Royal Mail workers to get free shares in planned sale

 

Vince Cable details the plans in the Commons

Related Stories

Postal workers are set to receive millions of pounds' worth of Royal Mail shares when the company is privatised later this year.

Business Secretary Vince Cable said employees would be given 10% of shares as part of a stock market flotation.

He described it as "the biggest employee share scheme for nearly 30 years".

Unions have reacted angrily to the plans and have threatened to ballot for strike action.

The Communication Workers Union (CWU) said the sale of Royal Mail was "unwanted by public, customers and the workers".

The government has opted to float the company on the London Stock Exchange rather than sell it to a private buyer.

Members of the public will be able to buy shares, alongside larger institutional investors.

Commercial freedom

But 10% of shares are being set aside for eligible members of Royal Mail staff, which they will get for nothing.

"Now the time has come for government to step back from Royal Mail, allow its management to focus wholeheartedly on growing the business and planning for the future," Mr Cable told MPs.

"It's now time for employees to hold a stake in the company and share in its success.

Dave Ward, CWU: "If you bring in private owners to Royal Mail, they will change the priorities of the company"

"This government will give Royal Mail the real commercial freedom it's needed for a long time."

The sale is likely to value the business at £2bn-£3bn, suggesting up to 150,000 staff will receive £200m-£300m in shares.

The government says the sale is necessary in order to give Royal Mail the access to private capital it needs to grow and remain competitive.

It is currently revamping its business to focus less on the delivery of letters and more on parcels, in order to benefit from the rapid growth of internet shopping.

A boom in parcel delivery helped Royal Mail to more than double its profits last year, after many years of losses.

Mr Cable also said privatisation was necessary to ensure that universal service, which guarantees delivery to all parts of the UK on six days of the week, can continue.

But both Labour and the unions argued the move made no sense.

"Having nationalised the organisation's debts by taking on its pension liabilities, they now want to privatise the profit at the very time it is making money. How on earth does that make any sense?" said Labour's Chuka Umunna.

Dave Ward, deputy general secretary of the CWU, said the flotation announcement had "ignored the views of the workforce and the British public".

Strike warning

"The workforce agreed a modernisation programme with Royal Mail three years ago and it didn't include privatisation," he said.

Start Quote

Unlike the great privatisations of the past, of the gas, electricity and telecoms industry, there will be no aggressive attempt to sell the shares to individuals - there will be no campaign such as the famous 'Tell Sid' adverts of the 1980s for the flotation of British Gas”

End Quote

"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 today's announcement."

He said the union would continue to fight the sale and warned that, without a legally binding agreement on terms and conditions, strike action was "inevitable".

The CWU represents about two-thirds of Royal Mail staff. Earlier this year, its members voted overwhelmingly against privatisation.

The threat of strikes means it is possible that the share sale, set to take place towards the end of the year, could take place under industrial action.

Speaking later to the BBC, Mr Cable described the share offer and a recent pay offer by Royal Mail as "attractive" and said he hoped strike action would not ensue.

"I think when they look at this in the cold light of day, I think they will see that it is in their interests not to disrupt it," he said.

In a statement, Moya Greene, Chief Executive Officer of Royal Mail Group said: "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," she said.

The flotation is likely to be one of the biggest since large utility companies such as British Gas were privatised in the 1980s.

It will not include the Post Office, which is a now a separate company.

The government said it planned to invest in the network of post offices and potentially set it up as a mutual business.

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -203

    Comment number 116.

    I don't understand where people are getting this idea that publicly run services are more efficient? When a company is private, generally to create profits for these 'scary foreign shareholders' you need to increase productivity and quality of services and products. Thats the rational view anyway. And letter delivery will be obsolete within 20 years anyway. Good riddance to a drain on public money

  • rate this
    -217

    Comment number 79.

    At last...we might start to get some decent service of they realise that they have to work for their money.

    Our local post office is a disgrace...lazy inefficient people who couldn't care two hoots if you get your mail/goods or not.

    Long overdue in my opinion.

  • rate this
    -178

    Comment number 75.

    This makes perfect sense. There is no reason why, in the 21st century, that the government should be in the business of delivering letters! Royal Mail should be allowed to compete with other companies that, in my opinion, provide a much better service. Government-funded monopolies have had their day.

