Taxpayer should stage £7 billion pension bail-out of RM

[TrueBlueTerrier]

Taxpayer should stage £7 billion pension bail-out of Royal Mail, ministers told

http://www.telegraph.co.uk/news/newstop ... -told.html

The taxpayer should take on billions of pounds of pension liabilities from the Royal Mail to put it on a sound financial footing, ministers are being told.


By Christopher Hope, Whitehall Editor
Last Updated: 12:15AM GMT 14 Dec 2008

A report on the future of the organisation is also expected to say it should enter into joint ventures with private firms, raising the prospect of large scale job losses.

The recommendations are likely to set up a battle royal with postal unions, which are fiercely opposed to any form of privatisation.

The Government's review of the postal service, by Richard Hooper - the former chairman of the media regulator Ofcom - is being considered this weekend by Business Secretary Lord Mandelson and could be published as soon as next week.

The Sunday Telegraph understands that the report will say the Government should take direct control of £7 billion of pension liabilities from the Royal Mail.

The report is also understood to suggest that private firms like DHL or TNT should enter into joint ventures to help with sorting letters and parcels bringing private sector discipline to the organisation.

Other plans, such as a "John Lewis-style" privatisation where shares are given to staff, are understood to be on the back-burner.

The bail-out of the pension fund is seen as key to securing the future of the Royal Mail and guaranteeing the "universal" postal service to every address in the UK.

Plans to open up Royal Mail to some form of co-operation with private firms are likely to be supported by Lord Mandelson.

In an interview several weeks ago, he said he was surprised that the issue of part privatising the postal giant remained "unresolved".

He suggested the Royal Mail should "be progressively private, even if initially part of the company stayed in the Government's hands".

However state ownership of the organisation is fiercely guarded by left wing Labour MPs and unions.

It was a manifesto commitment for the 2005 General Election and was part of the "Warwick Two" agreement with unions in the summer.

A spokesman for the Communications Workers Union said last night: "The postal service is a valuable public service and we will fight to protect it as a public service against any moves to bring it into a joint venture which will damage that service."

Left wing Labour MP John McDonnell said in October that privatising the Royal Mail was "madness". He added: "It would undermine an essential public service."

Royal Mail declined to comment. A spokesman for Department for Business, Enterprise and Regulatory Reform also declined to comment.

Last month, the industry's regulator Postcomm said that the Post Office should be separated from the Royal Mail to give the business greater commercial freedom.

Postcomm said the Royal Mail should be split into a retail network with a social role, and a communications and logistics business with a commercial focus.

[Martin Walsh]

The 3 CARD trick is on. Maybe some of you on this site who talk a good fight may now sign into the document moving forwards together which is within the blue shirts section.

Its time to pust pressure on the goverment or stop funding the labour governement unless they committ to emergency motion 6.

sign the document and start the fightback

[borders]

Royal Mail faces £7bn pension gapAs financial markets collapse and Britain switches from letters to email, postal staff have been hit by a retirement fund crisisToby Helm, Whitehall editor, and Gaby Hinsliff
The Observer, Sunday 14 December 2008
Article history
Royal Mail's pensions 'black hole' has more than doubled to some £7bn, placing a 'ticking timebomb' under the country's most cherished state-owned industry.

The implications of the soaring pensions deficit are laid bare in a long-awaited assessment of Royal Mail's operations submitted to ministers in the past few days by Richard Hooper, a former deputy chairman of Ofcom, who is chairing an independent review of postal services.

The report is expected to recommend 'radical surgery' and modernisation of Royal Mail's operations - leading almost certainly to widespread job losses - as the condition for maintaining a 'universal service' and letter deliveries across the country six days a week.

Whitehall sources said last night that the size of the deficit, which stood at £3.4bn in 2006, would make it far more difficult - if not impossible - for ministers to consider the most radical solution on offer, privatisation of the network. 'Who would want to buy a company with a £7bn liability in the best of times - never mind in the present climate?' said an insider. 'It is out of the question.'

Hooper warned in an interim report in May that the gap between the assets in its pension fund and what Royal Mail will have to pay out in pensions to current and former staff was growing fast. But with fund values falling victim to collapsing share prices and turmoil on the financial markets the gap has grown even faster than was feared just six months ago, meaning Royal Mail has to spend more of its dwindling profits on servicing its retirement obligations.

At present there are some 440,000 members of the Royal Mail pension scheme, the vast majority of whom are locked into generous 'final salary' arrangements. Earlier this year the final salary scheme was closed to new employees, who instead are locked into less attractive 'money purchase' schemes, in an attempt to ease the problems. Government officials said last night the report would be published 'soon' by Business Secretary Peter Mandelson.

The Hooper review will highlight an industry in severe decline as it struggles to compete with modern means of communication such as broadband internet, email and text messaging and is expected to recommend the closure of many regional sorting offices as part of modernisation and cost-cutting plans.

The company delivered 80m letters a day in the 12 months to the end of March compared with 83m the year before. The letters and parcels business, regulated by Postcomm, now makes a steady loss, having been in profit three years ago.

Ministers insist that whatever reforms they decide upon they will maintain the commitment to a 'universal public service'. This means at least one collection from all postboxes and at least one delivery to all addresses in the country on six days a week for letters and five days a week for parcels.

In a separate development, a former pensions minister is advancing radical plans for people who lose their jobs during the recession to be allowed to raid their pensions to tide them over. Baroness Hollis is to meet the current Work and Pensions Secretary, James Purnell, next month to discuss her proposals to allow working people access in a crisis to up to a quarter of their retirement savings.

Private pensions consultants welcomed her ideas last night, although they warned that they would involve a huge overhaul of the pensions system. John Ralphe, an independent pensions consultant, said last night that the plan made sense. He stressed, however, that people who withdrew a lump sum would have to pay tax on the amount withdrawn equivalent to the amount of relief they had received. 'It is economically sound but politically unattractive,' he said.

[Barry Trotter]

any report published by that horrible little man Peter Mandelson is sure to be a right royal shafting for the postal workers. The top dogs will always be looked after but we,the ones at the bottom of the ladder wil get told we have to work until we are 90 and make provision for the removal of our corpse should we die on duty.