Tag: Europe

Financial Times comment: Royal Mail is an elephant taking part in a dog show. It is much larger than its rivals but is the wrong sort of animal to compete successfully. Political cowardice over many years and across the party divide has resulted in a sorry mess. Even if the annual results show the organisation improving, nothing will fundamentally change as long as Royal Mail stays in the public sector.

Royal Mail’s plans to hand its 200,000 workers a stake in the business are to be pushed into the legislative long grass, with ministers unlikely to make any changes in the postal operator’s ownership structure for at least two years.
Alistair Darling, trade and industry secretary, plans to decide soon on whether to support in principle contentious proposals by Allan Leighton, Royal Mail chairman, for an employee share ownership scheme. However, both he and chancellor Gordon Brown are mindful that the issue is politically charged within the Labour party and could involve the use of public funds. They are considering whether the scheme would be appropriate for the management of Royal Mail. But with affordability a central issue, and the government juggling a busy domestic agenda, a bill introducing any changes is unlikely before 2008, say Whitehall insiders.

The Government is poised to hand 20 per cent of Royal Mail to its workforce by giving each of the organisation’s 195,000 employees pounds 5,000 worth of free shares. The move follows the announcement yesterday of a pounds 3bn bail-out of Royal Mail to resolve its pension crisis, modernise the letters business and fund the loss-making network of rural post offices. The employee shares will be controlled by a special trust so no outside investors can buy a stake in Royal Mail. Employees will be able to trade the shares between themselves and will receive an annual dividend but they are not expected to be allowed to keep them if they leave the company. Details of the scheme, which Royal Mail’s chairman, Allan Leighton, regards as central to his recovery plan for the business, are still being worked on but are due to be finalised in the next three to six weeks.