Royal Mail stake to be sold to private foreign firm in £3bn

[Night Tonic]

Telegraph Newspaper: http://www.telegraph.co.uk/news/newstop ... -deal.html

In a deal likely to be worth around £3 billion, at least a third of the state-owned firm that runs Britain's postal network will be sold to a private company.

The move – which will see taxpayers footing the bill for Royal Mail's £7 billion pensions black hole – will be seen as the first step on the way to full privatisation of Britain's mail services.

It will be the first time since the nation's universal postal service was set up in the 19th century that any stake in it has fallen into private hands. However, by only selling off a third of the company Labour will claim they are still keeping to their 2005 election manifesto commitment to keep it in public hands.

The decision to allow the company to take around a third of Royal Mail could be announced by ministers as early as Tuesday.

The Telegraph understands that two companies have been vying for the stake. One firm is TNT, the express delivery service that is part of the Dutch company TPG, the former state postal service. The other is thought to be DHL, the parcel courier, part of Deutsche Post.

The German postal company, which is Europe's biggest mail carrier, has long coveted a stake in the British postal market. Although commercial rivals can collect and deliver business mail, Royal Mail currently enjoys a monopoly on delivering residential post.

However, according to industry insiders, TNT is favourite to land the stake. TNT is already the main competitor to Royal Mail and collects more than a billion items of mail in Britain every year and handles BT bills and statements.

Lord Mandelson, the Business Secretary, has been instrumental in the move towards partial privatisation. The Post Office and Royal Mail have been losing money and ministers have decided to act.

Successive Governments have toyed with the idea of privatising postal services in Britain, but the move has always ultimately been rejected.

The Royal Mail is considered to be the oldest postal service in the world, and has been in state control since at least 1635, when Charles I opened up his Royal Mail to public use.

Its brave – if unprofitable – promise to deliver any letter anywhere within the country for a single price came into being in 1840, with the founding of the Penny Post.

Despite various reforms, such as splitting off British Telecom in 1981, and allowing competitors to deliver business post in 2006, it has remained resolutely in the ownership of taxpayers.

But a review by Richard Hooper, a former deputy chairman of Ofcom, will this week lay bare the true extent of liabilities Royal Mail faces. His report is expected to warn that the service – which has in recent years lost out on valuable commercial contracts – faces financial disaster unless radical action is taken.

Mr Hooper's final report, which has taken a year to produce, will recommend that private sector companies are brought in. It will point to comparable schemes in countries such as Denmark, which it says have proved successful

The report will also outline how large the Royal Mail's pension liability has become. Its £22 billion pension scheme has a "black hole" exceeding £7 billion.

Royal Mail is suffering from a loss of business due to people using email and mobile phones more often, it will warn, predicting that the number of letters being sent could decline by as much as 7 per cent each year.

Already the number of letters Royal Mail delivers is declining, from 84 million in 2006 to 79 million the following year.

Company profits fell by one third last year to £233 million. And despite the cost of a first-class stamp rising from 28 p to 36p tin the last decade Royal Mail still loses 6p on every stamped first and second class letter

Despite widespread public outcry, the number of Post Offices in Britain has almost halved in the last ten years from 19,00 in 1997 to 11,500 as they have become increasingly unprofitable.

The search for potential buyers was launched by ministers after it became clear what Mr Hooper was planning to recommend.

As part of the deal the Government will agree to take on the pension commitments that Royal Mail has accrued, a vital move to attract investments from private companies.

Ministers hope consumers will notice little difference in the short-run under the deal. Indeed, they believe the service may become slightly better as a result of the new investment. TNT is regarded as one of the most efficient postal firms in the world and Royal Mail may benefit from its involvement.

However, consumer groups will worry about the prospect of price rises under the influence of a private company. Under the deal, the price of stamps for first class post and other services will continue to be set by regulators.

The move is certain to anger unions and some Labour MPs who will fiercely oppose any move that looks like a form of privatisation.

State ownership of the Royal Mail has been a key part of recent negotiations between ministers and the unions. Keeping it in public hands was part of the Warwick Agreement prior to the 2005 general election and reiterated in Warwick Two – this year's updated agreement.

