Tag: Royal Mail

Any “bail-out” of Royal Mail’s Pounds 4bn pension fund deficit by taxpayers was yesterday ruled out by the government in the first clear statement of its plans for the state-owned postal operator in the run-up to full market competition next year. But the minister responsible for Royal Mail held out the prospect there could be extra government money to help pay for new equipment. MPs were told by Barry Gardiner, competitiveness minister, the government might breach European state aid laws if it agreed to the company’s request to put billions of pounds into the pension fund. “We should not be seen as the bailer-out, the funder of last resort,” he said. Asked if the government should be prepared to make at least some contribution to reducing the deficit, which has rendered Royal Mail technically insolvent, the minister said: “No. This should be done (dealing with the deficit) as it would be commercially.”

Royal Mail chairman’s hopes of raising private investment for the organisation have been dashed by the Trade and Industry Secretary, who will use legislation to sanction shares only for employees. Allan Leighton had wanted to bring in investment in return for a 10 per cent holding in Royal Mail, in addition to giving a 20 per cent stake to its employees. However, Alan Johnson, the Trade and Industry Secretary, has told The Times that the Government would consider only employee ownership of the state-owned organisation in a share trust. Mr Johnson said that Mr Leighton had done “a tremendous job” at Royal Mail, but added: “Whatever idea he had, he understands completely that we will not privatise Royal Mail . . . We are looking at a share trust and that is the only thing we are looking at in terms of the ownership of the company.”

Royal Mail is planning one of the largest marketing campaigns in its 350-year history, thought to be worth nearly GBP15m, for the launch of its controversial pricing in proportion (PIP) scheme. The push, to target both businesses and consumers, will include a PIP ‘template’, allowing customers to work out exactly how much they will pay before going to the Post Office. Every UK household – about 26 million – is to be targeted. The campaign will feature a major direct marketing blitz. A Royal Mail spokesman says: “We will be using a mix of media to promote what is possibly the biggest change in the postal service’s history. We have already started communicating with more than 200,000 businesses, so that they can prepare for the new pricing structure.”