Royal Mail privatisation set to proceed, government announces
The government has given notice of its intention to proceed with the privatisation of what it has indicated will be the majority part of the Royal Mail.
Notice has been given to the London Stock Exchange with the plans set to begin in the coming weeks.
10% of the shares will be given to UK Royal Mail employees - 150,000 given free with a priority offer for additional shares, subject to a minimum £500 investment.
The remaining shares will be offered to institutional investors and members of the public who will be required to apply at a minimum investment of £750.
Union opposition
The announcement comes despite the threat of industrial action by the Communication Workers Union (CWU).
The union, which opposes the privatisation, is about to ballot its members over strike action, with the result expected to be announced on 3 October.
The CWU said the plans to sell are "a betrayal of the British public - 70% of whom are against privatisation according to a Sunday Times poll at the weekend."
Billy Hayes, CWU general secretary, said: "This isn't about what's best for the Royal Mail, it's about vested interests of government ministers' mates in the City.
"Privatisation is the worst way to access to capital as it's more expensive than borrowing under public ownership. There's no competition with money for schools and hospitals as the government would have you believe - look at Network Rail which has borrowed billions on private markets at cheaper rates under an arrangement which doesn't affect public debt. This is simply about dogma from old-fashioned Tories wedded to privatisation.
"We remain convinced that privatisation is the wrong decision for Royal Mail. It would be bad for customers, bad for staff and bad for the industry. Privatisation would put jobs and services at risk and lead to higher prices for customers. We've seen it happen time and again in other industries.
"We're taking this to Labour Party Conference and we want a commitment that a Labour government would renationalise Royal Mail if privatised. Privatisation is an old-fashioned idea and a breach of the public's trust. It would destroy a centuries-old public service."
Political debate
The plans are set to generate an intense political debate. Business Secretary Vince Cable said: "HM Government is taking action to secure a healthy future for the company."
"These measures will help ensure the long term sustainability of the six days a week, one-price-goes-anywhere universal postal service."
But Labour's Shadow Business Secretary Chuka Umunna criticised the government's plans: "Ministers are pushing ahead with this politically-motivated fire sale of Royal Mail to fill the hole left by George Osborne's failed plan."
"The government has not addressed the huge concerns which remain on the impact the Royal Mail sale will have on consumers, businesses and communities."
Speaking to the BBC, Business Minister Michael Fallon insisted that the existing six-day-a-week universal service would be protected:
"It is the law - it's an Act of Parliament that was passed two years ago and only Parliament could ever change that."
"I can't think of any political party that would want to reduce the service that we all rely on."
To find out more about the Share Offer read the full HM Government's intention to float announcement on the HM Government's Share Offer Website at www.gov.uk/royalmailshares
