Business secretary Vince Cable has set out plans to offer ten per cent of the shares in Royal Mail to its employees.
Unveiling the Postal Services Bill for the privatisation of Royal Mail, Cable said: “This is an important package. It will secure the services that consumers and businesses rely on. It will give employees a stable company to work for, shares in the future of the business and the secure pension they deserve. It will remove the risk to taxpayers of an expensive bail out.”
He confirmed that the requirements of the universal postal service – collection and delivery of post six days a week at uniform prices – are written into the Bill.
And, while Royal Mail will receive an injection of private capital, at least ten per cent of the shares will go to its employees in the future, making it the largest employee share scheme of any privatisation.
In addition, the government will take over responsibility for the pension deficit – estimated at more than £8 billion in Royal Mail’s last annual report. This will be met from taxation.
“Royal Mail is in a difficult position,” said Cable. “There is no hiding from the facts: mail volumes falling; a multi billion pound pension deficit; less efficiency than its competitors and an urgent need for more capital at a time when there are huge constraints on the public purse.
“The company now has to go further and faster to innovate, modernise and adapt better to the digital age – that requires substantial investment. This investment needs to be delivered by the private sector, particularly in light of the huge public sector deficit.”
The privatisation is opposed by the Communication Workers Union. General secretary Billy Hayes said: “The government has wasted no time in flogging off the country’s state assets without exploring other options. This obsession with privatisation is deeply worrying. Handing postal services over to the City spivs and gamblers that Vince Cable recently denounced, but is now feeding, will be bad news for everyone.”
The Post Office branch network will not be sold but Cable want to turn it into a mutual structure, similar to John Lewis Partnership or the Co-operative Group, owned and run by its employees.