Unveiling details of the Postal Services Bill, business secretary Vince Cable says that private buyers will be permitted to buy up to 90% of Royal Mail.
Cable did not put a value on the business or set a timetable for the sale. However, a report in The Times today (13 October) valued the postal operator at just £700m when debt is accounted for.
The Bill follows a report by Richard Hooper last month that said “urgent action” was required to address the mail group’s worsening financial situation.
Royal Mail’s worth has suffered as the market for physical mail has shrunk. It has also been hit, Hooper concluded, by a lack of investment and efficiency.
The organisation has launched a number of initiatives to stave off the decline and stimulate the use of direct mail, including discussing possible joint initiatives with rival TNT Post in a bid to increase marketers’ use of the channel.
The Communications Workers Union slammed the sell-off. “The government has wasted no time in flogging off the country’s state assets without exploring other options,” says CWU general secretary Billy Hayes.
The Government has attempted to head off one possible hurdle to a sale, the Royal Mail’s £10bn pension deficit, by taking the burden on itself.
It also confirmed that the Post Office would not be sold off but it would instead explore a mutualised structure.
“It seems to me that the Post Office is ideally suited to a John Lewis or Co-operative Group style structure, where employees, sub-postmasters and communities get a greater say in how the company is run,” Cable says.
John Lewis is owned by staff, who are partners in the business.
The Postal Services Bill also confirms that regulatory responsibility for the postal sector will transfer to Ofcom from Postcomm.