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
    +24

    Comment number 120.

    Totally outrageous!! We own it already for a start.... and haven't been consulted about privatisation (NO! would be the answer). This is democracy is it???
    Service will get worse, prices will go up and already rich fat cats will get richer
    It's not there to make a profit but to get mail from one place to another cheaply... even the Outer Hebrides!!
    Tory dogma and money for their pals is all I see.

  • rate this
    +9

    Comment number 119.

    Here we have a national institution, a vital service and something which is making the government a decent amount of money. And so were going to sell it off and let the private sector take all the gains, very possibly at the expense of service. Ironically some of the big buyers look likeley to be other national post services. Typical and disgusting. When will we ever learn?

  • rate this
    +3

    Comment number 118.

    Its disgusting, they have been trying to sell off the Post Office for years citing huge losses year on year and yet it still continues to run and more so with the massive online shopping we have nowadays.

    The Royal Mail will then go the way of the others, huge prices will come into play and there will be massive streamlining and job losses.

  • rate this
    +13

    Comment number 117.

    NicktheFace

    "They rip-off customers"
    How? Post a letter anywhere in the country for 60p you won't be getting that cheap it is privatised.
    "fail to post a letter without folding it in half"
    The bristled draft excluders in letter boxes are rigid and many have a back plate. You try posting mail that is flimsy through every door you'd soon fail you'd just crumple it all up.

  • 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
    +35

    Comment number 115.

    The only people to profit out of this decision are the government and fat cat investors.

    Privatisation of the Royal Mail will mean profit over service every time and we the public will be left paying for it. The whole thing is an absolute discgrace.

  • rate this
    +17

    Comment number 114.

    Hands up anyone who was surprised at this most recent theft from us serfs.

  • rate this
    +15

    Comment number 113.

    For those who are saying that the RM sale won't affect them.

    My company sells online, and only 4-5 years ago I could send a 20g tube of hand cream 2nd class for about 35p. Now as it is more than 1" thick it costs me £2.60.

    I dread to think of what prices will go up to when RM is privatised.

    So if you buy online, expect BIG prices rises, and don't rely on FREE postage, it DOES NOT EXIST!

  • rate this
    +8

    Comment number 112.

    79. owlsoflaughter

    You don't know what you're talking about. Post Offices aren't part of this latest fleecing of public assets. Royal Mail delivers the mail. Get your facts right before you start pontificating about things that are obviously way above your level of comprehension . . . the problem with most right wingers I tend to find.

  • rate this
    +10

    Comment number 111.

    Another Tory in Lib Dem clothing. What a pathetic bunch.

  • rate this
    +6

    Comment number 110.

    ref Gerald 63
    Companies that are located in a rural area in order to afford both the office/warehouse space and staff wages to actually exist,if you cause the cost of their post related business to be 50% for example more than a competitor abroad or twice the distance but located in a city,bye-bye young people & families more dormitory villages & holiday homes.
    No more uneconomic presents sent!!

  • rate this
    +11

    Comment number 109.

    Yet another privatisation by the Tories.

    This is actually another reason for Scotland to be independant again, at least we will be able to keep the NHS. Hopefully it will happen before they get around to selling that off and we have to buy it back.

    We have two parties here and one isn't Tory for a reason.

  • rate this
    +9

    Comment number 108.

    This is simply disgusting! Royal Mail is finally making money and what do they do? Sell it off so fast the treasury doesn't have the chance to recoup it's losses. That way we can't complain about austerity can we?

  • rate this
    -8

    Comment number 107.

    Maybe, just maybe, there's hope at the end of the tunnel

    i see on average 10 to 20 courier vans hurtling though our little village every day. If the RM starts to compete with these couriers (with the obvious caveat of doing it for a reasonable price unlike 1st & 2nd class letters and anything weighing over that of a helium filled balloon) we might get something good out it all

    Though i doubt it

  • rate this
    +7

    Comment number 106.

    The Tories (and, sadly, the previous Govt) have been softening us up for this for some time now so it's no surprise. The real surprise is that many people still vote for the Spivs' Friends Party while our assets (NHS, Railways, Electricity, Water, Gas, Telecomms etc) are sold off to benefit filthy-rich global corporations.
    None of the privatisations has worked because profit replaces service.

  • rate this
    +65

    Comment number 105.

    Maggies legacy continues.

    As with B.Rail this will be another demise of a once state owned company.

    The service will get worse, we will be charged more & costs will rise more than inflation

    The vast majorty of citizens will suffer whilst the stakeholders benefit on a profit driven business model, not a service driven business model.

    Good old Tories,roll on 2015 when you're history

  • rate this
    +3

    Comment number 104.

    Let spend millions of taxpayers money flogging off something that is already owend by the taxpayer back to the taxpayer..genius'

  • rate this
    -3

    Comment number 103.

    @72. Little_Old_Me

    ...you could of course always just use the Mail Preference Service that ALREADY exists and has done for YEARS............

    --

    Oh dear, you don't know what you're talking about do you?

    MPS only works for direct mail addressed to you. It doesn't stop the home owner/occupier junk that RM constantly shoves through the letterbox.

  • rate this
    +5

    Comment number 102.

    As stated on a previous HYS today.

    The simple fact is, this sell off will be "Bulled" through by the Government one way or another.Your protestations count for nothing and you can shout as loud as you like. The Government will only pay heed to the electorate around 7th of May 2015,when they will, want to retain the reins of power, and then, they will be all ears and silky fork tongued promises.

  • rate this
    +4

    Comment number 101.

    The secret is in the name :ROYAL MAIL: this government does not have the right to sell this firm the same as previous governments did not have the right to sell all our other commodities, this will lead to mass redundancies and increased fares ,again for the benefit of the rich they are the only ones with spare money to buy shares thanks to the greed of bankers. MPs no doubt will be shareholders

 

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