Sell-off means survival for the RM that still has a future

[TrueBlueTerrier]

Sell-off means survival for the Royal Mail that still has a future

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This year will be one of the most significant in Royal Mail's history. Its iconic red pillar boxes have graced our streets since the 1850s. In that time it has not only become one of Britain's very biggest companies, it has won a special place in public affection. Waiting for the post to arrive has heralded important events in our lives like exam results, birthdays or an overdue cheque.

These deliveries are backed by the one price goes anywhere six-day-a-week universal postal service – of which Royal Mail is the sole provider. But while Royal Mail has continued to provide this service, the market has changed.
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The numbers of letters we send is in decline. Royal Mail is not just competing with other postal operators, but against email, the internet, and smart phones.

This changing market presents Royal Mail with opportunities. The huge boom in online shopping means that the company's business is shifting from letters to parcels. Royal Mail delivered one billion parcels last year – up by over 6%. Half of Royal Mail's revenues already come from parcels. This is growth that Royal Mail must exploit if it is to have a sustainable future.

That's why the government recently announced its intention to float Royal Mail shares on the London Stock Exchange through an Initial Public Offering to give the company access to private capital that it needs to invest in its future.
In the first half of 2013, Royal Mail was profitable but the challenge is to maintain this – we should not forget that its core UK letters and parcel business has lost money in five of the last 12 years. Overall, losses were around £1bn and over 50,000 jobs went during that period. And although Royal Mail's performance has improved, its profit margin lags well behind international competitors Deutsche Post, Austrian Post, and Belgian Post.

As part of the public sector Royal Mail has its hands tied in a way its competitors do not. It cannot be right for a £9 billion a year business to come cap in hand to Ministers each time it wants to innovate or commit future investment. It cannot be fair for the government to give it taxpayers' money ahead of schools and hospitals, or to increase public borrowing.

So our final reform is selling shares in Royal Mail to give it commercial freedom and future access to capital. By proceeding with an Initial Public Offering, the public too will be able to buy shares.

Opponents claim that the Government is rushing this privatisation. Such claims are ridiculous. Two independent reviews of the postal sector led by Richard Hooper – in 2008 and 2010 – found that the universal service was under threat and recommended action to secure its future viability. He set out the solution in three parts: removing Royal Mail's historic pension deficit, improving the way it is regulated and allowing it to access private capital. The last government agreed to these proposals but later dropped its plans. Labour's newfound opposition to a sale is Ed Miliband yet again dancing to his union paymasters' tune.

Parliament backed these plans to implement Hooper's recommendations over two years ago. The sale is a practical, logical and commercial decision. Few people now question whether BT or British Airways should have remained in the public sector. Leading postal operators across Europe have already moved into the private sector and continue to provide high quality services.

Any privatisation brings concerns, especially one that involves a company so intrinsic to British heritage. So it is important to address some of the concerns directly.

First, the six-day-a-week, one price goes anywhere service – to urban and rural areas alike and free services for the blind – is fully protected irrespective of ownership. Only Parliament can change this and it is unthinkable that any party would commit to uprooting a service that is vital to society and the UK economy in their manifesto. The Postal Services Act 2011 also put in place a new regulator – Ofcom – to protect this service. Ofcom has made clear that it will intervene to stop cherry-picking by competitors should that threaten the universal service.

Second, stamp prices for the universal postal service will continue to be regulated by Ofcom which has a duty to make sure they remain affordable. As part of this they have imposed a price cap on second class stamps.

Third, the Post Office is not for sale. Royal Mail and the Post Office are now separate companies but as natural partners they signed a ten-year commercial agreement in 2012. Nor will there be thousands of Post Office closures as under Labour. Far from it, we are investing £1.34bn to transform the post office network and committed to maintaining at least 11,500 branches We want to create more modern branches that better suit the needs of you, the customer.
Fourth, the heritage of Royal Mail is important and Parliament has also legislated to ensure the Queen's head remains on stamps.

Privatisations in the 80s and 90s extended share ownership and gave employees a stake in their companies. But this sale will be unique in guaranteeing at least 10 per cent of shares for employees. We were determined that a sale recognises the incredibly valuable job that post men and women do. Around 150,000 eligible employees could benefit – the largest commitment by a government for almost 30 years – including 2,700 Royal Mail workers in Devon, Cornwall, West Somerset and West Dorset who will have a real stake in its future success.

Our sale of Royal Mail will diversify its ownership to pension funds and other large institutional investors, Royal Mail workers, and the great British public. It will create a company accountable to a range of interests, including most importantly, those who work for it and use it every day.

Government will protect universal postal services which are rightly valued at the same time as allowing Royal Mail finally to have the commercial freedom, like any other major company, to access the capital and investment it needs.

[sagey]

I totally agree.

[Pete22]

I totally agree.

Are you Moya Greene or just bloody stupid, because you will be worse off on pay , leave or sick benefits.
The guys you work with now will be reduced in number with you expected to do more for less pay.

[UnhappyGremlin]

I totally agree.

Are you Moya Greene or just bloody stupid, because you will be worse off on pay , leave or sick benefits.
The guys you work with now will be reduced in number with you expected to do more for less pay.

And that's barely scratching the surface of what they'd actually do.