In the most contentious sell off since British Rail two decades ago Vince Cable has announced that the 497-year-old postal service is to be privatised.
"This is an important day for the Royal Mail, its employees and its customers," the business secretary said. "HM Government is taking action to secure a healthy future for the company. These measures will help ensure the long-term sustainability of the six days a week, one-price-goes-anywhere universal postal service.”
The unions are meeting with the Royal Mail chief executive, Moya Greene, on Thursday morning to voice their anger at the "great British flog-off". The Communication Workers Union (CWU) plans to disrupt the Royal Mail sale by holding a strike ballot on 20 September, which could lead to a nationwide strike by 10 October. It would be the first nationwide postal strike since 2009. The union is also pushing for a better pay deal, after rejecting a 8.6% pay rise over three years. The union opposes the potential £3bn flotation despite the government promising 150,000 postal staff a 10% stake in the company – worth up to £2,000 each – for free. The government also promised staff a further £13.3m in dividend payments in the first year and promised a "progressive dividend policy" in subsequent years.
The public will also be able to buy shares via stockbrokers or directly from the government via postal or online applications. Members of the public will have to buy at least £750 worth of stock, while Royal Mail employees will have preferential access to more shares if they spend at least £500. Goldman Sachs and UBS are lead advisers on the sale of shares.
As part of the privatisation, Royal Mail will take on £600m of loans from banks, with another £800m available if necessary. This will replace the loans it currently has from the government. The government has not yet decided exactly how much of the company it will float on the stock exchange with the size of the stake sold to be "influenced by market conditions at the time of the transaction, investor demand and the objective to ensure that value for money for the taxpayer is achieved".
Billy Hayes, general secretary of the CWU, said 96% of Royal Mail staff oppose the sell-off, which "not even Thatcher dared do".
Shadow business secretary Chuka Umunna said: "Ministers are pushing ahead with this politically-motivated fire sale of Royal Mail to fill the hole left by George Osborne's failed plan."
Greene said: "Our strategy is delivering a revitalised company, with a unique UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens.
"This network and our strong brand, coupled with the high service quality delivered by our people enable us to take full advantage of the growth in UK e-commerce to further enhance our pre-eminent parcels business. Combining this UK presence with our pan-European parcels business GLS, should result in a financial profile that combines revenue growth and margin progression to underpin strong cash flow generation."
Details of Royal Mail privatisation expected to be revealed today
