Government to sell Royal Mail stake
Chancellor George Osborne tonight announced that the Government had begun the sale of its remaining stake in Royal Mail and that it would give up to a further 1% tranche in the company to employees.
It means staff including postal workers across Britain will share in a chunk of the company worth around £50 million, adding to the 10% awarded to employees when the Coalition began the flotation of the then state-owned firm in 2013.
However it comes after a year in which Royal Mail cut the number of employees by 5,500. It has around 143,000 staff in its main UK business.
The share sale announced tonight will see a 15% portion of the group, worth about £775 million at its current market value, placed with institutional investors - rather than sold to members of the public.
Business Secretary Sajid Javid authorised the start of an "accelerated bookbuilding" process which will see the taxpayer holding in the group halved from 30% to 15%.
But ministers were immediately criticised by Labour, who said they had failed to learn lessons from the earlier "botched fire sale" of the company.
Mr Osborne told a City audience at the Mansion House that the sale of the remaining stake had begun.
He said: "We want to help the Royal Mail attract more investment and serve its customers, and use the money we raise in return to pay down the national debt.
"And we're also going to make sure that there is a special bonus for the workforce who have done such a great job turning Royal Mail around.
"Thanks to them, Royal Mail's share price has risen; so we're going to give more of the shares to the staff. Tomorrow we will announce more details of that, and how much of our stake we have sold."
Shares in the group have risen about 20% since the start of the year.
Today they ended the session at 516.5p, more than 50% higher than they were when the rest of the company was floated in 2013 - in a controversial process, partly including a retail offer to ordinary members of the public.
Ministers at the time came under fire after the share price soared immediately, leaving investors with an instant profit at the expense of taxpayers.
Tonight a Business Department spokesman said: "The Business Secretary has today authorised a sale process to begin.
"Current market conditions represent a good opportunity to achieve value for the taxpayer.
"The universal service is strongly protected by law and Ofcom has a duty to ensure its provision. Therefore the Government sees no policy reason to retain a stake in Royal Mail."
The announcement comes a week after Mr Osborne announced that the Government's remaining stake in Royal Mail was to be sold off within months.
Shadow business secretary Chuka Umunna MP said: "It's disgraceful the Government is rushing to dump its stake in Royal Mail to City speculators without giving ordinary investors a look in.
"The Government does not seem to have learnt the lessons from their initial botched fire sale of the Royal Mail."
Last month, Royal Mail said annual profits had risen by 6% on an underlying basis to £740 million in the year to the end of March as a squeeze on costs helped offset a lower than expected performance from its parcels business.
The group warned that the parcels and delivery market remained challenging and pointed to the threat from Amazon's delivery network.
Chief executive Moya Greene saw her pay increase by 13% to £1.52 million in the last financial year as her basic salary was hiked for the first time since she joined the company in 2010.