Mansion House speech: Government to sell stake in Royal Mail

The Government has already started selling off its stake in the firm

Chancellor of the Exchequer George Osborne speaks during the Lord Mayor's Dinner (AFP PHOTO / LEON NEALLEON NEAL/AFP/Getty Images)

The Government has started selling of its remaining stake in Royal Mail, Chancellor George Osborne has announced.

Business Secretary Sajid Javid has authorised the start of an “accelerated bookbuilding” process which will see the taxpayer-owned portion in the group halved from 30 per cent to 15 per cent.

Addressing an City audience at Mansion House in the heart of London, the Chancellor also said the Government would give up to a further 1 per cent tranche in the company to employees. This will allow staff, including postal workers, to share a £50million slice of the company.

The chunk comes on top of the 10 per cent awarded to employees when the Coalition began the flotation of the then state-owned firm in 2013.

However, the fate of employees as the firm becomes fully privatised remains uncertain, after Royal Mail cut the number of employees by 5,500, leaving it with around 143,000 staff in its main UK business.

The deal will also see a 15 per cent portion of the group, worth about £775 million at its current market value, placed with institutional investors instead of being sold to members of the public.

Osborne went on to use his speech to tackle previous criticism that the Coalition Government sold Royal Mail off for cheap, after the share price soared immediately and investors were left with an instant profit at the taxpayers' expense.

“We want to help the Royal Mail attract more investment and serve its customers, and use the money we raise in return to pay down the national debt.

"And we're also going to make sure that there is a special bonus for the workforce who have done such a great job turning Royal Mail around.

"Thanks to them, Royal Mail's share price has risen; so we're going to give more of the shares to the staff. Tomorrow we will announce more details of that, and how much of our stake we have sold."

At the start of the year, shares in the group had risen by around 20 per cent.

The announcement comes a week after Mr Osborne announced that the Government's remaining stake in Royal Mail was to be sold off within months.

But ministers were immediately criticised by Labour, who said they had failed to learn lessons from the earlier “botched fire sale” of the company.

Additional reporting by PA