Labour has been slammed for allowing Royal Mail to fall into foreign hands for the first time in 500 years after ministers waved through a £3.6billion takeover by the Czech Sphinx.
Politicians, business groups and campaigners warned of price hikes and declining quality after the Government gave billionaire Daniel Kretinsky’s bid the green light.
The deal will see Royal Mail fall into overseas ownership for the first time since the postal service was established by Henry VIII in 1516.
The board of Royal Mail owner International Distribution Services (IDS) sent shockwaves through the City and Westminster when it accepted the Czech energy tycoon’s offer in May this year.
But the takeover was paused when the Government ‘called in’ the deal for investigation under national security legislation.
In a move that sparked fears of future stamp price hikes, the controversial deal cleared a major hurdle when ministers and unions gave it the go-ahead yesterday.
Business secretary Jonathan Reynolds hailed a new agreement with Kretinsky, saying it will provide ‘a secure future for thousands of workers and customers’.
Beefed up commitments included giving the Treasury a so-called ‘golden share’ in the company.
However, Kretinsky’s EP Group has not made any promises to keep costs fair for consumers. The price of a first-class stamp has already risen five times in the last two years to £1.65.
And the Government’s stamp of approval comes amid concerns about the businessman’s connections to Russia.
Vince Cable, who oversaw the privatisation of Royal Mail as business secretary in the coalition government, indicated that he would not have approved the deal.
‘I would have erred on the side of caution on the Russian connections,’ he told the Mail.
The Government’s ‘golden share’ means ministers will need to approve key changes to Royal Mail’s ownership, headquarters location and tax residency.
Kretinsky had already promised to keep the brand name and retain Royal Mail’s HQ and tax residency in the UK for the next five years.
He had also agreed to meet the company’s Universal Service Obligation (USO), which means that Royal Mail must deliver letters six days a week to all 32million addresses in the UK for the price of a stamp.
The takeover comes as the postal service seeks major changes to the USO, which would allow it to ditch Saturday deliveries for second-class letters.
Prem Sikka, a Labour peer and professor of accounting at the University of Essex, said: ‘[There are] some assurances about postal deliveries and workers’ rights, but how long will they last?
‘Another essential service owned from abroad, shareholders don’t experience degradation of service.’
Liberal Democrat business spokesperson Sarah Gibson MP said the Government must make sure that ‘vital services won’t be watered down at customers’ expense’.
‘Ministers and Royal Mail executives must be held to account so that local communities receive the first-class service they deserve,’ she said.
Amanda Fergusson, the chief executive of the UK Greeting Card Association, said ‘further price rises and plans to shake up the service will create a further spiral of decline’.
Dennis Reed, the director of the Silver Voices charity of older people, said the decision ‘really was the pits’.
‘We can expect higher prices, staff unrest, and eventually the end of the universal service guarantee,’ he said.
But the Communication Workers’ Union, which had previously fiercely opposed the takeover, backed the deal and accused current management of ‘running the company into the ground.’
CWU general secretary Dave Ward said: ‘The truth is that the status quo is what will kill off postal services in the UK.’
‘If the takeover is completed, we will make sure every aspect of our agreement with EP Group is upheld in full,’ Ward added.
The deal is still subject to shareholder and other regulatory approvals. It is expected to complete in early 2025.