The British government is pressing ahead with its controversial plans to privatise Royal Mail, a decision described by the Financial Times as the “most ambitious privatisation since John Major sold the railways in the 1990’s.”
Royal Mail is an iconic institution, dating back to 1512 under Henry VIII’s reign, and its privatisation is being met with stiff resistance from labour unions.
Business Secretary Vince Cable announced the plans to the Cabinet on Tuesday. It will entail a stock market flotation of the company, a process which will take four to six weeks that according to industry watchers could value the company at up to £3 billion.
The announcement comes at a time when the 125,000 postal workers are being balloted for a strike, the results of which will be announced on October 3.
In a statement, the Communications Workers Union said the plans to sell are a “betrayal of the British public — 70 per cent of whom are against privatisation according to a Sunday Times poll at the weekend.”
In a letter to a postal employee on the government website, Michael Fallon, the Minister for Business and Enterprise, had justified the sale on the grounds that it would give Royal Mail “future access to private capital” to “modernise and take advantage of opportunities to grow.” It should not have to compete with hospitals and schools for “scarce public resources,” he said.
Mr. Fallon has promised the continuation of existing delivery patterns, and 10 per cent shares of the company for postal employees, though he made no commitment on whether these shares would be discounted or given free.
Bill Hayes, the CWU General Secretary, calls the government argument “dogma from old-fashioned Tories wedded to privatization.” I
In a statement on CWU’s website, he argues that privatization is the “worst way to access capital as it’s more expensive than borrowing under public ownership” pointing to Network Rail, the public utility that owns and operates Britain’s network infrastructure, which “borrowed billions on private markets at cheaper rates under an arrangement which doesn't affect public debt.”