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02/07/2009
Royal Mail Part-Privatisation Plans Shelved
Plans to part-privatise the Royal Mail have been put on hold due to the depressed state of the economy, Business Secretary Lord Mandelson has announced.
The proposals were shelved as the Business Secretary confirmed the economic climate had made it impossible to find a buyer for the 30% stake.
Speaking to the Lords yesterday, he said: "We have thoroughly tested the market to see who is interested, but economic circumstances are extremely difficult.
"I have always been clear that we would only do a deal with the private sector if it represented value for money for the taxpayer."
However, Lord Mandelson insisted the part-privatisation plans have merely been postponed until conditions in the market improve.
Only one potential buyer, the private equity group CVC Partners, had made a formal bid for the Royal Mail stake. It is thought to have offered about £1.9bn for a 30 per cent share in the business.
Around 140 Labour backbenchers and unions who were fervently opposed to the plans are likely be pleased with the outcome, with members of the Communications Workers Union (CWU) threatening to vote on disaffiliation from the Labour Party if it went ahead.
CWU general secretary Billy Hayes said: "The Government has not only looked at market forces but has listened to the British public. Privatisation was a deeply unpopular suggestion from day one."
He added: "We now look forward to resolving issues which remain around pensions, regulation and modernisation."
Last month the chairman of Royal Mail warned that without part-privatisation, the pension scheme would have to be closed to existing members.
The government is now being urged to describe how it would rescue the Royal Mail's pension fund, as part of the deal would have seen the fund's £8 billion deficit paid off.
However, Lord Mandelson said the pension trust was a "matter for the company and the pension trustees".
(JM/BMcC)
The proposals were shelved as the Business Secretary confirmed the economic climate had made it impossible to find a buyer for the 30% stake.
Speaking to the Lords yesterday, he said: "We have thoroughly tested the market to see who is interested, but economic circumstances are extremely difficult.
"I have always been clear that we would only do a deal with the private sector if it represented value for money for the taxpayer."
However, Lord Mandelson insisted the part-privatisation plans have merely been postponed until conditions in the market improve.
Only one potential buyer, the private equity group CVC Partners, had made a formal bid for the Royal Mail stake. It is thought to have offered about £1.9bn for a 30 per cent share in the business.
Around 140 Labour backbenchers and unions who were fervently opposed to the plans are likely be pleased with the outcome, with members of the Communications Workers Union (CWU) threatening to vote on disaffiliation from the Labour Party if it went ahead.
CWU general secretary Billy Hayes said: "The Government has not only looked at market forces but has listened to the British public. Privatisation was a deeply unpopular suggestion from day one."
He added: "We now look forward to resolving issues which remain around pensions, regulation and modernisation."
Last month the chairman of Royal Mail warned that without part-privatisation, the pension scheme would have to be closed to existing members.
The government is now being urged to describe how it would rescue the Royal Mail's pension fund, as part of the deal would have seen the fund's £8 billion deficit paid off.
However, Lord Mandelson said the pension trust was a "matter for the company and the pension trustees".
(JM/BMcC)
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3,000 managers to go at Royal Mail
Up to 3,000 "non-operational managers" are expected to leave Royal Mail under a voluntary redundancy programme launched by the company today. All of the job losses will be part of the 30,000 jobs which Royal Mail has already announced will be made redundant during the company’s "three-year turnaround plan".
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Northern Ireland WeatherToday:It will be cloudy again throughout the day. Mainly dry in the morning, but patchy drizzle in places, becoming more widespread and persistent in the afternoon. Freshening southwesterly winds. Maximum temperature 12 °C.Tonight:Cloudy with a spell of heavy rain pushing south through late evening and the early hours, followed by some clear spells. Minimum temperature 6 °C.
