Royal Mail privatisation bill unveiled by Vince Cable

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Business Secretary Vince Cable has said that private buyers will be allowed to own up to 90% of Royal Mail, while the Post Office may be mutualised.

He was giving details of the Postal Services Bill, designed to pave the way for Royal Mail's privatisation.

Mr Cable made clear that the government would not oppose a foreign company buying up the Royal Mail.

Royal Mail staff will be offered at least 10% of the shares in the company, but unions oppose the privatisation.

He called the proposed staff participation the biggest of its kind - larger than those of British Telecom, British Gas or British Airways.

'Open mind'
The Royal Mail's pension fund - which has a £10.3bn ($16.3bn) deficit - will not be included in the privatisation and will instead be taken on by the government.

"This is an important package," said Mr Cable. "It will secure the services that consumers and businesses rely on.

"It will give employees a stable company to work for, shares in the future of the business and the secure pension they deserve. It will remove the risk to taxpayers of an expensive bailout."

He gave no timeline for the sale, but said it would not happen before next summer.

He also said the government was "keeping an open mind" about whether to pursue a stock market flotation, or whether to sell the company to a strategic investor.

'Like John Lewis'
He also announceed that the Post Office network, which is not included in the sell-off, may be converted into a mutual ownership structure.

"It seems to me that the Post Office is ideally suited to a John Lewis or Co-operative Group style structure, where employees, sub-postmasters and communities get a greater say in how the company is run," he said.

John Lewis is owned by its employees, who are granted "partner" status and a stake in the company in order to encourage employee loyalty and service quality.

He said that the Co-operative UK had already been asked to put together a proposal for how mutualisation could be done.

"This would be the Big Society in action," added the Liberal Democrat, endorsing the Conservative party's slogan for greater community participation in government services.

He promised there would be no further closures of Post Office outlets.

'Difficult position'
Mr Cable said last month that he had come to his decision after an independent report said the postal service's outlook had worsened.

Royal Mail's woes

Pension deficit up from £2.9bn in 2008 to £8bn in 2010
Size of daily mailbag down from 84m in 2005 to 71m in 2010
Losses at Royal Mail Letters grew to £333m, from £200m last year
Global mail volumes predicted to decline by 25-40% by 2015
Source: Hooper review 2010

This review by Richard Hooper, a former deputy chairman of communications regulator Ofcom, concluded that the Royal Mail's universal postal service could only be maintained through an injection of private sector money and expertise.

"Royal Mail is in a difficult position," Mr Cable said after presenting the new bill.

"There is no hiding the facts - mail volumes falling, a multi-billion pound deficit, less efficiency than its competitors and an urgent need for more capital at a time when there are huge constraints on the public purse."

The main postal workers' union, the CWU, says that privatisation of the Royal Mail would lead to higher prices for consumers and job losses for staff.

The Royal Mail has 176,000 employees.

[hazzeem025]

why doesnt vince cable f**k off and crawl back under the rock that he appeared from. oh and perhaps do some proper research into why royal mail is in such a mess? instead of swallowing hook line and sinker everything hooper says? sorry for the language!

[belle smith]

why doesnt vince cable f**k off and crawl back under the rock that he appeared from. oh and perhaps do some proper research into why royal mail is in such a mess? instead of swallowing hook line and sinker everything hooper says? sorry for the language!

Well it would help if hooper hadn't launderd every line that RM wanted.