RM sale is sign of Conservatives' desperation, says Labour

[TrueBlueTerrier]

Royal mail sale is sign of Conservatives' desperation, says Labour

http://www.guardian.co.uk/uk/2013/may/0 ... esperation" onclick="window.open(this.href);return false;

Chuka Umunna, shadow business secretary warns the £3bn sale of the postal service could lead to sub-standard services

Labour has accused the government of desperately pushing ahead with the £3bn "fire sale" of Royal Mail in order to "raise funds to cover the gaping hole in George Osborne's failed economic plan".

Chuka Umunna, the shadow business secretary, said there was a "distinct whiff of desperation" surrounding the privatisation of the world's oldest postal service. He accused the government of rushing into a saleout of a desire to quickly reduce a £245bn overshoot in government borrowing. He warned that a rushed sell-off could lead to "sub-standard services and people being ripped-off".

"This timing of this privatisation has the distinct whiff of desperation from a government that has borrowed £245bn more than it planned and is eager to dig itself out of that hole at any price," he said. "Ultimately it is the taxpayer who will lose out."

A spokesman for the Department for Business, Innovation and Skills (BIS) said: "As business minister Michael Fallon said last week, the decision will not be based on ideology. It will be a practical, logical and commercial decision. Royal Mail will only be sold if it gets maximum value for the taxpayer."Fallon has said that unless Royal Mail passed into private hands, it would not be able to access equity markets, without which "every £1 it borrows is another £1 on the national debt". He said at least 10% of the shares would be allocated to Royal Mail employees, but refused to say whether staff would get free shares or have to buy them at a discount.

The flotation, which the government hopes to get away before April 2014, will be the largest employee share scheme since the privatisation of British Gas 26 years ago. About 140,000 staff are expected to each collect shares worth about £1,500 on average.

However, Labour questioned why "just 10%" of the shares in the initial public offering are earmarked for Royal Mail employees.

The Communication Workers Union (CWU) said postal workers would not "sell their soul" for a 10% stake in the company. Billy Hayes, general secretary of the CWU, said: "We don't want our prize assets to be flogged at bargain basement prices just to cover up George Osborne's mess.

"Privatisation is an old-fashioned idea from Thatcher's era. We'd like to see a little more imagination and positivity when it comes to our postal service. We firmly believe it can and should continue to flourish in full public ownership."

Umunna also warned that privatisation risks undermining the universal service obligation ensuring mail delivery six days a week to villages as well as cities at the same prices.

Fallon has already promised that "Royal Mail will remain the UK's designated universal postal service provider and must continue to provide a six-day-a-week service throughout the UK".

There was also renewed speculation over the weekend that the government is preparing to sell off the student loan book. It is to test the water with the sale of a £900m tranche of loans announced in March and is considering a wholesale privatisation, said the Sunday Times.

The Student Loans Company, which administers about £5.5bn of state loans a year, is part of the BIS. The department's 2011 annual report showed £28bn of loans are outstanding, but it is suggested the total is likely to rise to near £40bn because of the increase in tuition fees.

A sale might be difficult due the sensitivities of a new owner cracking down on graduates to repay loans. The department declined to comment.

[mickeymacca]

Morning TBT, I thought it was the Labour Party that set the ball rolling on privatisation.

[mickeymacca]

Morning TBT, I thought it was the Labour Party that set the ball rolling on privatisation.

Also not sure how it can be a 'fire sale' if the organisation is turning a profit.

[fishtank]

Morning TBT, I thought it was the Labour Party that set the ball rolling on privatisation.

No.
It appeared on a list of potential privatisations at a government sub committee meeting as far back as January 1984.
It was ruled out by Thatcher in 1987,not as most people believe because of its "Royal" connections (that didn't stop them with the Royal Ordnance Factories) but allegedly because of the risk to the USO and a back bench revolt.
It resurfaced again in 1988 when Tony Newton the Minister of State for the DTI raised the possibility of the sale of some parts of Royal Mail but again it was dismissed.
Then there was the Heseltine attempt(s) in the early nineties but that's a long story....

Also not sure how it can be a 'fire sale' if the organisation is turning a profit.

It's a bear market in that there is a lack of potential buyers,Royal Mail will be sold well below its intrinsic value,therefore in financial terms it's what's called a fire sale.
It's also a bit of a sham fire sale in that the Government is more interested in achieving a quick sale than top price.

[mickeymacca]

Thanks for reply.

I was referring to the current threat of privatisation not historical ones which were unsuccesful. I don't want to seem like an apologist for the Coalition government as I am not, but I find it a bit disingenuous of the Labour spokesman who knows well enough that there approach to privatisation would not differ greatly from the position of the government. This issue is too important to be used as a political football by the various parties and the answer I feel does n't lie with the Labour party, who in opposition will promise the earth but in power did not disipate the fears surrounding an impending privatisation.

