Fears for rural post services as Royal Mail sell-off is confirmed

Formal notice was given to the Stock Exchange yesterday that Ministers plan to privatise the company “in the coming weeks”. Employees will be given 10 per cent of the shares and the rest will be offered to institutional investors and members of the public.

The plans, which end 500 years of state control of the postal service, go further than the sell-offs carried out in the 1980s by Margaret Thatcher, who declared she was “not prepared to have the Queen’s head privatised”.

Business Minister Michael Fallon said it was a “very exciting day” for the company as it would now be able to access new sources of capital, insisting there was an “appetite” for the move from investors.

But unions representing postal workers and managers angrily attacked the announcement of sales of shares amid continued warnings of industrial action.

Unite general secretary Len McCluskey said the Government was “selling off the family silver”, adding: “We predict that the sell-off will lead to worse services for business and the general public, particularly in rural areas, as well as job losses, when private companies try to squeeze the last drop of profit out of the Royal Mail.”

Andy Lee, Communication Workers Union branch secretary for the Leeds postal area, said the move had caused concerns over workers’ terms and conditions and the quality of service.

He said: “If you look at the other services like TNT they are on zero-hours contracts and they only deliver three days a week. They won’t touch rural deliveries because they are too expensive.

“Our CEO has come from Canada, Canada Post are now saying that since they have been privatised they can’t sustain rural deliveries. Our fear is that that could happen to us. ”

Mr Fallon said there would be protection for “the service we all rely on” and that the move would not lead to closures for local post offices, which are separate from the Royal Mail itself.

He said: “This is all about enabling Royal Mail to face its future with confidence, accessing the capital markets for the money it needs to invest, to modernise and compete, not just in the UK but in the European market place.”

Prime Minister David Cameron told the BBC: “Royal Mail operates in a competitive market, and right now being owned by the Government is a massive disadvantage.

“You can’t get out there, borrow money, access expertise and capital from the private sector. Effectively we are setting this business free to be able to do that, to respond to the competition.”

The Yorkshire Post revealed this month that communities in the region have been waiting for more than five years for their local post offices to reopen after supposedly temporary closures.

Professor Andrew Graves, from the University of Bath’s School of Management, said the move was politically dangerous despite making economic sense.

He said: “For the Royal Mail this could likely result in the closure of smaller or more remote post offices that are less cost effective to maintain. Many of these are located in small villages, often keeping the sole village shop alive, in areas that are the foothold of the Conservative Government.”