Royal Mail staff to be gifted shares as business is privatised
Sell-off expected to raise £3 billion with London listing to come by end of financial year
The privatisation and flotation of a chunk of Britain’s Royal Mail will see around 150,000 workers handed shares worth millions of pounds. Photograph: Rui Vieira/PA Wire.
Up to 150,000 staff at Britain’s Royal Mail are to be handed thousands of pounds in free shares as part of a controversial privatisation.
British business secretary Vince Cable said 10 per cent of the new company would be gifted to employees under the £3 billion sell-off, which will begin over the next year.
“These shares will be free to eligible employees, recognising that many of them would otherwise find them unaffordable,” he told MPs in a statement.
Mr Cable said the final proportion of Royal Mail to be sold would depend on market conditions, although it would be a majority stake.
The shares will be available to the general public as well as institutional investors under the terms of the initial public offering (IPO).
The government hopes that the offer of free shares to staff - who will also get priority if they want to buy more - could ease vehement opposition to the privatisation being led by the GMB union.
Mr Cable told the House of Commons: “This is logical, it is a commercial decision designed to put Royal Mail’s future on to a long-term sustainable basis.
“It is consistent with developments elsewhere in Europe where privatised operators in Austria, Germany and Belgium produce profit margins far higher than the Royal Mail but have continued to provide high-quality and expanding services.”
The company will be listed on the London Stock Exchange by the end of the financial year, he added.
The Communication Workers Union had warned postal workers would be balloted for strike action in the event of privatisation.
CWU deputy general secretary Dave Ward said it was “simply not true” that Royal Mail could not survive without being privatised. “I really do not understand what the Government are trying to achieve by this,” he said.
“If you think about the profits the Royal Mail are now making, there’s no need for it to be privatised.”
Labour opposed plans to privatise Royal Mail while in government and prime minister David Cameron said it was “remarkable” that they had.
Mr Cameron said it was “fresh evidence” that trade unions were dictating the opposition party’s policies.
“What is remarkable about it is that it was proposed by the Labour Party when they were in government but of course because the trade unions now oppose it they have to oppose it too — fresh evidence today that they are still in the pockets of their trade union paymasters.”