Opposition in the post for Royal Mail sale

Ministers are pressing on with a privatisation challenge that even Thatcher steered clear of. Lucy Tobin reports

If Royal Mail were invented today it would deliver letters a couple of days a week and parcels every evening. Rather than returning home to a red "Sorry we missed you" card, Fred Bloggs could expect his Amazon delivery to arrive after he got home from work, and would file away the odd birthday card or tax documents that still dribbled in by post.

But Royal Mail – which was founded in 1516 – today still has to deliver letters to every household in the UK every day from Monday to Saturday, under the orders of Parliament. Meanwhile, the Government is trying to package it up as an attractive investment. And unions and politicians of both the left and the right are loudly opposing a sale.

So it's no surprise that Royal Mail's privatisation has been "in the post", but not actually announced, for some time. Or that the Government hasn't exactly been shouting about it.

The Government's preferred sale would be a float on the London Stock Exchange, with postal workers nabbing 10 per cent of the shares in the company. To that end, Royal Mail this week appointed a registrar to establish an employee share scheme. Another profit jump will be announced on Tuesday.

Ministers have started racking up fees for the deal too, signing up UBS bankers to run their side. Royal Mail, meanwhile, has hired Barclays to look after its own back.

But there's a growing political consensus opposing the sale. This month the centre-right Bow Group sent a letter to Tory MPs, demanding the Government call off Royal Mail's sale because the amount of cash raised would "hardly [be] a sum that can compensate for the national and political damage it will cause".

It hasn't gone well in the past: legislation to privatise the post group that was passed in 2011 followed failed attempts by the Tories to do so in the 1990s; and Lord Mandelson had the unsuccessful idea of selling off a third of Royal Mail in 2009.

This is also the frontier where even Margaret Thatcher, who privatised BT, British Gas, the former British Airports Authority, British Airways and other such items of family silver, refused to go, famously saying of Royal Mail that she was "not prepared to have the Queen's head privatised".

Quite a different story is being told by Michael Fallon, the Business minister, who is in charge of the sell-off. Last month he said that privatising the postal giant was "the way to put Royal Mail on to a long-term sustainable basis". In the face of union dissent, he has even whispered the "F" threat: the Royal Mail could fall into foreign hands if unions fight an initial public offering (IPO), Mr Fallon has said.

"What kind of a threat is that?" responds Kevin Slocombe, of the postal workers' union the CWU. "What difference does it make to us – if he sells the company, he sells the company. Royal Mail has been fattening itself up for privatisation, but we're not accepting it."

The CWU is holding consultative ballots for members to reject cuts and job changes (mostly increasing posties' rounds) created for that "fattening up" process. "Delivery workers are already working to capacity," Mr Slocombe says. "You can't rule out industrial action."

But a more pressing concern for Royal Mail managers is that postal workers are also having a consultative ballot on boycotting competitors' mail – the "last mile" deliveries it carries out on behalf of rivals such as TNT and which comprise almost 50 per cent of Royal Mail's letter revenues. The first ballot is on 18 June, which could see a boycott this summer – at the very time when the Government hopes to show off Royal Mail's progress to profit, before a hoped-for autumn IPO.

The CWU – which says it has about 130,000 Royal Mail staff as members – says it's only just gearing up the scale of its opposition. "Our postmen and women interact with the public every day," Mr Slocombe adds. "They are ideally placed to carry messages." So you can expect to get some anti-privatisation information with your post one day soon.

Mr Fallon claims he is "surprised" by the CWU's "ideological objection to privatisation that would benefit all their membership" – if Royal Mail were sold or floated for £2bn-£3bn, staff would get £1,500-£2,300 each.

But what's in it for a buyer? Universal post services worldwide are struggling. The US Postal Service is stopping delivering letters on Saturdays as the firm – which delivers about 40 per cent of the world's mail – has seen revenues drop from $75bn (£49bn) in 2007 to $65bn in 2012, and losses last year hit $15.9bn.

Over here, Royal Mail has tried to counter the pain with a 40 per cent hike in stamp prices last year. That saw it post a 12 per cent rise in half-year, pre-tax profit to £114m for the six months to October, despite the number of letters in the average postman's daily sack continuing to fall.

Yet that stamp price increase cannot be replicated every year. And another big reason for Royal Mail's improved finances is that we taxpayers took over the burden of its giant pension fund, including its £28bn of assets and £38bn in liabilities.

So might underlying numbers, industrial grumblings and the continuing demands of universal service put off potential private buyers? Unlikely. If an IPO does not work, potential bidders include private-equity houses, such as CVC Capital Partners; Dutch postal giant TNT; and the sovereign wealth funds that have poured cash into snapping up British assets in recent years.

With the Government this keen, it looks set to push unions and politics aside to try to get the Queen's head privatised in 2013.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific