Government to privatise RM and foreign firms WILL be allowed

[TrueBlueTerrier]

Government unveils plans to privatise Royal Mail... and confirms that foreign firms WILL be allowed to bid

The Government unveiled controversial plans today that will allow private firms to run up to 90 per cent of the Royal Mail.

Business Secretary Vince Cable added that there would be no objection to a foreign-owned group buying the postal organisation.

The remaining ten per cent would go in shares to postal workers.

In addition, he raised the possibility of converting the Post Office arm of the business into a mutual structure similar to the John Lewis Partnership or the Co-operative Group.

The Royal Mail employs postal staff and owns the delivery vehicles while the Post Office runs the branch network.

Today's Postal Services Bill risks a political row and an industrial dispute with postal workers.

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

However Mr Cable said handing ownership and running of post offices to employees, sub-postmasters and the local community would 'empower' the people who knew the business best.

He declined to say how much money the Government hoped to raise through the sale, how much the employee shares will be worth, or how quickly the privatisation will go ahead, although it will not be before next summer.

The plans were aimed at securing 'vibrant futures' for both, said Mr Cable, adding: 'My policy is to put them on a stable footing for the future.

Royal Mail lorries at Mount Pleasant sorting office in London. Any sell-off will be fiercely opposed by the Communication Workers Union

'Royal Mail is in a difficult position. There is no hiding the facts - mail volumes falling, a multi-billion-pound pension 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.'

Mr Cable said 'substantial investment' was needed if the Royal Mail was to modernise at a faster pace and adapt better to the digital age.

He said the employee share scheme would be the largest of its kind of any privatisation - bigger than BT, British Gas or British Airways.

Royal Mail would be 'relieved' of its 'enormous' pension deficit, currently estimated at around £8billion, said the Government.

Around £26billion of pension fund assets will be taken over, but there were £34billion of liabilities, so the Government was not acquiring a 'gold mine', said Mr Cable.

He continued: 'This is an important package. 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.'

Mr Cable said the Post Office was not for sale, pledging there will be no further closures.

'We will break the cycle of declining visitor numbers through new ideas and new services to win back customers. There will be no repeat of the previous Government's closure programmes.'

The minister said he was concerned that the structure was 'holding the network back', because the interests of the central holding company and locally-owned branches were not always aligned.

'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. This would be the Big Society in action.'

Community groups, charities and local people were already joining forces to provide post office services, said Mr Cable.

He revealed that Co-operatives UK had been asked to explore options for creating a mutualised Post Office, reporting back to the Government next spring.

The Government said that, before any changes were made, the Post Office network will need to be put on a more secure financial footing, so that a mutual could build from 'solid foundations'.

One possible model would be a company or co-operative set up by members with an interest in the Post Office who would become its members, have a say in appointing the board, agree its long-term strategy and share in its profits.

Mr Cable said there were a number of differences between today's announcement and what the Labour government was planning, including having no upper limit on private ownership of the Royal Mail, the employee shares and future ownership of the Post Office.

The minister said the Royal Mail had suffered a 'terrible time', but he believed its fortunes could be 'turned around' and it could become a very good business.

Asked about the prospect of a dispute with the CWU over the plans, Mr Cable said: 'There is a lot of rhetoric and strong feelings, but we have had a good dialogue with the unions and we think that, when it comes to the crunch, they are realistic.

'We are confident that the network has a good future.'

Postal Minister Ed Davey said the Royal Mail was in a 'fragile state', with declining mail volumes which was affecting its finances.

'We have to take action - no action is not a feasible way forward.'

Mr Davey said he would like to see more financial and Government services offered at Post Offices, including 100 per cent of bank accounts.

The minister, who worked as a consultant advising mail firms around the world before he became an MP, said the UK was well behind the rest of Europe on productivity, with even modern offices using 19-year-old machinery.


Read more: http://www.dailymail.co.uk/news/article ... z12FnARZ5Q" onclick="window.open(this.href);return false;

[labbloke]

Around £26billion of pension fund assets will be taken over, but there were £34billion of liabilities, so the Government was not acquiring a 'gold mine', said Mr Cable.

