Royal Mail is an essential part of Britain’s social and economic fabric. It is one of the UK’s largest companies with over 150,000 employees and a turnover approaching £9 billion.
Parliament decided, via the Postal Services Act, to give Royal Mail access to private capital in order to secure the universal postal service. Our overarching objective remains to safeguard the one price goes anywhere, six-days-a-week universal service. All the steps we are taking have this commitment at their core.
As recommended in the independent Hooper reviews of 2008 and 2010 and decided by Parliament, we have already relieved Royal Mail of its historic pension deficit and we have established a new regulatory regime. The benefits of this integrated approach are clear. Royal Mail’s results show how its staff and management, together with the Government’s reforms, have put the company on the road to sustainable profitability and long-term viability.
The final step in safeguarding the universal service is to give Royal Mail access to the flexible private capital it needs to innovate and invest. We are strongly committed to a sale of shares in Royal Mail, as Parliament enabled through the Act, and are advancing our preparations rapidly. Our firm intention is to give Royal Mail access to private capital during this financial year through a sale of shares.
We have put in place objectives for the sale which have been published today on the gov.uk website. These objectives set out that we will sustain the universal postal service for the benefit of all users by securing Royal Mail’s future through the introduction of private sector capital and associated disciplines.
This will be achieved through:
i. Delivering a sale of shares in Royal Mail within this Parliament;
ii. Creating an employee share scheme that, as Parliament has decided, will lead to at least 10% of the company in employee ownership, to drive stronger staff engagement; and
iii. Delivering a financial outcome for the taxpayer, which when considered in the context of the overarching policy objective, represents overall value for money.
We are exploring sale options and no final decisions as to the type of sale have been taken. We recognise the attractions of an initial public offering (IPO) and we have received positive investor feedback to date. However, all options remain open. If an IPO is not possible, we will pursue the option of a private sale if this can be achieved on acceptable terms.
A priority for Government is to honour the commitment that Parliament enshrined in statute in 2011 that at least 10% of shares should be reserved for employees so that they can share in the company’s success. We are rapidly progressing plans for an employee share scheme which would be the largest such scheme for 25 years.
I meet regularly with Royal Mail and the Communication Workers Union (CWU) to discuss progress on plans for a sale of shares, and I have invited the CWU to give their views as to the structure and terms of the employee share scheme.
The delivery of Parliament’s commitment to private capital and employee shares will be good for employees, consumers and business, and will ensure a better capitalised, more adaptable company, better able to meet its customers’ changing needs.
We will continue to keep Parliament informed of developments as we progress our plans for a sale of shares in Royal Mail.