Government to press ahead with Royal Mail privatisation

THE Government will press ahead today with controversial plans to privatise the Royal Mail, risking a political row and an industrial dispute with postal workers.

Business Secretary Vince Cable will publish a Postal Service Bill, stressing that at least 10 per cent of the shares in Royal Mail will go to its employees.

The Government will say it plans the largest employee shares scheme of any privatisation for 25 years in terms of the number of workers who will benefit - second only to the privatisation of British Telecom in 1984.

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But the move will be fiercely opposed by the Communication Workers Union, which last year successfully fought plans by the Labour Government to part-privatise the postal service.

The annual TUC conference supported an emergency motion from the CWU last month which warned that hundreds of post offices will close and the universal postal service will end if the business is sold off.

CWU deputy general secretary Dave Ward said the Royal Mail was being "set up to fail".

He attacked the previous Labour government for the "disastrous" way it introduced competition into the postal industry, which he said had allowed competitors to take 60 per cent of the Royal Mail's profitable business.

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Mr Ward said the threat of competition and the Royal Mail's 8 billion pensions deficit could be tackled without privatisation.

The universal service, under which letters are delivered anywhere in the UK for the same price, would end if the Royal Mail were broken up, the union has warned.

The CWU will be targeting scorers of key marginal parliamentary seats held by Conservative and Liberal Democrat MPs as part of its campaign.

Mr Cable has made it clear that the Post Office was not for sale, pledging there would be no repeat of the previous branch closure programmes.

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"But Royal Mail is a different business, with different challenges. It is struggling under the weight of some huge pressures - pressure from email and falling mail volumes, pressure from a dire pension position, pressure from a lack of money to invest.

"The only way to save it for the future is to bring in new private capital to support the ongoing modernisation and growth opportunities.

This will bring new commercial disciplines, and the enormous public sector deficit means that the taxpayer does not have an endless supply of money to meet the company's investment needs," he said.

The Bill follows recent publication of a report by Richard Hooper, which recommended a new less burdensome regulatory framework, adding that the multi billion pound pension deficit should be taken over by the Government and that private sector capital should be introduced into Royal Mail.

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The Government said last month that it was keen to draw lessons from the success of John Lewis and other companies with significant employee share ownership, pledging to design a scheme for Royal Mail, in discussion with management and employees, based on its "particular circumstances and challenges".