LTB 1078/11 The Future of the Royal Mail Group Update

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Letter to Branches




No: 1078/11 Ref: 67000 Date: 20th December 2011


TO: ALL BRANCHES WITH POSTAL MEMBERS



Dear Colleague


The Future of the Royal Mail Group – Emergency Motion 3 – Update on Key Issues


The purpose of this LTB is to provide an end of year overview of the key issues affecting the future of the Royal Mail Group and the terms of Emergency Motion 3.

The LTB follows a report endorsed by the Postal Executive at a meeting on the 6th December and sets out the current state of play and our forward workplan initiatives in the New Year.

EU State Aid

The process for securing State Aid is well underway and regular meetings are taking place between the European Commission, the Government and the Royal Mail Group. These meetings are testing the state aid case put forward by the Government against the viability of the company’s restructuring plan and the rules laid down in Europe for clearing such cases. Having made a strong submission to the European Commission, the Union continues to press for clearance of State Aid without any onerous conditions that would impact adversely on our members or the company.

We pursue CWU policy in regular dialogue with the Minister, the Shareholder Executive, senior management and directly with the European Commission. We would summarise the current state of play as follows:-

There appears to be a reasonable degree of confidence that a form of state aid will be granted, albeit the prospect of some conditionality remains.

In terms of timescales, whilst the case workers may well reach a decision in the very near future, the ratification process in Europe means that it may take sometime before a final decision is announced. The significance of the timescale is directly linked to the Royal Mail Group being responsible for paying the next deficit contribution (approximately £300 million), due at the beginning of April 2012.




At the last Tripartite Pensions meeting both the Government and the company explained that they were doing everything possible to find a solution that would avoid this situation.

In the New Year the Union will continue to press forward our policy position by continuing to directly engage with the European Commission.

Pensions

Tripartite meetings have continued and both the Government and the company now recognise that the Union’s policy position needs to be addressed. All parties have agreed to increase the frequency of these meetings in the New Year.

Postal Branches are reminded that the implementation of a pensions solution will ultimately be directly linked to the timescales on state aid being granted.

We are currently working with the communications department to produce a comprehensive pensions pamphlet that will be sent to all members’ home addresses. The exact timing of this is also dependent on progress in our discussions.

Regulation

We are beginning to see a shift in the balance of forces on regulation away from the competitors and towards Royal Mail. This has been achieved through the work we have jointly undertaken with the company and our lobbying during the passage of the Bill through to the royal assent of the Postal Services Act 2011. Further evidence of this can be seen in Ofcom’s first Consultation paper. Responding to the Ofcom Consultation, which concludes in early January 2012, is now our immediate priority.

At its meeting on the 6th December the Postal Executive received a full presentation from Ofcom of their Consultation paper. On the 12th December the Regulation Sub Group met with Royal Mail to consider their views on this latest consultation. The Postal Executive will meet on the 21st December to endorse the Union’s submission and in due course this will be circulated to Postal Branches.

Privatisation/Employee Ownership

When the General Secretary and Deputy General Secretary recently met with Ed Davey, it was confirmed by the Minister that there was no real prospect of a sale taking place in 2012. The Minister also stated the same thing publicly at a Marketforce Conference on the Future of UK Postal Services held on the 23rd November 2011.

In line with CWU policy, we continue to explain to the Minister that we still oppose privatisation, but expect to be fully involved in discussions on the shape and type of sale - should it proceed - and the construction of any Employee Ownership Scheme. The Minister confirmed that he supported our involvement on these issues and was committed to ongoing and timely dialogue with the Union.






To take the subject matter forward we will be placing a document before the Postal Executive in the New Year that will enable a more informed discussion about the various privatisation options available to Government and the likelihood of any of these taking place in the current economic conditions. We will also table a document that considers the various forms of employee ownership and how, if this were to proceed, the Union could best address this in line with our policy of building industrial democracy principles and new governance models within the company. Both these documents will enable a review of our overall tactics based on the prevailing circumstances.

POL Separation and Mutualisation

The Union has held a number of meetings with the company on all the issues associated with the separation of Post Office Limited. This includes commencement of the formal consultation over the transfer of employees to Post Office Limited as a separate company. The company has indicated that they believe the formal separation of Post Office Limited from the overall Royal Mail Group is still on course to go ahead on the 1st April 2012.

The Union are seeking to ensure the full protection of all existing National Agreements, including MTSF at the point of transfer. A further meeting has been arranged for the 22nd December 2011

The current inter business agreement between Royal Mail and POL runs until 2014. We understand that negotiations on a new arrangement will be concluded in the very near future.

The Union continues to engage with the government over their plans for mutualisation and a CWU submission was recently made to the BIS formal public consultation paper entitled “Building a Mutual Post Office”.

Independent Assessment of Royal Mail’s Restructuring Plan/Finances

The Union has engaged an independent business analyst to provide us with an independent assessment of Royal Mail’s restructuring plan and the company’s overall financial position. Thus far, the Royal Mail Group has cooperated in providing our nominated company with the necessary information required. This work will be completed early in the New Year with a report being placed before the Postal Executive. It will be our intention to then provide Branches with relevant information, whilst observing commercial confidence.

Summary

The aforementioned demonstrates the sheer scale of the work the Union is undertaking to move forward Emergency Motion 3 and secure the best possible agreements for our members, whilst shaping the debates that will determine the future structure of the company.



In the New Year these issues will come to the forefront and further reports will be provided to Branches in due course. To compliment the terms of this report a further comprehensive LTB, covering the current state of play in national talks with RMG, will be sent out later today.

Any enquiries on the above LTB should be addressed to the DGS (P) department.

Yours sincerely



Dave Ward
Deputy General Secretary (P)