  • rate this
    +307

    Comment number 51.

    Never learn. The government says that RM need private investment for it to continue. What short memories they have of the last sell off of national assets. Why is the public paying for the HS2 and not investors? Why are the public paying for broadband infrastructor? Why are shareholders coming first before investment? They will sell off RM and YOU will still be paying for it not the fat cats !!!

  • rate this
    -107

    Comment number 22.

    Privatising Royal Mail will give it commercial freedom.

    So would scrapping a regulator that won't let it compete fairly, scrapping a regulator that forces it to deliver it's so-called competition's business mail.

    Competition? 13 years of Zero choice for the public. Isn't that what competition is all about?

    Poor regulation, Poor Service. All thanks to Poor Government.

 

Comments 5 of 7

 

More Business stories

RSS

BBC Business Live

  1.  
    TESCO PROFITS WARNING 09:07:

    This morning, before the Tesco announcement, the Motley Fool website for private investors published this front page article, extolling the value of investing in Tesco shares for its "big fat dividends". The half-year dividend has just been cut by 75%. Whoops!

     
  2.  
    MARKETS UPDATE 08:59:

    Despite the heavy falls for supermarket shares, broadly speaking the market is positive and the FTSE 100 is up 22 at 6827. Frankfurt's Dax is up 50 at 9510 and Paris's Cac 40 is 26 higher at 4392. If you're planning a bit of a trip the pound is looking pretty good. Its at 1 euro 2603 and $1.6603. Bulk money market rates being quoted here of course - your tourist cash is generally lower.

     
  3.  
    MALAYSIA AIRLINES 08:43:
    Malaysia Airlines plane

    The Malaysia Airlines plan in brief: 6,000 job cuts (a third of workforce); new chief executive; firm completely nationalised by state investment fund; long-haul routes slashed; return to profitability forecast by 2018.

     
  4.  
    SUPERMARKET SHARES 08:32:
    Tesco sign

    Tesco's profit warning and slashed dividend has knocked its rivals' shares for six. Sainsbury's is down 5%, Morrisons is down 4% and Marks and Spencer is down 3%. Waitrose is not listed, of course, being owned by the John Lewis Partnership. Asda is owned by US giant Wal-Mart, whose shares trade in US time.

     
  5.  
    TESCO PROFIT WARNING 08:20:

    The market doesn't like what it's seen in the Tesco statement. Shares are down 8%.

     
  6.  
    MALAYSIA AIRLINES 08:18:

    The job cuts - about 30% of the workforce - are part of a restructuring of the airline, which has seen a steep drop in passenger numbers following the two air disasters involving its planes.

     
  7.  
    MALAYSIA AIRLINES 08:15: Breaking News

    Malaysia Airlines says it will cut 6,000 staff. More details to follow.

     
  8.  
    WATER BILLS 08:12:

    Just to make it clear, the OFWAT announcement covers the 18 regulated water and sewerage companies in England and Wales.

     
  9.  
    NATIONWIDE HOUSE PRICES 07:54:

    The Nationwide's chief economist, Robert Gardner, says the fact that the economy is picking up means the property market will probably continue to thrive. "Consumer sentiment remains buoyant thanks to declining inflation and sustained increases in employment. The first increase in interest rates still appears some way off - we expect the first increase in the first quarter of 2015."

     
  10.  
    TESCO PROFIT WARNING 07:42:

    Tesco invents some new business jargon. "The actions announced today regarding capital expenditure and, in particular, dividends have not been taken lightly. They are considered steps which enable us to retain a strong financial position and strategic optionality." Strategic optionality? Who writes that sort of thing?

     
  11.  
    WATER BILLS 07:36:
    Tap

    Average bills for water and sewerage customers may fall by around 5% in real terms between 2015 and 2020, says the water industry regulator OFWAT. It has published its draft proposals for the industry's prices. The regulated water companies put forward their price plans last December and OFWAT will deliver its final ruling this coming December.

     
  12.  
    CAT BAIT 07:30:
    Cat

    Russia's biggest lender, Sberbank, is looking to boost mortgage sales by offering a free cat to anyone willing to buy a property with money loaned from the bank.

