Backlash as Royal Mail sale plans are unveiled

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Job losses, higher prices for customers and a poorer service were feared by trade union leaders last night after the Coalition unveiled plans to sell off Royal Mail and mutualise the Post Office network.

UK Business Secretary Vince Cable described the two arms of the postal service as “cornerstones of society” and promised there would be no further post office branch closures.

But Billy Hayes, who leads the Communication Workers’ Union, accused the UK Government of being “obsessed” with privatisation and that it was “flogging off the country’s state assets without exploring other options”.

He described separating Royal Mail from the postal network as a “fatal step” and suggested a privatised company would only be interested in the bottom line and not the communities it served.

“We’re very concerned privatisation will undermine the whole concept of a universal service. In turn, this will bring even more pressure to cut jobs and services,” added Mr Hayes.

If private equity takes an interest in Royal Mail, this will only be for short-term profit through asset-stripping.

Paul Reuter, Unite

Paul Reuter for Unite said: “If private equity takes an interest in Royal Mail, this will only be for short-term profit through asset-stripping. They are not in business to provide a public service, they are out to make money, pure and simple.”

However, Moya Greene, Royal Mail Group’s chief executive, insisted deregulation of the UK postal services market was long overdue.

She said: “Royal Mail is a great organisation which has made enormous strides in modernising over the last few years, but with mail volumes continuing to fall and competition intensifying we need to step up the pace.

“That means we need more capital, deregulation to allow us to compete fairly while safeguarding the universal service obligation, and the removal of the historic pension deficit.”

Earlier in the Commons, Mr Cable said the Government was determined to put the postal service on a stable financial footing for the future.

He told MPs there would be no objection to a foreign company buying the nation’s postal organisation because the Government was not going on a “nationalist jihad” against overseas companies.

Up to 90% of Royal Mail will be up for sale with 10% going in shares to postal workers. This would make it the UK’s largest ever employee share ownership scheme by a firm being privatised. Royal Mail has 176,000 employees.

He also confirmed the Government was considering converting the post office network into a John Lewis-style mutual.

Giving the ownership and the running of the UK’s 11,500 post offices to subpostmasters, customers and the local community would “empower” the people who knew the business best, claimed the Secretary of State. “This would be the Big Society in action,” he insisted.

Publishing the Postal Services Bill, Mr Cable explained: “Royal Mail is in a difficult position. There is no hiding the facts; mail volumes falling, a multibillion-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.”

The Government is to take on £8 billion pension liability to ensure the business does not have to make huge payments to make up the shortfall. The proceeds of the sale could be recouped by the Treasury to support the liability.

He insisted the Coalition plan would “secure the services that consumers and businesses rely on … give employees a stable company to work for, shares in the future of the business and the secure pension they deserve [and] remove the risk to taxpayers of an expensive bail-out”.

Mr Cable also made clear the post office network was not for sale and there would be no further branch closures.