Government attacked on sale details
Published 27/09/2013 | 07:31
The Government came under attack today for releasing details of its sale of shares in the Royal Mail as more than 100,000 postmen and women started voting on whether to strike in protest at the controversial privatisation.
Unions representing postal workers and managers, and the Labour Party, criticised the coalition for pressing ahead with the sell-off despite "consistent opposition" from the public and warnings of the impact on jobs and services.
The Government said Royal Mail expects postal workers to vote for a national strike and other forms of industrial action.
The business will be valued at up to £3.3 billion when privatisation takes place next month, the Government said.
Shares are expected to be priced at between 260p and 330p, giving a market valuation in the range of £2.6 billion and £3.3 billion.
Unconditional dealings in the stock will start on October 15, the day before voting closes in a ballot by the Communication Workers Union (CWU) over whether to back a campaign of industrial action on the sale.
The union is urging its members to vote yes, with any strike action starting a week later.
Around 150,000 eligible staff will be handed 10% of shares in the largest free stock offer of any privatisation in the UK over the past 30 years. This is equivalent to around £2,000 each at the mid-point of today's offer price range.
A union communication being sent to CWU members today said: ''Those who want to sell off the Royal Mail Group are motivated purely by short-term gain and vested interests.
''We cannot give the company a free hand to determine your future and the future of UK postal services.''
A vote at this week's Labour Party conference opposed the sell-off and called on an incoming Labour government to renationalise a privatised Royal Mail.
Billy Hayes, CWU general secretary, said: "The Government continues to press ahead with the sale of the UK postal service despite consistent opposition from the public.
"It seems remarkable that the prospectus is being issued on the same day that postal workers are being sent ballot papers for strike action. Today's announcement changes nothing in terms of the ballot, which will go ahead as notified.
"Royal Mail is profitable and can continue to be successful in the public sector. The sale is driven by political dogma, not economic necessity, and postal workers and the CWU will continue to fight to save services as well as defend their terms and conditions."
Len McCluskey, general secretary of Unite, said: "Customers know and businesses know that this rushed sale is likely to lead to higher prices and could spell the death knell of the universal service which so many rural communities rely on.
"It goes where even Thatcher didn't dare, with the Government selling off a treasured and profitable service to make a quick buck to pay for their failed handling of the economy."
Unite represents Royal Mail managers, who have voiced their opposition to the sell-off.
Shadow business secretary Chuka Umunna said: "Royal Mail is a cherished national institution with a presence across Britain providing vital services to millions of customers every day. But out of touch ministers are putting all that at risk just so they can raise a quick buck to fill the hole left in the public finances by George Osborne's failed economic plan.
"This is in the face of huge opposition from the public and Royal Mail's employees and a real concern about what the sale will mean for customers and local communities.
"Having nationalised Royal Mail's debts by taking on its pensions liability, Ministers are privatising the business when it is making over £400 million in profits, which makes no sense."
In today's offer launch document, it emerged that the Government is expected to retain a stake in Royal Mail of between 30% and 49.9%.
Business Secretary Vince Cable said: "Today is an important day in the life of Royal Mail. People can now apply to buy shares in this iconic British brand.
"This will give Royal Mail access to the private capital it needs to modernise, as envisaged under successive governments, and enshrined in law by Parliament two years ago."
Individuals can apply for shares from later today, with the deadline for the receipt of applications being October 8. Further pricing details and share allocations will be confirmed when conditional dealings in Royal Mail start on Friday October 11.
Retail investors based in the UK can buy shares at a minimum of £750 and can also apply through intermediaries.
Hargreaves Lansdown stockbrokers has already reported significant interest from private investors registering for the share offer.
Richard Hunter, head of equities at Hargreaves Lansdown, said: "Once the prospectus is published and the share offer is open, we will see how much of this interest translates into people applying for shares.
"Time will be short. The share offer will close on October 8 and therefore interested investors will need to act quickly."
Royal Mail handled more than 17 billion letters and more than 1.4 billion parcels during the 2012/13 financial year. Revenues were £9.1 billion, with profits after restructuring costs at £403 million.
Under a programme started in 2007/08, Royal Mail said it has invested £2.8 billion in operational improvements. The Post Office, which has been separate from Royal Mail since April 2012, is not for sale.
Business minister Michael Fallon told BBC Breakfast that postal services would not be adversely affected by today's moves.
Reminded of Margaret Thatcher's comment in the 1980s that she was not prepared to have the Queen's head privatised, he said: "We are not selling the Queen's head and we are not selling the post offices. We are selling Royal Mail."
He added: "It's fully protected, that's quite separate, it's protected by a new regulator, Ofcom.
"The six-days-a-week universal one-price-goes-anywhere service is absolutely separate and the ownership of Royal Mail can't affect that.
"On the contrary, getting private investment into Royal Mail makes it better equipped to deliver that service to a better standard up and down the country."
He said he expected the business to enter the stock market just outside the FTSE 100.
A document published by the Business Department said Royal Mail expects CWU members will vote for national strike action in the ballot.
"It should therefore be assumed that national strike action and other forms of industrial action will take place across the whole of UKPIL's (UK Parcels, International and Letters) activities during the period immediately following, and may take place during, the offer period.
"In the event of national strike action, Royal Mail has contingency plans in place and will also consider its legal options."