Royal Mail privatisation looks like a blitzkrieg strategy

[TrueBlueTerrier]

http://www.telegraph.co.uk/finance/comm ... ategy.html" onclick="window.open(this.href);return false;

Business Minister Michael Fallon has fired the starting gun for the Government’s proposed sale of Royal Mail.

In a speech to the think tank Policy Exchange, he announced on Monday that the tendering process for banks to advise on a flotation will begin in the next few days, with an appointment expected by the end of May; at the same time, Royal Mail will begin exploring access to capital with the debt markets.

After years of procrastination, false starts and ideological battles, this looks very much like a blitzkrieg strategy.

There is no doubt that an IPO is the Government’s favoured approach – Mr Fallon said as much to Parliament last week – and that it intends to move with lightning speed. The strategy will be to set the terms of the debate so that privatisation is seen as inevitable, emasculating the campaign against it.

Expect an October IPO and one that’s completed by November at the latest. Any later and you run into the build-up to Christmas – always the Royal Mail’s biggest logistical challenge and not one they can afford to fail.

Mr Fallon is promising that a privatised mail service would not only keep a six-days-a-week pattern at affordable prices, but actually improve service, delivering letters more quickly. Cash raised from privatisation would make the service more efficient. Key to the strategy will be neutralising opposition from the Communication Workers Union. They will still make plenty of noise, but one senior industry figure advises: “Watch their feet, not their mouths”.

Under the Postal Services Act, the Government is obliged to pass on 10pc of equity to Royal Mail staff; that could concentrate a few minds if it comes to a ballot on industrial action. If the Treasury wants to box clever, it could increase that amount above 10pc and make privatisation a truly attractive prospect to the 170,000-plus workers. Calls to man the barricades might then fall on deaf ears.