Britain will pay a heavy price for Hunt’s Royal Mail mistake, says ALEX BRUMMER

Jeremy Hunt is running a good election campaign in difficult electoral circumstances. He has forced the shadow chancellor, Rachel Reeves, onto the defensive over VAT.

However, his approach to the imminent sale of International Distribution Services (IDS), owner of Royal Mail, to Czech billionaire Daniel Kretinsky is misguided.

It is encouraging that foreign investors are interested in the UK and that free markets are allowed to operate. But it is clear that the sale does not respond to the public interest.

Privatizing Royal Mail in 2013 was a good thing, but it’s a shame the Con-Lib coalition didn’t get a share of the gold.

By transferring responsibility for the pension fund to the Government, respecting a crown guarantee, it made the postal network an easier target.

It would be nice to think that Vince Cable’s decision to give shares to the Communications Workers Union (CWU) would be a bulwark against an overseas deal. But we can’t be sure.

Hunt made the same mistake as Philip Hammond when Arm was embarrassingly sold to Japan’s Softbank in 2016.

A similar mistake was made when George Osborne welcomed Pfizer’s proposed bid for AstraZeneca, which failed.

Apart from the assets of the Royal Mail, one of our oldest institutions, the financial structure of the deal will be detrimental to investment and the future of the service.

There is £1.7bn of debt on the balance sheet. The “Czech Sphinx” proposes an additional £2.3 billion, financed by international banks, at a time of high interest rates.

The only way to finance such a debt load is by laying off staff (are you listening to the CWU?), cutting investment and disposing of assets such as Royal Mail’s valuable property portfolio.

Plus, imagine the fight when Kretinsky starts diverting dividends to support his glamorous lifestyle and other interests.

It is deeply worrying that Labour’s business spokesman, Jonathan Reynolds, appears incapable of booing a goose and has bought into the myth that he will be protected by meaningless guarantees.

The National Security and Investment Act was signed into law to prevent travesties like Arm, Thames Water and many others from happening again. Our naive politicians appear to be as weak as the IDS board of directors.

Tax times

Rachel Reeves was quick to reassure voters that: “Labour will not increase income tax, national insurance or VAT.”

How impressed should they be? Not terribly. The Labor Party has already committed to imposing VAT on independent schools, so its commitment is not entirely ironclad.

There are many VAT loopholes that could be closed without increasing the rate. Financial services are exempt, while business services, such as telecommunications, are subject to VAT. Various foods such as gingerbread men and gingerbread cookies are excluded.

There are reduced rates for children’s clothing and household fuel, although these would be difficult targets for Labor for distribution reasons. Beyond the three large tax groups mentioned by Reeves, there is no shortage of other objectives.

Carried interest, the profit made by private capital, is believed to be in the Labor Party’s sights. Raising capital gains and inheritance taxes may penalize businesses but would appeal to Labour’s base.

In the past, private sector pension tax breaks have been an easy target.

Reeves has no shortage of options to raise revenue without breaking his promises.

wrong foot

Sandals or boots? Germany’s Birkenstock is triumphing with strong sales of its cork sandals, boosted by Margot Robbie wearing pink Birkenstocks in the box office hit ‘Barbie’.

In contrast, quirky British boot maker Dr Martens is suffering from declining demand and the perceived high cost of its classic £136 boots. Turnover is expected to fall by 20 percent in the first half.

Expect a revival in the fall when marketing spending increases. All brands know that there is no explanation for rapidly changing tastes.

A wet Glastonbury could help.