Royal Mail flotation: MPs voice fresh concern over controversial privatisation

An Early Day Motion has been tabled in Parliament calling on the Coalition to review its decision

Alan Jones
Wednesday 09 October 2013 16:56 BST
MPs have voiced fresh concern that the Government's controversial privatisation of the Royal Mail
MPs have voiced fresh concern that the Government's controversial privatisation of the Royal Mail (Getty Images)

MPs have voiced fresh concern that the Government's controversial privatisation of the Royal Mail will be “highly lucrative” for speculators, hedge funds and investment banks rather than the public.

An Early Day Motion has been tabled in Parliament calling on the Coalition to review its decision, which has come under criticism from Labour and postal unions amid a scramble to buy shares.

The SDLP motion reads: "This House... is deeply concerned that the market pressures of privatisation will lead to the watering down of long held social compacts including the universal service obligation and the commitment to deliver six days a week; has reservations that the sell-off will be highly lucrative for speculators, hedge funds and investment banks rather than the public; and calls on the Government to review its decision and reassure the public that a fully functioning service will remain in place."

The development came ahead of an appearance before a select committee by Business Secretary Vince Cable, where he will be questioned about the privatisation.

Postal workers will stage a protest outside Parliament today ahead of the meeting, with activists dressing up as highway robbers, carrying banners saying: "The Great British Royal Mail Robbery."

The meeting will go ahead following the deadline for buying shares, at midnight last night, with conditional trading starting on Friday and full trading next Tuesday, a day before the result of a strike ballot by the Communication Workers Union.

CWU members are expected to back industrial action over issues linked to privatisation, with any strike set to be held on or after October 23 - the run-up to the busy Christmas period.

Mr Cable has warned Labour that its opposition to the sale was "irresponsible", adding it was "dangerous" to imply there was an easy bargain to be made.

He told his Labour counterpart Chuka Umunna that he was magnifying a small minority of views which take a "short-term view" of the flotation.

Mr Umunna said: "It's a dream for City speculators and hedge funds, but it's a nightmare for the taxpayer, who ultimately doesn't want this to happen anyway and is now being hugely short-changed."

Billy Hayes, general secretary of the CWU, said: "It's no surprise that the Government has sold the postal service cheap to its friends in the City.

"The public didn't want the service sold and will get a worse service as customers. Now they also know they are getting a bad deal as taxpayers too."

Mr Cable wrote to Mr Umunna, saying that value for money for the taxpayer was an "absolutely key consideration" and adding that Labour's line on the sell-off was "irresponsible".

Mr Umunna has urged the Government to pull the plug on the privatisation to prevent a "massive bonanza" for City speculators.

In written evidence to the Business Select Committee, the Government said its main objective was to secure the universal postal service, which guarantees deliveries to every address in the UK, six days a week, for the same price.

The submission said the Royal Mail was on the road to sustainability, with an increase in its operating profit to £403 million.

"Royal Mail must continue the process of modernisation and transformation, and must be able to invest to grasp new business opportunities.

"It should be able to access flexible capital so that it can continue to modernise and innovate, invest and seize opportunities presented by new markets such as the rapid growth of online shopping," said the Government.

Consumer watchdog Consumer Futures warned that "ill-considered" use of measures by the regulator Ofcom could stifle or restrict competition in the postal services market.

The group said there could be a "perverse incentive" on Royal Mail not to address inefficiencies, adding: "Whether Royal Mail is in public or private ownership, Ofcom must remain vigilant in its monitoring of prices and efficiencies to ensure that Royal Mail is not permitted to raise prices without making the cost efficiencies necessary to ensure the sustainability of the universal postal service."

In its submission, the Royal Mail said privatisation will give it flexible access to private capital, which will be a "positive step" for the universal service.

The company noted that the postal sector had changed "dramatically" in the past decade, with fewer letters posted, more competition and an increase in parcel deliveries.

"Change will continue and the company will employ fewer people in the future, whoever owns it. The company remains committed to the overarching objective of achieving this without compulsory redundancies."

The evidence added: "Privatisation will allow the company to innovate, invest, improve our services, win new business, deliver the high quality universal service, and continue to be a very substantial employer in the UK."

The Northern Ireland Assembly passed a motion saying the Royal Mail is a vital public service which should not be privatised and voicing concern that the sell off "would add to the costs of Northern Irish businesses and consumers if the universal service obligation and uniform pricing are withdrawn".

Lawrence Huston, the CWU's Northern Ireland Regional Secretary, said: "Services to Northern Ireland's people, businesses and communities will be put at risk by the privatisation, which will put private profit above public service.

"We certainly welcome the powerful message delivered by the whole of the Northern Ireland Assembly. The fact that this coalition government is continuing with the sell-off of the Royal Mail, against massive public opinion, is nothing short of scandalous.

"It is now time for our elected politicians, both here in the NI Assembly, and at Westminster, to stand up for the people who elected them and put in place measures which will guarantee our postal services are maintained at their current status across the province, into the future."


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