Q&A Royal Mail part-privatisation plans

[TrueBlueTerrier]

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Royal Mail part-privatisation plans

Postal unions have been protesting at Westminster against Lord Mandelson's plans for the postal service. Why?

Why are postal workers protesting against the government today?

There is a rally in Westminster, organised by the Communication Workers' Union (CWU), which represents postal workers. They are angry about Lord Mandelson's plans for the part-privatisation of the Royal Mail.

What do Mandelson's plans involve?

We don't know exactly how the part-privatisation will work, but the business secretary said last December that he was accepting the recommendations contained in a report by Richard Hooper on the future of the Royal Mail.

Hooper proposed part-privatisation as the centrepiece of a radical reform package that would also involve the government stepping in to tackle the problem of the deficit in the Royal Mail's pension fund.

Why is reform considered necessary?

The Royal Mail has a huge pension fund deficit. The Hooper report valued it at £5.9bn, but that figure is expected to grow to about £8bn as it gets revalued.

The Royal Mail is less efficient than many other postal services in Europe, and the fact that people are sending fewer letters means its income is falling sharply.

Ministers believe that, without reform, the Royal Mail will find it hard to carry on offering a universal service – the same price for every letter – to customers in the UK.

Who would buy a stake in the Royal Mail?

The Dutch postal company TNT has expressed an interest in buying a minority stake, although Mandelson has said he would welcome expressions of interest from other partners.

Who is opposed to the plans?

More than 140 Labour MPs have signed a Commons motion opposing the proposals. The CWU is also very hostile to the plans.

What do the rebels say?

They accept that the Royal Mail needs to modernise, but they do not believe part-privatisation is the only way to bring in the relevant capital and management expertise.

They also say the government could address the pension fund deficit without having to sell a stake in the business.

What happens next?

The government is publishing its bill on the reform of the Royal Mail on Thursday. It will be introduced in the Lords, so peers will debate it before MPs.

As the legislation goes through parliament, ministers are likely to announce concessions in the hope of minimising the scale of the Labour rebellion.

[steviemac]

who has the money to buy a stake in RM and frankly why buy a business in an industry in decline throughout the EU ? Any investment will not solve the pension defecit and if the government can guarantee pension benefits then what will be gained? Unless offers run into billions for a stake then it's not worthwhile for the government is it?
Will we be in a situation where the tax payer(us) is funding bank loans to be given to a foreign company to buy a business that we already own!!

[TrueBlueTerrier]

Unless offers run into billions for a stake then it's not worthwhile for the government is it?
Will we be in a situation where the tax payer(us) is funding bank loans to be given to a foreign company to buy a business that we already own!!

Recent quotes state that TNT are willing to pay £3 billion.

[BELIAL]

It buys the pared down MC network and distribution hubs which in a true open market should probably be valued between £15 and £20 billion.
So not only a knockdown price but there is also the question of payment details. Fairly unlikely that anyone could raise that sum for such a controversial buyout in this economic climate ,so the real chance exists that Mandy will have to offer part payment terms and installments ie taxpayer will subsidize yet another private profit concern

[dvbuk55]

It buys the pared down MC network and distribution hubs which in a true open market should probably be valued between £15 and £20 billion.
So not only a knockdown price but there is also the question of payment details. Fairly unlikely that anyone could raise that sum for such a controversial buyout in this economic climate ,so the real chance exists that Mandy will have to offer part payment terms and installments ie taxpayer will subsidize yet another private profit concern

Has anyone suggested what the 3bn will be spent on? Is it going to be going to reinvest in RM or is it going to Gordy to offset the monies paid to others? Who knows.

[DGP1]

It buys the pared down MC network and distribution hubs which in a true open market should probably be valued between £15 and £20 billion.
So not only a knockdown price but there is also the question of payment details. Fairly unlikely that anyone could raise that sum for such a controversial buyout in this economic climate ,so the real chance exists that Mandy will have to offer part payment terms and installments ie taxpayer will subsidize yet another private profit concern

Has anyone suggested what the 3bn will be spent on? Is it going to be going to reinvest in RM or is it going to Gordy to offset the monies paid to others? Who knows.

The money paid over by TNT/any others will go straight into the Government coffers and I caught the end of the Sky interview with Mandy and Jeff Randall and the amount of money being discussed was in the low hundreds of millions

[fmrPOSTIE]

It buys the pared down MC network and distribution hubs which in a true open market should probably be valued between £15 and £20 billion.
So not only a knockdown price but there is also the question of payment details. Fairly unlikely that anyone could raise that sum for such a controversial buyout in this economic climate ,so the real chance exists that Mandy will have to offer part payment terms and installments ie taxpayer will subsidize yet another private profit concern

Not how it works to be honest. If plans get through parliament, 30% of the comapny will be sold to TNT, CVC whatever. They are not buying "assets" merely this will give them the ability to bring in their own management and sit on the board.

[BELIAL]

It buys the pared down MC network and distribution hubs which in a true open market should probably be valued between £15 and £20 billion.
So not only a knockdown price but there is also the question of payment details. Fairly unlikely that anyone could raise that sum for such a controversial buyout in this economic climate ,so the real chance exists that Mandy will have to offer part payment terms and installments ie taxpayer will subsidize yet another private profit concern

Not how it works to be honest. If plans get through parliament, 30% of the comapny will be sold to TNT, CVC whatever. They are not buying "assets" merely this will give them the ability to bring in their own management and sit on the board.

Oh yeah ,quote me a precedent This is tried and true asset stripping, not we take the good with the bad. Little house on the prairie was made up

[fmrPOSTIE]

What I mean is they wont "own" specific buildings or assets.

[BELIAL]

See what you mean. Yep there is always a chance Mandy's lot will come up with an innovative ,going forward ownership structure that will allow his TNT business chums to cream off the profits of the MCnetwork,without owning a bean

[bogstandard]

they'll want all the power but none of the resposibility.