Call to follow German model and scale back privatisation

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Call to follow German model and scale back Royal Mail privatisation

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THE government is under pressure to water down its privatisation plans for Royal Mail after the postal services minister Ed Davey admitted that the German model is the best way forward.
The Deutsche Post is 31 per cent owned by the German government, and critics of the coalition's plans to completely privatise the Royal Mail claim that Mr Davey has undermined his own case.

The Tory/Lib Dem plans are to completely privatise Royal Mail but separate it from the post office network, which it claims means all 11,500 branches will be safe.

However, Labour MP Gregg McClymont has argued the German government share in Deutsche Post has helped it keep its post office network.

In addition, Germany has laws which guarantee the post office network, a move the UK government refuses to consider.

There are concerns that, once privatised, Royal Mail may abandon the post office network for a cheaper outlet or force it to close 7,000 unprofitable branches from the 11,500 across the UK. This would disproportionately hit post offices in rural communities, Labour argues.

Mr Davey and Mr McClymont clashed over the issue at the committee stage of the Postal Services Bill this week, when Mr Davey raised Deutsche Post as the best model.

At first, the Lib Dem minister claimed Deutsche Post was wholly privatised, but was later forced to admit the German government had a one-third share.

But in response to Mr McClymont he said: "The majority of Deutsche Post is owned by private-sector investors. If he cannot accept that, he is not accepting the facts."

The government's aim is to make Royal Mail profitable by taking away its pension liabilities of £8 billion and selling it off to raise the money required to invest in new technology and infrastructure.

Highlighting the success of the German model, Mr Davey said: "Since its first flotation in 2001, the equivalent of £11.9bn has been invested.

"Quite a lot of that has been invested in ensuring Deutsche Post is able to deliver more effectively, and sort, distribute and allocate parcels."

Unions have opposed the privatisation, even though some of the shares will go to employees.

In the Commons, Cumbernauld, Kilsyth and Kirkintilloch MP Mr McClymont, the leading backbench critic of the postal plans, said: "Mr Davey needs to get his facts straight. The German government has a considerable stake in Deutsche Post.

"The coalition wants a fully privatised Royal Mail. They're not following the example of successful European companies, they're putting the Royal Mail and post offices at risk."