Thousands of Royal Mail staff to receive shares in privatisation plans
Business secretary Vince Cable sets out out key parts of plan to sell off postal service, including giving 10 per cent of shares to employees
Wednesday 10 July 2013
The Royal Mail privatisation plans have been laid out by Vince Cable, the business secretary, including giving 10 per cent of shares to employees.
In the final stage of the Government's postal sector reform plan, Cable said shares in the company would be sold off on the stock market. Although he remained flexibile about the size of the stake the Government would dispose of, Cable said a majority would be sold.
"The time has come for the Government to step back from Royal Mail," said the business secretary.
The IPO is likely to value Royal Mail at between £2bn and £3bn, with thousands of staff told they will receive 10 per cent of the shares that could be worth as much as £300m in total. The staff involvement is part of the Postal Services Act that paved the way for the sell-off of the company two years ago.
Despite being sold off into the private sector, Cable said the Royal Mail would have to retain its universal service obligation of delivering a six-day mail service across Britain. He added that Post Office Ltd would remain publicly owned, with a view toward mutualisation and ruled out any further branch closures.
"The challenge is to maintain the current momentum of profitability," said Cable.
He insisted that: "under public ownership, the service does not have the freedom to raise capital in markets."
Labour's Chuka Umunna told MPs the opposition continued to oppose the privatisation and said the Government had failed to provide any justification for acting now:
"Maintaining the Royal Mail in public ownership gives the taxpayer an ongoing direct interest in the maintenance of universal postal service.
"It helps safeguard the vital link the Royal Mail has with the Post Office and it ensures the taxpayers get a share in the upside of modernisation and increased profits which Royal Mail delivers.
"Despite this, the Government has pressed on regardless with this sale and failed to adequately justify why it must sell now."
However, unions representing Royal Mail workers are still strongly opposed to the privatisation plans. They have already rejected a pay offer and are now threatening strike action.
The Communication Workers Union is touring the City this week on a bus that is stopping outside UBS and Goldman Sachs, the banks advising the Government on the flotation, to remind them of its opposition.
Dave Ward, the CWU's deputy general secretary said: "The flotation announcement has ignored the views of the workforce and the British public. The workforce agreed a modernisation programme with Royal Mail three years ago and it didn't include privatisation.
"They have worked hard to modernise the company and deliver the profitable organisation Royal Mail is today. They have recently voted in big numbers against the sale and they will be angered by the announcement.
"CWU will continue to fight the sale and without worthwhile and legally binding assurances on terms and conditions, strike action is inevitable."
Moya Greene, Chief Executive Officer, Royal Mail Group said: “Royal Mail aims to combine the best of the public and private sectors. Our employees will have a meaningful stake in the company and its future success. The public will have the opportunity to invest in a great British institution.
“As we move into the private sector, the current legal position is that all terms and conditions that apply to Royal Mail employees would remain in place, on the same basis. To provide further reassurance, we will create a legally-binding and enforceable contract with the CWU. Pay and protections could not be changed for the period of the contract without CWU agreement.”
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