Tag: Royal Mail

Opposition parties have rounded on the UK government over Royal Mail’s deepening financial crisis, as an exodus of big corporate clients heaped pressure on the firm to tackle its GBP5.6bn pensions deficit.

BT dropped Royal Mail in favour of TNT Post for a GBP90m contract, with UK energy supplier Centrica and the Carphone Warehouse quickly following suit – both choosing private suppliers.

In total Royal Mail lost out on contracts worth nearly GBP150m.

The Department for Work and Pensions (DWP) became the first high profile department to turn its back on the Royal Mail and has since said it would not rule out dropping the firm for future contracts.

Alan Duncan, Conservative shadow trade, industry and energy secretary, quizzed the government in parliament over its failure to deal with the situation.

The government-owned former monopoly has struggled to retain business after postal services were fully opened to competition last year. Since then it’s lost more than 10% of the mail-handling market to private firms.

A multi-billion-pound funding package for the cash-strapped Royal Mail is likely to be paid out next month – eight months after it was agreed with ministers. The trigger for the payment of the GBP3bn deal has been the agreement in principle of a share plan for employees of Royal Mail. The new plan is a compromise between the Royal Mail’s plan for actual shares to be given to staff and a more straightforward profit-sharing scheme advocated by the Communication Workers’ Union (CWU).
Under the deal, Royal Mail workers are likely to be issued with “phantom shares” which will track the value of the business and allow staff to share in its value. The hope is that approximately 200,000 Royal Mail workers could be left with phantom shares worth GBP5,000 after five years.
The compromise emerged after months of negotiations between Allan Leighton, Royal Mail’s chairman, and Alastair Darling, the DTI Secretary. Sources close to the talks insisted that no deal was agreed. One said: “There is a lot still to do to agree, but it is a way forward.” Other sources said that Royal Mail would be happy with a deal which gives staff about GBP5,000 worth of shares in the company.

A multi-billion-pound funding package for the cash-strapped Royal Mail is likely to be paid out next month – eight months after it was agreed with ministers.

The trigger for the payment of the pounds 3bn deal has been the agreement in principle of a share plan for employees of Royal Mail.

The new plan is a compromise between the Royal Mail’s plan for actual shares to be given to staff and a more straightforward profit-sharing scheme advocated by the Communication Workers’ Union (CWU).

Under the deal, Royal Mail workers are likely to be issued with “phantom shares” which will track the value of the business and allow staff to share in its value.

The hope is that approximately 200,000 Royal Mail workers could be left with phantom shares worth pounds 5,000 after five years.

Royal Mail had wanted the Government to agree to give a fifth of its shares to its employees.

However, a straight share transfer was strongly opposed by the postal workers union, the CWU, and Left-wing Labour MPs who feared it might be a back-door privatisation of the business.

The postal service, which has a deficit of pounds 5.5bn in its pension scheme, will plough the money into its pension fund, as well as modernising sorting equipment.