UK Royal Mail sell-off wins go-ahead, says paper

Royal Mail Chairman Allan Leighton has won a private pledge from the government that he can partially privatise the state-owned postal service, the Financial Mail on Sunday has reported.
But the Department of Trade and Industry denied there were any such plans. “We have no plans to privatise the Royal Mail,” said a department spokeswoman.

The paper said the privatisation deal was the price Leighton demanded to stay on for another three years. On Thursday, the government said Leighton will serve a further three years as chairman of the Royal Mail, until March 2008.

Leighton has been given the green light to hand 20 percent of the business to postal workers, and sell off 31 percent on the stock market for about 4 billion pounds, but this will put him on a collision course with the Communication Workers’ Union, the paper said.

In a move to head off a hostile reaction, Leighton intends to pledge some of the proceeds of the sale towards plugging the 2.5 billion pound hole in the Royal Mail’s pension fund. This will also make it easier to sell the company as investors will be less worried about the pension liability, it added.

Leighton will also be in a stronger position to offer early retirement packages to reduce the 200,000 workforce by a further 30,000, making the company more competitive, the paper said.

The Royal Mail was unavailable for comment.

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