Royal Mail workers to get free shares in planned sale

 

Vince Cable details the plans in the Commons

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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.

 

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  • 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.

 

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