     
  13.  
    NATIONWIDE HOUSE PRICES 07:27:

    The lender says the outlook for the housing market remains highly uncertain: "The number of mortgage approvals fell by almost 20% between January and May, suggesting that activity was cooling. However, there was a modest rebound in June and it is unclear how much of the slowdown was due to the introduction of Mortgage Market Review rather than an underlying loss of momentum."

     
  14.  
    TESCO PROFIT WARNING 07:16:

    Tesco is cutting its dividend payout to shareholders. It says it will set the interim dividend at 1.16p per share - a reduction of 75% from last year's interim dividend.

     
  15.  
    HEADLINES
     
  16.  
    TESCO PROFIT WARNING 07:12:

    Tesco's profits were previously expected to be £2.8bn for the year - now it says below £2.5bn.

     
  17.  
    NATIONWIDE HOUSE PRICES 07:11:
    Houses

    House prices are still going up says the Nationwide building society. In August they rose by another 0.8%, pushing the annual rate of inflation to 11%. It's the 16th monthly rise in a row.

     
  18.  
    TESCO PROFIT WARNING 07:10:

    "We now expect trading profit for 2014/15 to be in the range of £2.4bn to £2.5bn. Trading profit for the six months ending 23 August 2014 is expected to be in the region of £1.1bn."

     
  19.  
    TESCO PROFIT WARNING 07:08:

    Tesco has brought forward the start date for Philip Clarke's replacement David Lewis as boss. He now starts the job on Monday.

     
  20.  
    TESCO PROFIT WARNING 07:05: Breaking News

    Tesco says its profits will be lower than expected. Dividends to be cut.

     
  21.  
    VIRGIN AUSTRALIA 06:49:
    Virgin planes

    Virgin Australia overnight announced losses of A$355.6m (£200.5m) for the year - more than three times its loss last time. It blamed "weak consumer sentiment" and too many planes - like its rival Qantas which reported its results yesterday.

     
  22.  
    CO-OP VOTE 06:35: BBC Radio 4

    Big changes to the structure of the deeply troubled Co-op group will be put to a ballot of members tomorrow. Phil Dorrell, of consultants Retail Remedy, tells Today that even if the changes go through, a new leadership will have lot of work to do. "This will be a large step-change. My one concern would be that it probably shouldn't be the final change for the Co-op, they should consolidate, make sure they get their businesses back on track, and then have another look at it in a couple of years time."

     
  23.  
    EUROZONE ECONOMY 06:22: Radio 5 live

    Wake Up to Money ponders whither the eurozone? This week France had to re-appoint its cabinet because of its failing economy. Italy re-entered recession earlier this month and even German GDP was down slightly in the latest quarter. Kathleen Brooks, from Forex.com tells the programme: "Some economies are falling at a faster rate than others but what we've really seen is the core economies Germany and France lagging behind Spain."

     
  24.  
    HOUSE PRICES 06:14:
    For Sale signs

    The gap between house sellers' asking prices and actual selling prices is widening, says the property website Hometrack. It explains that the market is cooling down, at least in terms of prices. It says sellers in England and Wales typically got 96% of their asking price in August, falling back for the third month in a row. But it adds house prices only tend to start falling when the percentage of the asking price that sellers achieve falls below 94%.

     
  25.  
    GOOGLE DRONE 06:03:
    Google drone

    Overnight, Google said it was developing drones to act as flying delivery vehicles. The company calls it Project Wing. But it said it would take many years to create a service with lots of drones making lots of deliveries every day. More here.

     
  26.  
    06:00: Rebecca Marston Business reporter, BBC News

    All of that. Stay with us - we're here 'til 13:00.

     
  27.  
    06:00: Ian Pollock Business reporter, BBC News

    Good morning, we are here again, to keep you informed, educated and possibly entertained.

     

Features

  • A painting of the White House on fire by Tom FreemanFinders keepers

    The odd objects looted by the British from Washington in 1814


  • Chris and Regina Catrambone with their daughter Maria LuisaSOS

    The millionaires who rescue people at sea


  • Plane7 days quiz

    What unusual offence got a Frenchman thrown off a plane?


  • Children testing a bridge at a model-making summer school in Crawley, West SussexTiny shipyard Watch

    The art of making boats out of coffee stirrers


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.