Minister says Royal Mail could be floated
UK operator Royal Mail could be floated on the stock market, the new postal affairs minister has been reported as saying. Ed Davey told The Daily Telegraph that the organisation could be sold, with the newspaper suggesting a figure of £9bn – which would be the biggest UK privatisation for two decades – as a money-raising option.
The new coalition government has already stated that it will look to part-privatise the business.
Dwindling mail volumes, a decline in parcels being sent, and an unsustainable pension scheme has left Royal Mail needing to cut costs.
The Daily Telegraph reported Davey as disclosing: “The era of big pay packets for Royal Mail executives is over and that ministers had put pressure on Royal Mail to cut the pay for its new chief executive, Moya Greene, after Adam Crozier, her predecessor, earned more than £2m last year; the coalition would never repeat “Labour’s mass closure programme” of post office branches; postal workers could be given shares in any part-privatisation so they have an incentive to improve performance; and that Royal Mail’s pension deficit could have reached £10bn.”
Davey told The Daily Telegraph: “The truth is that Royal Mail’s situation, if nothing is done, will become increasingly dire. If we don’t transform Royal Mail, it will be dragged down by a lethal combination of falling mail volumes, low investment and potentially one of the worst pension crises for employees in UK history.”
He said that private investment was needed which could come from: a stock market flotation, another postal organisation, or a private equity business.
