Fallon To Unveil £2.5bn Royal Mail Flotation

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The Government will this week fire the formal starting-gun on the most ambitious privatisation in decades by unveiling plans for a £2.5bn autumn stock market listing of Royal Mail.



Sky News can exclusively reveal that Michael Fallon, the Business Minister, is expected to disclose the news in a statement to the House of Commons. The statement has been provisionally scheduled for Wednesday although the timing could still change, according to people close to the situation.

Mr Fallon’s announcement will end any lingering suggestions that the Government could abandon plans for a flotation of Royal Mail in the face of escalating public hostility from trade unions.

The Communication Workers’ Union rejected an 8.6pc basic pay rise offer – spread over three years – from the company’s management last week, a deal which Mr Fallon described as “pretty reasonable”.

It will also confirm the widely-held expectation that the Government wants to pursue a listing in which members of the public can participate, although there may be restrictions on the number of shares for which individuals can apply.

Mr Fallon had previously said the Coalition’s “preferred route” to injecting capital into Royal Mail was a stock market flotation but insisted that other options remained under consideration.

Last week, the Government hired three investment banks to add to an existing quartet of advisers that will work on the share sale. They are expected to earn up to £15m in total, a relatively small fee pool for such a sizeable listing.

It is unclear whether this week’s statement will include full details of the terms of an initial public offering (IPO), such as the mechanism through which Royal Mail’s 130,000 staff will receive shares in the company.

Sources said the Government was leaning towards the option of giving the equity to staff for free rather than at a discount.

However, Sky News understands that the employee share offer, which will take place over a period of some months, will only include those Royal Mail staff who are based in the UK.

Ministers and officials have been deliberating over whether the roughly 13,000 people who are employed by General Logistics Systems (GLS), Royal Mail’s European parcels business, should be involved in a staff share ownership scheme.

The Government has been sensitive to potential accusations that they are orchestrating a share giveaway worth hundreds of millions of pounds from which thousands of French, German and Italian citizens would stand to benefit.

GLS, which delivers more than 360 million parcels to 220,000 customers every year, is one of the most profitable parcel delivery businesses in the world. Its earnings have been one of few financial bright spots during the restructuring of Royal Mail during the last decade.

The company has staged a significant financial turnaround under the leadership of Donald Brydon, its chairman, and Moya Greene, the Canadian who was parachuted in to lead the restructuring in 2010.

Royal Mail’s annual report, which could also be published this week, is expected to show that she will receive an annual bonus worth almost £500,000 after nearly trebling the company’s operating profit to £403m last year.

The Department for Business, Innovation and Skills and Royal Mail both declined to comment.

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Royal Mail sell off a 'disgrace' say Coventry and Warwickshire union leaders



Coventry and Warwickshire union leaders have branded the decision to sell off Royal Mail as a “disgrace”.

Members of the Communication Workers’ Union reacted angrily to yesterday’s announcement and vowed to fight government plans to privatise the service.

They say the news will lead to a national dispute with postal staff unwilling to accept threats to their jobs, pensions and terms and conditions of employment.

And they believe the decision will have a “detrimental” effect on residents and businesses as it will lead to the collapse of the postal service, claiming it will become “unsustainable”.

“To allow the Queen’s head to be privatised is a disgrace,” said Mick Kavanagh, Coventry union leader for the CWU (pictured top).

“There was no mandate for it and it wasn’t even in the Conservative’s manifesto. There is no justification for why they are doing this now, why they are pushing ahead with this plan? This is a complete rip-off and will be the collapse of the postal service.

“Workers will obviously be very concerned about changes to their terms and conditions of employment and what this means for jobs.”

The news was announced yesterday by Business Secretary Vince Cable who confirmed a majority stake in the Royal Mail is to be sold off by the government and staff handed ten per cent of the shares free of charge.

Mr Cable told the Commons there would also be a public offering of the shares, and staff who wished to extend their free stake would have the first chance to buy.

But union leaders say workers will not be enticed by ministers’ plans to allocate ten per cent of the new company for free.

Mr Kavanagh added: “As a union we are not going to stand by and watch this proud institution be destroyed by this government.

“We really hope the public will get on board and give us their support to help fight these plans.”

Postal workers will be campaigning across Coventry and Warwickshire next week, collecting as many signatures from the public as possible.

People will also be urged to write to their MPs in protest.

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[rebbonk]

Long-term, the general public have not done well out of previous privatisations, I don't expect this one to be different.

[dutchman]

The government's sole objective is to weasel its way out of its existing £30billion pension obligation to former post office workers. All the talk of 'modernisation' and 'investment' is purely a smoke screen. If new investment is needed it will still be the government/taxpayer who has to stump up as happened with the long-sinced privatised BT.

What's sickening is the way the Liberal-Democrats have gone along with the deception despite having been implacably opposed to privatisation whilst in opposition.

I'm no friend of the post office workers union but I know from my time running a mail order business that this is the end of the postal service as we currently know it.