This is the real reason why they want our pension, they have very cleverly spun the line that the pension is in crisis and nearly everyone has fallen for it.

The way our pension is reported to the world is the same as everyone elses. You have to report what the deficit would be if everyone of our 170,000 employees all left tomorrow and claimed their pension. This is quite plainly a daft way of reporting, but we like other companies

(The combined pension deficits of companies in the FTSE 100 reached £73bn at the end of April, up from £52bn a year earlier, according to Pension Capital Strategies (PCS), )

suffer from this way of financial reporting.

The reality of life is that most of all the pension funds in the world have lost value as the world markets collapsed recently, but any financial advisor will tell you is that you always plan for the long term and any pension should meet its targets over a prolonged time.

Cable and Cameron will use and abuse the 26 billion in assets to plug their bankers friend hole (pun defo intended) and will let future generation of politicians and us taxpayers worry about having to pay up when required, just like the state pension

[jack straw]

When will someone speak out and deny these stupid stories of declining mail volumes? It is a blatant lie. Ask any postman, and you will be told that we are delivering far more mail than ever before. The figures taken for mail levels are solely on RM collections, NOT all the other operator's mail added in. Jointly, this has increased mail levels alarmingly,add to this the D2D rubbish and it's a recipe for chaos come Christmas time. This company is lying to us, and curiously the union are agreeing with them.
MAIL LEVELS ARE UP!

[Night Tonic]

No falling mail volume and pension not in crisis? The only two spinning are you two.

[labbloke]

i do not know you night tonic, but I thought that perhaps you were a bit more aware of issues than most.

My mistake

Here for you Tunic is an easy explanation of the FRS17 pension accounting standard, if you require any more education, pick up a book or surf the web, before you put your two'penneth in.

EXPLANATION OF FRS17:

You may have heard about or seen reference to large pension fund deficits declared under Financial Reporting Standard 17 (FRS17). FRS17 is a national accounting standard that all authorities administering pension funds must follow.

FRS17 requires an organisation to account for retirement benefits when it is committed to give them, even if the actual giving will be many years to come. Whilst FRS17 is a better reflection of the obligations of the employer to fund pensions promises to employees, it does not reflect the actual accounting arrangements of the pension fund. It requires employers to disclose the total value of all pension payments that have accumulated (including deferred pensions) at the 31st March each year.

This value is made up of:

• The total cost of the pensions that are being paid out to former employees who have retired, and
• The total sum of the pension entitlements earned to date for our current employees – even though it may be many years before the people concerned actually retire and begin drawing their pension. (For example, the value will count in the anticipated cost of the pension of a school leaver who may have recently joined us and wouldn’t normally be expected to take their pension for 40 years).

The standard also requires us to show all investments (assets) of the Pension Fund at their market value, as they happen to be at the 31st March each year. In reality, the value of such investments fluctuates in value on a day-today basis but this is ignored for the purpose of the accounting standard.

Setting side by side the value of all future pension payments and the snapshot value of investments as at the 31st March, results in either an overall deficit or surplus for the Pension Fund. This is called the FRS17 deficit or surplus.

For the reasons set out above, the FRS17 figure can only be a snapshot at a given point in time. A truer reflection of a pension fund’s actual position comes from the more detailed assessment made by an Actuary. This assesses and examines the ongoing financial position of the Pension Fund. The actuarial valuation can differ considerably from the FRS17 valuation. It is the actuarial valuation that really matters.

We use the actuarial valuation, which is carried out every three years, to review contribution rates to the Fund from the employers, to ensure that existing assets and future contributions will be sufficient to meet future pension payments. We can do this, because by its very nature, the Pension Fund is ongoing and long-term and gives employers time to act so that any deficit is spread and paid-off over a number of years.

Since the majority of employer bodies in the Pension Fund are government organisations, there is no risk that they will default on their contribution payments

[Night Tonic]

"This assesses and examines the ongoing financial position of the Pension Fund. The actuarial valuation can differ considerably from the FRS17 valuation. It is the actuarial valuation that really matters."

