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| Version 8 | Version 9 |
|---|---|
| Royal Mail is to be privatised, government confirms | Royal Mail is to be privatised, government confirms |
| (40 minutes later) | |
| The government is to go ahead with a complete sale of Royal Mail. | The government is to go ahead with a complete sale of Royal Mail. |
| Business Secretary Vince Cable made the commitment after an independent report said the outlook for the postal service had worsened. | |
| A new independent company will be formed to run all the sorting and delivery operations. | A new independent company will be formed to run all the sorting and delivery operations. |
| Outside investors will hold the most shares, and the rest will be offered to Royal Mail staff. Pension liabilities will be taken on by the government. | Outside investors will hold the most shares, and the rest will be offered to Royal Mail staff. Pension liabilities will be taken on by the government. |
| 'Potentially lethal challenges' | |
| There has not yet been a final decision on exactly how the majority of Royal Mail will be privatised. | |
| It could be sold to a private company or companies, or involve a public share offering. | |
| "These are matters we need to resolve further down the line," Mr Cable said. | |
| "But we need to get on with the legislation, which is urgently needed, because the financial position is deteriorating. | |
| "Royal Mail is facing a combination of potentially lethal challenges - falling mail volumes, low investment, not enough efficiency and a dire pension position." | |
| The government also confirmed that the separate Post Office network would remain in state ownership. | |
| 'Failed politics' | 'Failed politics' |
| The review of Royal Mail by Richard Hooper says that the universal postal service can be maintained only 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. |
| 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 says industrial relations have improved at the Royal Mail in the past two years and some modernisation of sorting and delivery services has taken place. | Mr Hooper's report says industrial relations have improved at the Royal Mail in the past two years and some modernisation of sorting and delivery services has taken place. |
| But he argues that only the private sector can provide the money necessary to continue the modernisation process, at a time when the government is strapped for cash and the Royal Mail cannot generate enough extra cash itself. | But he argues that only the private sector can provide the money necessary to continue the modernisation process, at a time when the government is strapped for cash and the Royal Mail cannot generate enough extra cash itself. |
| And he envisages that this will involve closing half of the current 64 big "mail centres" that distribute letters and packets to local sorting offices. | And he envisages that this will involve closing half of the current 64 big "mail centres" that distribute letters and packets to local sorting offices. |
| 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 | 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, a former deputy chairman of the communications regulator Ofcom, said that in 20 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. | "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. | 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 | 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." |