European Commission approval of Royal Mail aid welcomed
Wednesday 21 March 2012
The Government today welcomed European Commission approval of a state aid package for Royal Mail which cuts the company's pensions bills and bolsters restructuring costs with a debt reduction of more than one billion pounds.
Postal Affairs Minister Norman Lamb said: "We warmly welcome the Commission's approval of state aid in favour of Royal Mail.
"It safeguards the universal postal service by allowing the Government to relieve, in full, the historic pension deficit of the Royal Mail Pension Plan and restructure the debt on the company's balance sheet as required at the time of sale."
Mr Lamb went on: "We will now put into action - through secondary legislation - our pension solution, taking on the historic liabilities and the bulk of the assets of the Royal Mail Pension Plan and establishing the new Royal Mail Statutory Pension Scheme".
He said the approval from Brussels did not mean that a sale of Royal Mail would happen overnight.
"We have always been clear that further modernisation by the company and a period of stability under a new regulatory framework, along with state aid approval, are needed before we can move forward with a sale," said Mr Lamb.
"However, this decision is a fundamental step towards achieving that goal."
The Commission said it was endorsing the Government's plans to relieve the Royal Mail Group from what it called "excessive pensions costs relating to its past monopoly position".
A Commission inquiry established that Royal Mail was liable for higher pension costs than its private competitors thanks to "legacy costs" dating back before the sector was liberalised to open up competition.
Brussels decided it was fair that Royal Mail should have help to reduce its pension liability to that of comparable UK companies.
The cash aid was also approved as being in line with EU guidelines on "rescue and restructuring".
EU competition Commissioner Joaquin Almunia said: "To achieve a level playing field in postal markets it is crucial that incumbent operators neither enjoy undue advantages, nor suffer from structural disadvantages in comparison with competitors.
"The relief of excessive pension costs and the restructuring aid approved today will help ensure this balance for Royal Mail and its competitors".
- 1 King Salman: Just five days in, Saudi Arabia's new king has already overseen a beheading
- 2 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Presidential optical illusion offers clues to how brain processes faces
- 5 Grumpy Roald Dahl letter warning student to 'eschew beastly adjectives' rediscovered after 35 years
King Salman: Just five days in, Saudi Arabia's new king has already overseen a beheading
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Presidential optical illusion offers clues to how brain processes faces
Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Louise Mensch says 'F**K YOU' in explosive tweets about David Cameron, Saudi Embassy and the Queen over King Abdullah tributes
£35000 - £40000 per annum: Ashdown Group: Management Accountant (ACCA / CIMA, ...
£11 - £12 per hour: Recruitment Genius: A 10 year old girl who has profound an...
£30000 - £35000 per annum + 20 days holidays & pension: Ashdown Group: Marketi...
£35000 - £45000 per annum: Recruitment Genius: A Business Development Manager ...