For Lord Mandelson it will represent the culmination of almost 10 years work. When he was first Trade and Industry Secretary in 1998 he was a strong advocate for reforming the Royal Mail.

Lord Mandelson, who was brought back into the Cabinet by Gordon Brown in October, recently suggested that the Royal Mail should be "progressively private, even if initially part of the company stayed in Government hands."

Postcomm, the industry regulator, is likely to welcome the move. They have recommended that "Part privatisation is the only way Royal Mail can ensure good management and efficiency."

They suggest Royal Mail "splits into two parts – with the Post Office in government ownership and the delivery and sorting side of the business part -owned by the Government and partly by private capital."

In his report Mr Hooper is expected to repeat his warning to trade unions, made in the interim report, that future industrial action is likely to "accelerate" the decline of Royal Mail.

Postal workers in parts of the country are currently poised to go on strike on Friday, threatening widespread disruption to the Christmas posts.

A spokesman for the Communication Workers Union said that staff would not react well to the warning, or the prospect of privatisation. She added: "The British public is fed up with privatisation and has seen the failures of the free market."

[NWpostie]

This is a very bad idea, a privatised mail service, profit will be the motivation, USO will be dropped, this was tried in Sweden and Canada running a mail service ona commercial basis, it failed and service standard went down, RM is a social service, you couldn't run it as fully commecial service.

Previous privatisations have meant more expensive bills and service as well as different priorities the shareholders comes first.

[TrueBlueTerrier]

If this goes ahead the CWU better let us have a vote to suspend donations to the PLP. Then we can start rewarding the MPs that we sponsor if they work enough for it.

[k979aaa]

If this goes ahead the CWU better let us have a vote to suspend donations to the PLP. Then we can start rewarding the MPs that we sponsor if they work enough for it.

We should have done that long ago but i support your recommendation T.B.T.

[Phantom]

Lets sell a 3rd to TNT and it will all be better again..............................................

[darth]

firstly it is a report nothing has been agreed yet.if the tories are smelling a rat lets see what comes out in the wash.whether gordon brown is prepared to play political roullette as well will have to be seen.i think the whole rank and file of the labour party will make their message clear.

[Pmn]

If this goes ahead the CWU better let us have a vote to suspend donations to the PLP. Then we can start rewarding the MPs that we sponsor if they work enough for it.

Yes, this my general attitude to the Labour Party these days. Critical support. Starve the Tory wing of the party of money and votes.

[smokerjim]

firstly it is a report nothing has been agreed yet.if the tories are smelling a rat lets see what comes out in the wash.whether gordon brown is prepared to play political roullette as well will have to be seen.i think the whole rank and file of the labour party will make their message clear.

Does it not seem odd that within hours of the Hooper report being published, one of our major competitors has jumped in with both feet to say "I'd buy that for a dollar!" - I'm not suggesting that they've been tipped the wink, in advance.....after all, that would call in to question the probity & integrity of HMG & especially Lord Mandelson of Corkscrew, and no one could accuse either of being shady, could they?

:mfo :lfo :cfo

[stokes11eg]

firstly it is a report nothing has been agreed yet.if the tories are smelling a rat lets see what comes out in the wash.whether gordon brown is prepared to play political roullette as well will have to be seen.i think the whole rank and file of the labour party will make their message clear.

Does it not seem odd that within hours of the Hooper report being published, one of our major competitors has jumped in with both feet to say "I'd buy that for a dollar!" - I'm not suggesting that they've been tipped the wink, in advance.....after all, that would call in to question the probity & integrity of HMG & especially Lord Mandelson of Corkscrew, and no one could accuse either of being shady, could they?

:mfo :lfo :cfo

It is probably already a done deal! I think I said before on this board that within 18 months or so, there will be a sell out--and everybody who is sitting back thinking of a big pay off is in for a shock.You'll end up working more and
more hours for less money--forget all this transfer of undertaking etc, any 'new employer only needs to honour your contracts for a month, and then they can start making changes.By which time you are trapped.

[NWpostie]

firstly it is a report nothing has been agreed yet.if the tories are smelling a rat lets see what comes out in the wash.whether gordon brown is prepared to play political roullette as well will have to be seen.i think the whole rank and file of the labour party will make their message clear.

Does it not seem odd that within hours of the Hooper report being published, one of our major competitors has jumped in with both feet to say "I'd buy that for a dollar!" - I'm not suggesting that they've been tipped the wink, in advance.....after all, that would call in to question the probity & integrity of HMG & especially Lord Mandelson of Corkscrew, and no one could accuse either of being shady, could they?

:mfo :lfo :cfo

It is probably already a done deal! I think I said before on this board that within 18 months or so, there will be a sell out--and everybody who is sitting back thinking of a big pay off is in for a shock.You'll end up working more and
more hours for less money--forget all this transfer of undertaking etc, any 'new employer only needs to honour your contracts for a month, and then they can start making changes.By which time you are trapped.

Maybe I should have took that VR when it was offered to me

[97gaz]

firstly it is a report nothing has been agreed yet.if the tories are smelling a rat lets see what comes out in the wash.whether gordon brown is prepared to play political roullette as well will have to be seen.i think the whole rank and file of the labour party will make their message clear.

Does it not seem odd that within hours of the Hooper report being published, one of our major competitors has jumped in with both feet to say "I'd buy that for a dollar!" - I'm not suggesting that they've been tipped the wink, in advance.....after all, that would call in to question the probity & integrity of HMG & especially Lord Mandelson of Corkscrew, and no one could accuse either of being shady, could they?

:mfo :lfo :cfo

It is probably already a done deal!

Hmm. What colour are the new uniforms going to be. Wasn't going to be orange was it?

[stokes11eg]

How long have we got then before this starts to affect the postmen and women?? Mayb i should take the IHR they want me to take

I think it already has affected posties----I bet most of these current changes were due to a behind
the scene deal---just think about it, for over a year we were going to get new machines-- then all of a sudden ,
that's not going to happen---is this because the so called new "buyers ' have already ageed to make investments?
It would take more that a couple of days f0or them too come up with a figureof a 3 BILLION POUND INVESTMENT.
Get out Madlin4 if you get the chance!!!!

[opgpat]

'In April 2007, TNT Post announced a new reorganisation of the company, which will lead to the shedding of some 7,000 jobs by 2010. The need for restructuring has been fuelled by dwindling post volumes as well as liberalisation of the postal services market, bringing increased pressure on terms and conditions of employment.'

This is interesting reading from an Amsterdam research institute. There is nothing unique about the RM position and the UK mail market.

TNT Post's domestric solution is to:
Cut the workforce by 15% approx
Bring wages inline with competitors (20-25% cut)
Flexible hours.
Pay per assignment NOT per hour as per competitors.
Compulsory redundancy if 'rationalistation' is refused by workforce.

Two choice quotes:

'In effect, TNT Post is passing on the consequences of the price war in the postal market to its employees.'

'The State Secretary of Economic Affairs, Frank Heemskerk, has reassured postal delivery staff at TNT Post who are facing dismissal that they can count on the government’s support in finding alternative employment.'

http://www.eurofound.europa.eu/eiro/200 ... 04049i.htm

Happy reading.

[stokes11eg]

'In April 2007, TNT Post announced a new reorganisation of the company, which will lead to the shedding of some 7,000 jobs by 2010. The need for restructuring has been fuelled by dwindling post volumes as well as liberalisation of the postal services market, bringing increased pressure on terms and conditions of employment.'

This is interesting reading from an Amsterdam research institute. There is nothing unique about the RM position and the UK mail market.

TNT Post's domestric solution is to:
Cut the workforce by 15% approx
Bring wages inline with competitors (20-25% cut)
Flexible hours.
Pay per assignment NOT per hour as per competitors.
Compulsory redundancy if 'rationalistation' is refused by workforce.

Two choice quotes:I I remember perhaps a couple of years ago, our Manager saying that T.N.T. wouldn'temploy any x Royal Mail workers-probably just a scare tactic, but wqe shall wait and see!!

'In effect, TNT Post is passing on the consequences of the price war in the postal market to its employees.'

'The State Secretary of Economic Affairs, Frank Heemskerk, has reassured postal delivery staff at TNT Post who are facing dismissal that they can count on the government’s support in finding alternative employment.'

http://www.eurofound.europa.eu/eiro/200 ... 04049i.htm

Happy reading.