Reassurances over Royal Mail privatisation

Gerry O'Rourke, Royal Mail Operations Director North
Gerry O'Rourke, Royal Mail Operations Director North

Gerry O’Rourke, Operations Director North, Royal Mail has released a statement amid concerns around the Privatisation of the Royal Mail.

In it he assures “the six-day-a-week, one-price-goes-anywhere, affordable universal postal service will remain unchanged” for all customers, including those in rural communities.

The full statement is below:

Gerry O’Rourke, Operations Director North, Royal Mail on Royal Mail Privatisation

Privatisation is an important step for Royal Mail. It is also important for our customers, both individuals and businesses.

To understand why now is the right time for Royal Mail to move into private ownership, it is important to understand the way the postal market has changed. While letter volumes are in decline, Britain’s online retailing boom is driving strong growth in the parcels market. Around half of Royal Mail’s revenues now come from our expanding UK and international parcels businesses. Alongside this, many of our competitors are successful, privately-owned global players who have been able to invest to modernise their operations and capture growth in high-growth markets such as parcels.

We have made significant strides in becoming a successful commercial company in recent years. Last year, in contrast to three years ago, we reported profits in our core UK business rather than losses and we generated cash rather than having to borrow. The transformation of Royal Mail is underway; but it’s by no means complete.

The UK Government has acknowledged it has not been a good owner of large businesses. Private ownership will enable Royal Mail to become more flexible and fleet of foot in the fiercely competitive markets in which we operate and seize the opportunities available to us. Some of our competitors are privately owned and can invest when they need to. Like them, we need to access to long-term capital from time to time to invest in our business. The UK Government has made clear it doesn’t have the money to allocate to Royal Mail ahead of schools and hospitals.

I have heard some people say that the service we provide rural communities will reduce. I want to assure all our customers that the six-day-a-week, one-price-goes-anywhere, affordable universal postal service will remain unchanged. I also want to offer this reassurance to our small and large business customers. We make commerce happen by connecting companies, customers and communities across the UK, our aim is to continue this through our universal service. It is also protected by law – enshrined in the Postal Services Act 2011. Any change would have to be passed through an affirmative vote in both Houses of Parliament.

We believe we can combine the best of the public and private sectors. Our customer service will be a competitive advantage in the private sector. The Quality of Service regime that applies to Royal Mail under public ownership will continue to apply under private ownership. Ofcom has already specified the minimum standards under regulation.

Royal Mail offers good value for money. That will not change. UK stamp prices are among the best value in the EU. In five of the six weight steps for First Class and Second Class mail, the cost of UK stamps is ranked in the bottom half of prices when compared with other European countries. Affordable prices are protected in legislation and regulation.

Our people are at the heart of Royal Mail. The current position is that all terms and conditions that apply to Royal Mail employees now would remain in place, on the same basis, were the company sold. To provide further reassurance, we aim to create a legally-binding and enforceable contract with the Communication Workers Union. Pay and protections could not be changed for the period of the contract without CWU agreement.

The Company will continue to have a predominantly full-time workforce on an overall national basis, as per our current agreements with the CWU.

Our existing enhanced voluntary redundancy terms have been extended for the life of our modernisation programme. Our commitment to managing change without recourse to compulsory redundancy will remain in place.

In addition, approximately 150,000 eligible UK employees, including employees working in Parcelforce Worldwide will receive free shares giving them a combined 10 per cent stake in the business. This is the largest free stake of any major UK privatisation for nearly 30 years.

The Government intends to award the Free Shares under a tax-advantaged Share Incentive Plan. Eligible employees will automatically receive an equal number of shares, irrespective of their grade. There will be a pro-rata allocation for part-time employees.

Many previously Government-owned companies - like Rolls Royce and British Airways - have flourished under private ownership. We believe privatisation will equip Royal Mail for similar success.