POSTAL WORKER IN LINE FOR FREE SHARES AS ROYAL MAIL MOVES AHEAD WITH PRIVITISATION – Since its creation some 378 years ago the Royal Mail has been owned and operated by the state.
Last night Business Secretary, Vince Cable, gave the green light for the Royal Mail’s privitisation package and expects the Royal Mail to float on the London Stock Exchange within a year.
Since the announcement earlier this year there has been speculation, with divided opinion, as to whether postal workers would receive free shares and it is now confirmed that approximately 10 per cent of the company will be awarded to its staff in the form of free company shares.
The Government is expecting to raise some £3 billion from the Royal Mail flotation and if demand for shares remains high, as expected, each postal worker will likely walk away with £1,500 worth of free shares.
As with most things in life it is not possible to please all of the people all of the time and the Unions are certainly not happy with the prospect of the Royal Mail being privatised and have threatened a series of labour strikes if the Government doesn’t halt its plans.
The Unions fears that once privatisation is completed the Royal Mail will likely start increasing prices through a tariff system so that letters and parcels are charged at different rates depending on their destination.
However, Ministers have made it clear that Royal Mail’s obligation to deliver letters under a single fee, regardless to its destination with in the UK, is enshrined in law and that any change would require approval from Parliament and the House of Lords.
In order for the Government to put as much of the funds back into the Treasury from the sale it has decided not to engage in a costly advertising campaign. It will, according to Ministers, be a low-key affair however the public will become fully aware through media sources.
It is still early days and as yet the price per share has not yet been set but Ministers are warning prospective shareholders that the Royal Mail will not be sold off ‘on the cheap’.
Is this good news for the Royal Mail and its customers? The Royal Mail is surely a British institution however I personally don’t think privatisation will change that. One of the biggest issues the Royal Mail has is its £9.5 billion pension black hole that the taxpayer is forced to pick up the tab on.
Like most ‘state run’ business they have a tendency to run inefficiently; due to the fact that they can always run to the taxpayer for help. Privatisation historically promotes efficiency due to shareholder demand. However as with any privatisation there is the strong possibility of price hikes that the customer has to bear in order for the company to keep its shareholder content.
Some Ministers are voicing their concern that the sale of the Royal Mail is little more than an attempt to dig George Osborne out of the fiscal woes he created and that such a sale will inevitably hurt consumers and small businesses which rely so heavily on the Royal Mail services.
According to a recent poll two thirds of the public are opposed to privatising the Royal Mail and in another some 96% of 112,000 CWU members voted against the sale; one campaign group gave this statement;
“The Government is clearly out of touch with public opinion, but the message from the voters couldn’t be clearer. They cherish the service Royal Mail provides and don’t want to see it sold off.” Mario Dunn, campaign director of Save Our Royal Mail
It is now the Governments position to push ahead and we are likely to start seeing the campaign for shareholders move within the next six to eight months.
Do you think the Royal Mail should be privatised? Leave your comments below.