Government's Royal Mail float heightens strike threat

By Darryl Danielli, Thursday 11 July 2013

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Business secretary Vince Cable finally confirmed yesterday that the government is to privatise the Royal Mail, drawing an angry response from the CWU, which once again raised the spectre of industrial action.

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Speaking in the Commons on Wednesday (11 July), Cable said: "The sale would initiate the final stage of the governments postal sector reforms, the overarching objectives of these is to secure universal postal service, the six-day-a-week service at uniform and affordable prices to all 29m addresses in the UK."

Cable added that the government would retain flexibility in terms of the size of the stake to be sold "as this would be influenced by market conditions and investor demand". However, he confirmed that a "majority stake" would be sold.

According to Cable the IPO would include a "retail offer" enabling individuals to buy shares, however private institutions will most likely buy the majority of the share issue – although the government has in effect ruled out selling the business as a whole.

Royal Mail employees will also be allocated 10% of the Royal Mail’s shares for free, with discounted options to buy more.

The share issue is likely to take place in the autumn and, according to reports, will value the business at between £2bn and £3bn.

Cable reassured Royal Mail employees that a change in ownership would not trigger a change in their terms and conditions. He added that for at least three years the Royal Mail was committed to: a predominantly full-time workforce, no change to the company structure in relation to its current services and no outsourcing of services.

General secretary Billy Hayes of the CWU, which represents around 100,000 of the 150,000 Royal Mail staff, said: "For the secretary of state to describe this decision as logical is unbelievable.

"Royal Mail is profitable, has modernised and can be successful in public ownership. The logical step is for the government to consider the union’s proposal to keep the company in public ownership whilst putting in place a not-for-dividend structure that allows profits to be put back in to improving the service."

"CWU will continue to fight the sale and without worthwhile and legally binding assurances on terms and conditions, strike action is inevitable," added Dave Ward, CWU deputy general secretary.

In the union’s consultative ballot last month, 96% of respondents said they were against privatisation.
The union has also published an open letter to Michael Fallon, minister for business and enterprise highlighting the reasons behind its opposition to privatisation.

Defending the privatisation, Cable said: "A share sale will not only provide commercial discipline, it will give the Royal Mail future access to private capital enabling the company to continue modernising and to take advantage of commercial opportunities such as the growth of online shopping, building on its success in parcels and logistics."

Separately, the Royal Mail has unveiled a £70m plan to add barcodes to letters so that DM firms and large users can track their mail through the postal network.

The scheme will begin a phased launch next year, with 47 companies, organisations and mailing houses the first to trial the system. It will be rolled out to all business users in the following two years.

Stephen Agar, Royal Mail’s managing director of consumer and network access, said: "The introduction of this new barcode technology to letters will enable businesses to track the progress of bulk mail consignments through the postal network, helping them to improve their own efficiency and customer service."





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