Royal Mail privatisation likely (UK)
The Communication Workers Union says that Royal Mail should be a public service first and a business second, is not keen on the idea of privatisation and has accused the government of allowing the service to be run down to push through privatisation plans. The postal regulator, Postcomm, denies this, saying that it has been a greater than expected take-up of electronic communications such as email that has eroded Royal Mail’s business and that without private capital, Royal Mail’s future is grim. Adam Crozier, Chief Executive at Royal Mail, said that Royal Mail was not against the idea of partnerships that would introduce private capital.
It is unclear in what form private investment would be, but it would require a splitting up of Royal Mail to encourage investors, with Parcelforce probably the most lucrative part of Royal Mail. Postcomm is keen to see an arrangement that would provide a sustainable source of funding for the USO rather than leaving the country to pick up the cost.
The EU says that each country can effectively make its own arrangements for the USO providing it complies with EU rules. If Royal Mail were privatised but the pension deficit offloaded to the entire country as well as the funding for the USO, deregulation would be a complete disaster, so Postcomm will be keen to see that any investment will underpin the USO.
In all probability, large chunks of Royal Mail’s business will be privatised over the next ten years and with no one really certain as to just how low the decline in mail business is likely to drop, private capital is unlikely to be worth as much to Royal Mail as it is now. A report into the state of the UK’s postal service expected in October will almost certainly underline the urgency of a sell-off.
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