News Column

Royal Mail to Be Privatized

September 12, 2013

Rupert Neate

The government will today formally begin the sale of Royal Mail by announcing its intention to float the 497-year-old postal service on the London Stock Exchange.

It is the most ambitious privatisation since the sale of the railways in the 1990s and is forcefully opposed by the unions, who are meeting Royal Mail chief executive, Moya Greene, in Birmingham today to discuss threatened strike action.

Billy Hayes, general secretary of the Communication Workers Union (CWU), said 96% of Royal Mail staff oppose the sell-off, which "not even Thatcher dared do".

Margaret Thatcher, who privatised British Gas, British Airways, British Telecom and dozens of other state-owned institutions in the 1980s, famously refused to countenance a sale of Royal Mail, saying she was "not prepared to have the Queen's head privatised".

Lord Heseltine and Lord Mandelson both subsequently tried but failed to sell the company, in the face of intense opposition from MPs. The sale of Royal Mail was approved by parliament in the 2011 Postal Services Act.

The union opposes the potential pounds 3bn flotation despite the government promising 150,000 postmen and women a 10% stake in the company, worth up to pounds 2,000 each. It would be the largest employee share scheme since the privatisation of British Gas 26 years ago.

Hayes said postal workers will not "sell their souls" for such a small stake in the business. "Postal workers know that privatisation would mean the break-up of the company, more job losses, worse terms and conditions, and attacks on their pensions," he has said. "It would be a wrecking ball to the industry they work in."

The public will also be able to buy shares alongside banks and institutional investors. The government will launch an advertising campaign along the lines of the Tell Sid campaign to encourage the sale of British Gas shares in 1986.

The "intention to float" announcement to the London Stock Exchange this morning will kick off a sale process lasting four to six weeks. The CWU plans to disrupt the sale process by holding a strike ballot on 20 September, which could lead to a nationwide strike by 10 October. It would be the first nationwide postal strike since 2009. The union is also pushing for a better pay deal, after rejecting a 8.6% pay rise over three years.

The CWU is also planning to call on Labour to renationalise Royal Mail if the party wins the next general election. Dave Ward, the union's deputy general secretary, told the Trades Union Congress (TUC) the union is tabling a denationalisation motion at the Labour conference. TUC delegates voted unanimously in favour of a motion to support the Save Our Royal Mail campaign and for the TUC to back it.

The financial performance of Royal Mail has improved considerably recently, with pre-tax profits up 60% to pounds 324m last year, but the price of stamps has risen strongly and the government has taken over direct responsibility for its pension scheme.

The government has promised that privatisation will not threaten Royal Mail's pledge to deliver mail six days a week to villages as well as cities at the same prices.

"A change of ownership in Royal Mail will not mean that Royal Mail can stop delivering to rural areas," Michael Fallon, the business minister, has said.

"Royal Mail will remain the UK's designated universal postal service provider and must continue to provide a six-day-a-week service throughout the UK."

Royal Mail and the business department declined to comment.

(c) 2013 Guardian Newspapers Limited.

Ministers to announce Royal Mail privatisation despite union anger: 497-year-old service to be floated on stock exchange: pounds 3bn sell-off could lead to nationwide CWU strike



Source: (c) 2013 Guardian Newspapers Limited.


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