majority stake in the 497-year-old Royal Mail, known worldwide for its iconic red postboxes.

Sources said on Friday that the deal, which is being advertised to retail investors as well as institutions, was expected to price towards the upper end of its original range, potentially valuing the company at as much as 3.3 billion pounds ($5.31 billion).

But that price tag was still seen as too low by Labour's business spokesman Chuka Umunna, who on Saturday urged an immediate inquiry into the deal and said the firm's property portfolio was so valuable that taxpayers could be short-changed.

Cable hit back on Tuesday, saying those claims were based on "back of the envelope" calculations and accusing his opposite number of encouraging risky speculation in Royal Mail's shares.

"It is irresponsible to imply that a share offering looks significantly undervalued. I think you should consider the risk that you may be influencing the decisions of retail investors," Cable wrote in an open letter addressed to Umunna.

Order books are due to close on October 8, with the shares beginning conditional trading in London on October 11.

Labour is opposed to the timing of the sale, which it says is designed to patch up Britain's public finances, but has resisted calls from party activists and trade unions to pledge to renationalise the firm if it wins power in a 2015 election.

Once completed, the sale will close a political drama spanning three decades, succeeding where previous attempts by both the Labour and Conservative parties had failed due to public and political resistance to selling off a revered national asset.

($1 = 0.6219 British pounds)

(Editing by Tom Pfeiffer)

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