My interpretation of a 'fire sale' was the selling of assets when a company or organisation is in financial hardship or facing liquidisation, but then I did n't rely on a google search for my definition

[TrueBlueTerrier]

Not an apologist for Liebour, far from it actually, but they will claim there was a major difference - The ConDems are going to sell Royal Mail completely bar 10% for employees, whereas Liebour think selling less than 50% wasn't really privatisation.

In my opinion both are sell outs and neither have or had any popular political endorsement to carry out their different policies on Royal Mail, and yet they claim we live in a Democracy.

[mickeymacca]

Not an apologist for Liebour, far from it actually, but they will claim there was a major difference - The ConDems are going to sell Royal Mail completely bar 10% for employees, whereas Liebour think selling less than 50% wasn't really privatisation.

In my opinion both are sell outs and neither have or had any popular political endorsement to carry out their different policies on Royal Mail, and yet they claim we live in a Democracy.

I concur,

and while you are there thanks for the good work you do in the running of this site and keeping us informed with the ongoing privatision situation . My office are completely oblivious to the issue, and until the mention of shares was muted in 'The Sun' have showed no interest.

[fishtank]

I was referring to the current threat of privatisation not historical ones which were unsuccesful.

In that case Labour's unsuccessful attempt in 2009 should also be discounted.
I don't believe that we can trust Labour in the long term not to pursue some kind of privatisation but I do believe at least some of their MPs can be used in the short term to help derail the coalition's plans if only to help get the message out.
The difference between Labour and Government is that there is a core of opposition towards privatisation within Labour ranks even if it is a minority,within the ranks of the coalition there is nothing.

[UnhappyGremlin]

If there is a £245bn shortfall, then selling RM for £3bn really won't make any difference will it?
Especially as it is likely to backfire long term, and will likely need to be bailed out by the taxpayer. But then, that will be another Governments problem, not the current one.

[fishtank]

If there is a £245bn shortfall, then selling RM for £3bn really won't make any difference will it?
Especially as it is likely to backfire long term, and will likely need to be bailed out by the taxpayer. But then, that will be another Governments problem, not the current one.

Much like the pension "deal".
£25 Billion in assets now set against £34 Billion in liabilities that future Governments will have to worry about.
Politics is a dirty business.

[mickeymacca]

I was referring to the current threat of privatisation not historical ones which were unsuccesful.

In that case Labour's unsuccessful attempt in 2009 should also be discounted.
I don't believe that we can trust Labour in the long term not to pursue some kind of privatisation but I do believe at least some of their MPs can be used in the short term to help derail the coalition's plans if only to help get the message out.
The difference between Labour and Government is that there is a core of opposition towards privatisation within Labour ranks even if it is a minority,within the ranks of the coalition there is nothing.

I would argue the legacy of a 2009 privatisation bid is is still fresh and its failure did not end the possibiltiy of privatistation in the few years that have followed. Whereas the ones referred to in the 80s and early 90s brought an end to serious privatisation talk for 15 - 20 years ( or is that because it coincided with a Labour government for most of that time? genuine question not being sarcastic)

However I think we are on the same page so to speak

[Martin Walsh]

Do not under estimate what the Labour Party has done with coming out and opposing the sale. The CWU met with Chukka last week the third meeting in the last 3 weeks and Labour needed to come out in opposition to the sell off. Whilst this is a good first step they need to state that they do not support the privatisation and will renationalise if it is partially or wholly sold.

If they do that what investor is going to put down up to 3 billion.

[borders]

I hope Labour will come out and say they will Renationalise RM if privatised but I doubt it. if they do , it places them in a tricky situation , why not renationalise the railways , Utilities etc ? its just a touch of sabre rattling with no great intent.

[mickeymacca]

I hope Labour will come out and say they will Renationalise RM if privatised but I doubt it. if they do , it places them in a tricky situation , why not renationalise the railways , Utilities etc ? its just a touch of sabre rattling with no great intent.

I absolutely agree and cannot see what is stopping them from making such a statement now if they are serious rather than dilly-dallying (technical term) about and playing politics with the issue. Granted I am not privy to the same information as you dingo so I hope you are right.

[The FraudSquad]

Do not under estimate what the Labour Party has done with coming out and opposing the sale. The CWU met with Chukka last week the third meeting in the last 3 weeks and Labour needed to come out in opposition to the sell off. Whilst this is a good first step they need to state that they do not support the privatisation and will renationalise if it is partially or wholly sold.

If they do that what investor is going to put down up to 3 billion.

Why oppose it now, when 4/5 year ago Mandelson was trying the exact same thing??