Goverment plans to part-privatise the Royal Mail

The goverments business secretary Vince Cable is planning a fresh attempt to privatise Royal Mail, after attempts by the former Labour Government foundered last year.
Under the new plan, to be announced in the final coalition agreement agreed between the Conservatives and the Liberal Democrats, the Government will say that it is seeking a new injection of capital in Royal Mail.
 
This will open up Royal Mail to a fresh bout of speculation about its future ownership, and whether a foreign buyer will want to table a bid.

However the country’s 12,000 post offices will not be included in the part privatisation and will remain in public ownership, in a bid to ensure the future of the network which receives a public subsidy of £150 million a year.

Whitehall sources last night confirmed that the Government will say that it wants to bring in a “fresh injection of cash” to help the company compete with privately owned rivals.

The final coalition agreement, which is set to be announced today, is understood to refer to the plans to sell off a stake in Royal Mail, however it will not set a figure on now much of the company should be sold off.

The new postal services minister Ed Davey, a Liberal Democrat member of the coalition, is understood to be planning to produce firm plans on the privatisation of Royal Mail within eight weeks.

A spokesman for the Department of Business and Innovation and Skills said: “The Government programme of work which will be published in the coalition agreement.”

The decision to sell off a stake in Royal Mail is consistent with the manifestos of both parties that form the coalition Government.

The Liberal Democrats' election manifesto said the party would sell 49 per cent of the Royal Mail to free up funds of investment in the business, while the Conservatives backed a straightforward sell-off.

The scheme is almost certain to plunge the new coalition Government into a furious dispute with the postal workers union, which vehemently opposed plans to privatise under the Labour Government.

The last privatisation attempt, organised by Lord Mandelson, fell after a backbench revolt by more that 120 MPs following a campaign by the Communication Workers Union.

The CWU has argued that the postal service should remain in public ownership, but the Royal Mail is expected to post a drop in annual profits this year as a result of last year’s damaging round of strikes.