The government acted on poor advice and let its fears of industrial action by the postal service’s workers drive the IPO, rather than consider what the proper value for the business was, a damning report from MPs on the Business, Innovation and Skills select committee has found.

The MPs also questioned the value for money of government advisers such as Lazard, according to the BBC. It said these firms had failed to gauge demand for shares at higher prices.

After the floatation, business minister Vince Cable described the sharp jump in share price as “froth”.

But Labour MP and committee chair Adrian Bailey told the BBC: “The government cannot blithely dismiss as ‘froth’ our committee’s concern that the low issue price of this prime public asset has cost the taxpayer around £1bn.”

The report slammed the assertion by ministers that the demand for shares would have disappeared at an offer price above 330p, the upper limit set for the IPO: “The fact that both Ministers and officials have refused to acknowledge any level of demand for a higher price is, to say the least, disappointing.”

It also criticised the engagement of priority investors without any clear criteria to identify long-term investors. Priority investors in the IPO included Threadneedle Asset Management, BlackRock Investment Management, Henderson Global Investors, Fidelity Worldwide Investment and JP Morgan Asset Management.