Postal union threatens disruption over Royal Mail privatisat

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Postal union threatens disruption over Royal Mail privatisation

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A postal union leader has threatened a summer of industrial disruption and campaigning in a late attempt to halt the privatisation of Royal Mail.

Dave Ward, deputy general secretary of the Communication Workers Union, told the Financial Times the union was likely to order a boycott of deliveries of rival companies’ mail without calling a formal industrial action ballot.
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That would, in effect, invite Royal Mail and private companies such as TNT Post and UK Mail to seek an injunction declaring the action, launched on the back of a less strict “consultative” ballot, unlawful. Otherwise it could result in up to half the nation’s mail going undelivered.

While Royal Mail is responsible for delivering nearly all letters, it takes a fee for delivering presorted mail to the final address. This “access mail” now accounts for almost half of all letters.

The CWU says the rival companies are competing unfairly by “cherry-picking” profitable bulk mail contracts, undermining pay and jobs.
“The industrial side of things is going to hot up between now and any sale,” Mr Ward said in an interview. The CWU represents 120,000 of Royal Mail’s 150,000 staff.

Legal obstacles to mounting such action appear huge, but the union may be seeking to put off investors by showing that Royal Mail still has difficult industrial relations issues.

Preparations for a sell-off will accelerate on Tuesday when Royal Mail unveils improved full-year results, possibly up to twice last year’s profits, boosted in part by deliveries of packets and parcels ordered by internet shoppers. Last year it made £211m operating profit on turnover of £9.5bn.

Mr Ward said he believed the better results would be due to last year’s sharp rise in the price of stamps rather than to Royal Mail achieving its targets. Royal Mail’s £9.5bn pension deficit has also been taken over by the government.

The coalition aims to begin privatising Royal Mail in this financial year, probably through a stock market flotation this autumn. Observers believe the company could be worth between £2bn and £3bn.

If that proves unviable, it could sell an initial stake to a buyer such as a private equity house, sovereign wealth fund or rival operator.
Mr Ward said: “We recognise that the government are determined to carry this through, but we don’t think it’s too late. As far as we are concerned everything is still to play for.”

This week the CWU will launch its consultative ballot on the boycott. It is also asking members to endorse non-co-operation with any further efficiency measures and back the union’s claim for a pay rise without productivity strings. The result is due on June 19.
If, as expected, there is a Yes result, the executive will set an early date to begin the action, arguing that no formal ballot is needed because it would be “direct action” to protect the universal service rather than a trade dispute over employment terms.

“It is for a judge to determine whether it’s unlawful or not, not Royal Mail or any third party,” Mr Ward said. If the CWU defied a court injunction, it would be open to fines and sequestration of assets.

He accused Ofcom, the regulator, of breaching its legal duty by not setting conditions to block the spread of “end-to-end competition”. TNT has launched its own delivery service to homes in west London, now spreading to some southwest London postcodes.

Mr Ward said once TNT had built capacity, it would switch its bulk mail contract to its own network, undermining Royal Mail’s profits. In those circumstances, he said no private owner would want to continue the universal service, under which Royal Mail is obliged to deliver six days a week to any UK address.

Ofcom said: “Ofcom has a duty to secure a universal postal service. If we identify a potential threat to that service from competition, we have powers to step in to protect it.” Royal Mail said: “All of our customers’ mail is important to us and it needs to be delivered.”
Michael Fallon, business minister, aims to woo postal workers by offering at least 10 per cent of shares to staff. The CWU thinks these are likely to be offered at a discount but argues that a “new business model” balancing the company’s commercial and social objectives would be a better way to engage staff.