Royal Mail sales battle

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SO MANY have tried and failed to privatise Royal Mail that even now, with a promise of a flotation in the autumn, the process has to be treated with some caution.

Chief executive Moya Greene has done her bit, modernising its outdated sorting offices, getting its costs and income into better balance, resolving its huge pension fund deficit – with the help of some sleight-of-hand Treasury accounting tactics – and 
finally making a healthy profit.

Both the UK government and Royal Mail management have accepted that, in the modern era, faced with electronic means of communication and European competition rulings, the status quo is no longer tenable. Royal Mail requires access to external capital and that could not be achieved by raiding the public purse.

Privatisation, therefore, becomes the only option, though there will be those who believe the state should retain some form of golden share to prevent yet another former public utility being sold into foreign ownership.

There has been no indication that the UK government will take this 
option, but it does look likely to offer 10 per cent of the eventual share issue to the employees.

Business Secretary Vince Cable has been at pains to stress that this is not a bribe, even though the Communication Workers Union is unhappy at the whole process and is threatening strike action.

Trade union problems have dogged the postal service for years and it has contributed to previous failures to shift Royal Mail into private hands. But Michael Fallon was installed as a minister at the Department for Business, Innovation & Skills with a remit to make it happen.

He issued a diplomatic statement yesterday referring to the united 
efforts of management, staff and the UK government in putting Royal Mail on a sustainable footing, but he will know that there are a few battles yet be fought.

At least as deputy chair of the Treasury select committee, he will have picked up a few lessons on how to confront those with a different agenda to his own.