Five questions answered on Royal Mail’s share price rise

They rose more then 38 per cent.

As Royal Mail shares started conditional dealings on the London Stock Exchange this morning the demand was so high the share price rose substantially. We answer five questions on the latest news about Royal Mail’s stock exchange debut.

By how much has Royal Mail’s shares risen by?

They rose more then 38 per cent to 456p at the start of conditional dealings on the London Stock Exchange.

The oversubscribed sale price was at 330p per share with a total value for the business of £3.3bn, however, after trading began its value shot up by £1.1bn. 

Did the shares stay at this price?

No, by midday they had fallen to 435p.

The shares are listed officially next Tuesday, but City institutions began conditional dealings on Friday.

Does this initial spike mean the company has been undervalued?

Business Secretary Vince Cable has insisted the tax payer is getting a good deal with the sale price of Royal Mail. However, some have called it a "sham".

Communication Workers Union, Billy Hayes, speaking to BBC Radio 4's Today, described the sell-off as "a tragedy".

He added: "This is a sham, really. The company has been undervalued.

"It's basically David Cameron rewarding his mates in the City. Vince Cable, one of the cleverest men in British politics, has made one of the stupidest decisions he is ever likely to make as a politician."

What else has Cable said?

Also speaking on today’s BBC Radio 4's Today: “You get an enormous amount of froth and speculation in the aftermath of a big IPO [initial public offering] of this kind.

"The bulk of the shares have gone to long-term institutional investors, stable investors, some overseas investors, but mainly British pension funds and insurance companies who are there for the long term.

"The objective of the exercise, which fits in with what we want for the Royal Mail, is to make sure it has stable, long-term investors."

Anything else?

The demand has caused endless trouble for broker Hargreaves Lansdown whose system has buckled under the heavy demand to trade Royal Mail shares.

Ian Gorham, the company’s chief executive, issued a statement saying:

“Whilst clearly we predicted and prepared for substantial activity in Royal Mail shares, the volumes involved have gone off any conventional scale.

“We have six times the normal number of dealing staff working today, and continue to work hard to deal with the demand. We will keep working flat out until our normal fluent service is restored. We’d like to apologise to our clients for any issues they have experienced this morning.”

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Heidi Vella is a features writer for

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.