Proof emerged yesterday that Business Secretary Vince Cable knew he was selling off Royal Mail on the cheap.

Mr Cable cost the taxpayer £1 billion by setting the share price too low.

According to Freedom of Information requests, the 21 banks pitching to work on the floatation valued Royal Mail at between £4bn and £4.8bn.

But Mr Cable eventually sold a 60 per cent stake at 330p per share - valuing it at £3.3bn.

That meant the sale secured £2bn for the taxpayer, rather than a potential £2.9bn if the higher valuation had been used.

Shares have soared to more than 580p since.

The Communication Workers Union, which fought against the Tory sell-off, pointed out that Mr Cable's initial rejections of claims that he had virtually gifted the public company to investors had now been shown to be empty words.

CWU general secretary Billy Hayes said: "These latest figures come as no surprise and show the government's main concern in selling off Royal Mail was to get a good deal for the rich resulting in a bad deal for the rest of us.

"It is disgraceful that Royal Mail was sold off to the lowest bidder losing the taxpayer up to £1.5bn."

Deputy PM Nick Clegg rushed to Mr Cable's defence and declared that the Business Secretary was "not a share price expert."

Speaking on his regular LBC radio phone-in yesterday, Mr Clegg said. "What I dispute is this idea that somehow Vince Cable single-handedly plucked some arbitrary price out of thin air.

"He didn't, he did it following advice. It is clearly an imprecise, unpredictable science."

Shadow business secretary Chuka Umunna was quick to put the Lib Dem down.

He said: "Nick Clegg's claims that Vince Cable is not a 'share price expert' is looking like an understatement. While this may be true, it won't get David Cameron's government off the hook.

"There are real questions to answer about a decision that could have cost taxpayers dearly.

"Nick Clegg said that Vince Cable followed independent advice and set the initial price at 'the very highest point' (which is) completely contradicted by the figures released from his own department.

"We know that the Tory-led government considered - and rejected - the option of a higher price."