Business secretary in denial about mishandling of sale that cost taxpayer £750m on day of privatisation, says committee of MPs

Vince Cable has continued to contest claims that the government significantly undervalued Royal Mail, costing taxpayers £750m on the day of the postal service was privatised in October.

During questioning by MPs on Tuesday, the business secretary said he offered "absolutely no apology" for the pricing of the shares at 330p, despite their immediate 38% jump in value. Cable had dismissed the initial jump to 455p as "froth and speculation". The shares, which continued to rise as high as 615p, closed up 10p at 521.5p on Tuesday.

Cable had been summoned back by the business select committee after a scathing report by the National Audit Office found the government had massively undervalued Royal Mail in its desperation to sell off the 500-year-old postal service.

Adrian Bailey, a Labour MP and chair of the business committee, said Cable and the business minister, Michael Fallon, were in denial about their mishandling of the sale. "They seem to think if you repeat certain assertions long enough, they will become true," Bailey said.

He accused Fallon of living in "Alice in Wonderland" reality if the minister really believed the government got the best price for taxpayers.

"The fact is that you didn't get the best price because on the day of sale the share price soared. This is just an astonishing assertion," said Bailey.

Fallon replied: "It was a successful flotation. I have not seen any evidence that the shares were undervalued at the time of the flotation. I stick by the share price."

The minister appeared to blame planned strike action by Royal Mail staff for depressing the valuation. Fallon said it was "wholly possible" that the shares could have been priced higher than 330p if the threat of nationwide strikes were not looming over the company.

Cable refused to publicly name the six "priority investors" who almost immediately sold their Royal Mail shares at vast profits. He said he would provide the committee a list of the 16 priority investors – who were selected by ministers as "long-term, blue chip" institutions – on the condition the names were kept confidential.

Katy Clark, a Labour MP, asked whether it was not the case that some of the 16 had sold shares quickly "to make a quick buck".

Cable replied: "Yes, that is what happened. It is how markets work."

Billy Hayes, general secretary of the Communication Workers Union (CWU), repeated his call on Tuesday for Cable to resign.