Royal Mail to copy Unipart share scheme

Royal Mail plans to model its controversial employee share scheme on one that has delivered thousands of pounds of profit to workers at Unipart.
John Neill, Unipart’s chief executive, is a non-executive director of Royal Mail and has been working closely with its chairman, Allan Leighton, on the scheme for its 200,000 employees.
The Unipart scheme, which has been running since Neill led a buyout of the business from British Leyland in 1987, is credited with transforming the company’s relationship with its 10,000 workers.
Shares in the car parts and transport group, which is 55 per cent owned by its employees and pension fund, were valued at a 1/2p when the scheme started and are now worth 42p. The company made a profit of Pounds 50 million last year.
The use of Unipart as a template emerged as officials from the Department of Trade and Industry and Royal Mail attempted to thrash out a similar scheme.
The key initial difference will be that workers at Royal Mail will each be given about Pounds 4,000 worth of shares, equivalent to about a 20 per cent stake in the business in total, while Unipart’s workers had to buy theirs.
Royal Mail workers will be able to trade during a two-month period each year as opposed to a one-month window at Unipart while the price of the shares will be assessed by outside financial experts and will roughly reflect the state of the company. There will be no dividend.
The Government is keen on the scheme, which it says it does not regard as a first step to privatisation. But a change in legislation is required for it to go through and more than 200 Labour MPs have threatened to vote against it.
An employee share scheme is also fiercely opposed by the Union of Communication Workers-which has threatened to withhold its Pounds 200,000 contribution to the Labour Party if the Government gives the green light.
Royal Mail regards employee share ownership as part of a wider shake-up that will see the Government help it to deal with its pension deficit by freeing up cash for investment to help it compete with private firms.
The Government’s plans to give Royal Mail Pounds 2 billion to modernise the Post Office and to hand over 20 per cent of the business to the workforce has still not received formal approval from the Treasury.
Industry sources say they are optimistic that Chancellor Gordon Brown and Trade Secretary Alistair Darling will back the scheme, but Treasury officials insisted that no such decision had yet been made.
Critics of Royal Mail have argued that if it can make Pounds 609 million in profits then it should be able to pay for its extensive investment plans itself.