Royal Mail Sale: Cable Outlines Flotation
Royal Mail staff will get free shares under the Government's plans for the privatisation of the service, despite strong opposition to the sell-off among the workforce.
The Business Secretary confirmed in a statement to MPs the intention to float a majority stake in Royal Mail initially, with the rest following depending on market conditions.
Vince Cable told the Commons: "These shares will be free to eligible employees, recognising that many of them would otherwise find them unaffordable."
As he announced that staff would hold 10% of the business under proposals first revealed by Sky News, members of the Communication Workers Union (CWU) took to an open-top bus in the City to denounce the sell-off.
Some of the protesters - most of them employees of the postal service - held placards reading: "Save our Royal Mail" or "You own it, don't buy it."
They argued that they cared more about the future of the service, their pensions, jobs and working conditions than the prospect of a windfall worth more than £2,000 each for the 150,000-strong workforce.
The union's deputy general secretary, Dave Ward, dismissed reassurances about future employment rules to warn of the prospect of strikes unless legally-binding agreements were put in place to guarantee his members' conditions.
But the chief executive of Royal Mail assured staff their pay and conditions would not be changed without their agreement.
Moya Greene said: "As we move into the private sector, the current legal position is that all terms and conditions that apply to Royal Mail employees would remain in place, on the same basis.
"To provide further reassurance, we will create a legally-binding and enforceable contract with the CWU. Pay and protections could not be changed for the period of the contract without CWU agreement."
Mr Cable said the flotation, which was expected to value the business at £3bn, would begin over the next year and the shares would be listed on the London Stock Exchange. They will be available to the general public as well as institutional investors.
"This is logical, it is a commercial decision designed to put Royal Mail's future on to a long-term sustainable basis," he said.
"It is consistent with developments elsewhere in Europe where privatised operators in Austria, Germany and Belgium produce profit margins far higher than the Royal Mail but have continued to provide high-quality and expanding services.
"Now the time has come for Government to step back from Royal Mail, allow its management to focus wholeheartedly on growing the business and planning for the future."
Labour said it would oppose the flotation.
Shadow business secretary Chuka Umunna said: "Having nationalised the organisation's debts by taking on its pension liabilities, they now want to privatise the profit at the very time it is making money.
"There is every sign this treasured national institution is being sold off on the cheap to get income quickly to a Treasury whose economic strategy has failed."