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Royal Mail to be privatised or sold, government says | Royal Mail to be privatised or sold, government says |
(40 minutes later) | |
The government is to go ahead with the privatisation or sale of Royal Mail. | The government is to go ahead with the privatisation or sale of Royal Mail. |
Business Secretary Vince Cable made the commitment after receiving updated recommendations from the businessman Richard Hooper. | Business Secretary Vince Cable made the commitment after receiving updated recommendations from the businessman Richard Hooper. |
His latest report says the universal postal service can only be maintained by an injection of private sector money and expertise. | His latest report says the universal postal service can only be maintained by an injection of private sector money and expertise. |
The CWU trade union said the plan would devastate the postal service and lead to higher postal charges. | The CWU trade union said the plan would devastate the postal service and lead to higher postal charges. |
'Failed politics' | |
Mr Cable said: "Royal Mail is facing a combination of potentially lethal challenges - falling mail volumes, low investment, not enough efficiency and a dire pension position. | Mr Cable said: "Royal Mail is facing a combination of potentially lethal challenges - falling mail volumes, low investment, not enough efficiency and a dire pension position. |
"We will come forward with new legislation in the autumn. It will draw heavily on Hooper's analysis and recommendations and the government's wider objectives, including the need for employees to have a real stake in the future of the business," he added. | "We will come forward with new legislation in the autumn. It will draw heavily on Hooper's analysis and recommendations and the government's wider objectives, including the need for employees to have a real stake in the future of the business," he added. |
Royal Mail welcomed the report. | Royal Mail welcomed the report. |
"Royal Mail needs a way of getting access to capital, a resolution of the legacy pension deficit and a strikingly different regulatory approach which allows us to compete fairly in an increasingly tough and shrinking market," said a spokesman. | "Royal Mail needs a way of getting access to capital, a resolution of the legacy pension deficit and a strikingly different regulatory approach which allows us to compete fairly in an increasingly tough and shrinking market," said a spokesman. |
But the CWU's general secretary, Billy Hayes, said privatisation would lead to higher prices for customers and job losses for staff. | But the CWU's general secretary, Billy Hayes, said privatisation would lead to higher prices for customers and job losses for staff. |
"It's the failed politics of history which brought disruption to Britain's utilities and railways and astronomical prices for consumers," he said. | "It's the failed politics of history which brought disruption to Britain's utilities and railways and astronomical prices for consumers," he said. |
"Dangerously in this case, we fear the government may also be plotting to seize the pension assets." | "Dangerously in this case, we fear the government may also be plotting to seize the pension assets." |
Pension problem | Pension problem |
Mr Hooper's report argues that only the private sector can provide the money necessary to continue the modernisation of the postal service at a time when the government is strapped for cash. | Mr Hooper's report argues that only the private sector can provide the money necessary to continue the modernisation of the postal service at a time when the government is strapped for cash. |
A key feature of the latest recommendations, like those first published in December 2008, is that the Royal Mail's pension scheme, which currently has a deficit of £8bn, should be taken over by the government to relieve the company of making huge extra contributions. | A key feature of the latest recommendations, like those first published in December 2008, is that the Royal Mail's pension scheme, which currently has a deficit of £8bn, should be taken over by the government to relieve the company of making huge extra contributions. |
The pension problem is mentioned more than 40 times in Mr Hooper's latest 50-page report. | The pension problem is mentioned more than 40 times in Mr Hooper's latest 50-page report. |
"The introduction of private sector capital is by itself far from sufficient to secure the future of the universal postal service," Mr Hooper said. | "The introduction of private sector capital is by itself far from sufficient to secure the future of the universal postal service," Mr Hooper said. |
"Its future depends just as much on resolving the closely connected issues of the pension deficit and the need to transform postal regulation." | "Its future depends just as much on resolving the closely connected issues of the pension deficit and the need to transform postal regulation." |
Worsening outlook | |
Last year, the Labour government abandoned its plans, inspired by Mr Hooper's first report, to find a private sector partner for the Royal Mail via a partial sale. | Last year, the Labour government abandoned its plans, inspired by Mr Hooper's first report, to find a private sector partner for the Royal Mail via a partial sale. |
Mr Hooper said that in 18 months since that report, the Royal Mail's position had become worse. | Mr Hooper said that in 18 months since that report, the Royal Mail's position had become worse. |
The decline in the number of letters being sent has accelerated and will not be offset by more parcels being sent, for instance, to internet shoppers, he argued. | The decline in the number of letters being sent has accelerated and will not be offset by more parcels being sent, for instance, to internet shoppers, he argued. |
"Without serious action, Royal Mail will not survive in its current form," he said. | |
He demanded urgent changes to preserve the universal service under which letters are delivered for the same charge regardless of their destination in the UK, six days a week. | |
Staff shares | |
A new feature of his proposals, supported by the coalition government, is that staff should be given a stake in the company if it is sold or privatised. | A new feature of his proposals, supported by the coalition government, is that staff should be given a stake in the company if it is sold or privatised. |
"It is important that any future employee ownership scheme should be taken forward with the aim of achieving the culture change that is needed within Royal Mail," he said. | "It is important that any future employee ownership scheme should be taken forward with the aim of achieving the culture change that is needed within Royal Mail," he said. |
"Employee shares could be a powerful force in supporting the company's modernisation and future success." | "Employee shares could be a powerful force in supporting the company's modernisation and future success." |
The government said that the Post Office network would not be included in its forthcoming privatisation plans. | The government said that the Post Office network would not be included in its forthcoming privatisation plans. |
Mr Hooper is a former deputy chairman of the telecoms regulator Ofcom. | Mr Hooper is a former deputy chairman of the telecoms regulator Ofcom. |
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