The British government’s plan to sell its remaining 30% stake in Royal Mail for about £1.5 billion to help reduce the country’s large-scale debts has been greeted with a union threat to strike if the disposal impacts on employee working conditions.
UK chancellor (finance minister) George Osborne announced in Parliament on June 4 that the government will sell its remaining shares in the postal group, with sales to start later this year. At present, 70% of Royal Mail shares are held by institutional and private investors (60%) and employees (10%), with the government still owning the remaining 30%.
The 30% stake currently has a market value of about £1.5 billion and the transaction “will be designed to deliver best value for money to the taxpayer”. This means the government will be determined to maximise the proceeds from the sale, and it is unclear in how many tranches and how quickly shares will actually be sold.
The disposal will complete the privatisation begun with the IPO of October 2013 which raised about £2 billion for the government. However, there was widespread criticism at the time that the share offer, at 330 pence per share, had been substantially under-valued to ensure heavy demand, and the company’s share price rose sharply after the IPO. The share closed at 492.70 pence on Friday.
In response, the postal union CWU declared that it would oppose the final sell-off, criticised that no further shares would be set aside for employees and warned that full privatisation “threatens the very existence of the one-price-goes-anywhere, six-day delivery service that Royal Mail provides to 29 million UK addresses”.
General secretary Dave Ward said: "When the first part of this privatisation was completed we were told that this was because Royal Mail needed private capital to invest in its future, but if you ask the workforce they have seen hardly any new investment but have witnessed the worst type of short term investors making a killing without any regard to the long term future of the company or the services it provides to the public.
"As a minimum, if this Government wanted to say they were interested in the workers then they could at least increase the workers' stake in the company,” he added.
"The CWU will oppose this final part of the sell-off and continue to campaign against unfair competition and the race to the bottom, which privatisation inevitably brings. Both existing, and any new shareholders should be in no doubt – any attempt to undermine the legally binding agreement that protects Royal Mail workers' terms and conditions will be defended if necessary through strike action,” Ward warned.