Quite right, so you think that the figure will suddenly put the pension in the black, ie it will swing from £8bn?

Come on , if you're going to post comments like this at least make them credible. Besides its all academic. Sale is on. Billy can open his pie shops now.

[ziko]

No falling mail volume and pension not in crisis? The only two spinning are you two.

Why dont you find out for yourself Night Tonic, Find out how many letters each grey box holds on average then compare that to RM's official number there is a massive difference - i will let you look for the real figures yourself. Also what do you think the online Parcel/Package industry was worth 10 years ago? Now what do you think its worth now in 2010. Spin on those figs.
Who you kiddin Vince Cable, Night Tonic?

[Wessex]

I wonder which company would want to buy Royal Mail unless they had secret guarantees that regulation would change to benefit them.Surely whoever is planning to takeover would face massed opposition from the competitor companies.Is it more likely therefore that a consortium would be formed amongst the major players or a gentlemans agreement reached.The only guaranteed outcome I can see for postal workers private or state in the forthcoming years is worsening wages and conditions.In the past 3 to 4 years my actual income has remained the same so I am well down in real terms already.In addition I am working harder than ever and like many of my colleagues am permanently knackered 6 days a week.

[Night Tonic]

No falling mail volume and pension not in crisis? The only two spinning are you two.

Why dont you find out for yourself Night Tonic, Find out how many letters each grey box holds on average then compare that to RM's official number there is a massive difference - i will let you look for the real figures yourself. Also what do you think the online Parcel/Package industry was worth 10 years ago? Now what do you think its worth now in 2010. Spin on those figs.
Who you kiddin Vince Cable, Night Tonic?

Wouldn't argue that mail volume figures vary between two but how much of that mail is sorted by RML? How much of it is officially RM mail? Plus, smaller parcels that go through RML are not making up for the shortfall on letters. Lets not have this tired old argument dug up again. You can cut blackpool rock anywhere you like, it will always say Blackpool. You can take it up with Vince Cable if you think he might listen to you. Feel free.

[labbloke]

"This assesses and examines the ongoing financial position of the Pension Fund. The actuarial valuation can differ considerably from the FRS17 valuation. It is the actuarial valuation that really matters."

Quite right, so you think that the figure will suddenly put the pension in the black, ie it will swing from £8bn?

Come on , if you're going to post comments like this at least make them credible. Besides its all academic. Sale is on. Billy can open his pie shops now.

No you just dont seem to get it do you, the comments I make are academic and obviously more credible than you.

There doesnt have to be a big 'Swing' (sic), only if we all left this year and claimed our pensions, and I mean all 170000 of us. Any deficit in any fund can be made up over the medium to long term, thats because a large proportion of the fund is made of blue chip shares and we all know (well I thought we did) that they suffered badly over the last few years (average loss of 22% prior to Apr 2010).

Obviously the Ft 100 and 350 company pensions have also lost heavily recently, and you do not hear or see them wringing their hands.

Unfortunately people such as your self, have allowed themselves to be educated by one source only and have yet to do a bit of research yourself and only then can you profess to have a balanced opinion.


Ps rather an uncalled for remark regarding Mr hayes, perhaps you really have found your level

[barbario]

This reported mail volume fall,does it inclued DSA. I sometimes get the feeling they are referring to what Royal Mail process,not what it actually deliver's.

[tasape]

Where do Parcel force Fall in to this sell off,will we be sold as a private entity? or will we be sold as a job lot with the royal mail .

[labbloke]

Where do Parcel force Fall in to this sell off,will we be sold as a private entity? or will we be sold as a job lot with the royal mail .

It certainly looks like Parcelforce etc are to be included in the privatisation, otherwise I think investors may not be willing to invest if only collection and delivery was to stand alone. Only POL is defo not included, this is a mistake, as after the sweetener deal (i think several years) finishes , the new mail company will look for the cheapest high street access points and thousands of PO will close.