June 19, 2013 / 12:11 PM / 5 years ago

Workers at Royal Mail vote against sell-off

LONDON (Reuters) - Royal Mail workers backed union opposition to plans to privatise the state-owned postal group on Wednesday, a stark reminder for potential investors that there will be no warm welcome if and when the company changes hands.

The Communication Workers Union (CWU) sent consultative ballot papers to 112,000 Royal Mail postal workers. It said, from a 74 percent turnout, 96 percent opposed government plans to sell the firm this financial year in Britain’s most significant privatisation in decades.

An initial public share offer (IPO), which could value the near 500-year old business at 2-3 billion pounds, is the preferred route, rather than a private equity sale, and banks have been appointed to run the listing. As part of government legislation, Royal Mail’s 150,000-strong staff would have a 10 percent stake in the group.

The CWU believes that privatising the firm will lead to a worse deal for customers and staff, while Royal Mail argues it is vital to secure external capital for future investment.

“This ballot result is a damning rejection of the tired old government privatisation policy and the actions of the Royal Mail board in support of this,” said Dave Ward, CWU deputy general secretary. He said industrial conflict was inevitable unless talks to find a different solution took place.

“Postal workers are not going to sacrifice their souls for a so-called 10 percent stake when they know their jobs, pensions and conditions are once again under threat.”

Union members also voted on pay and workplace issues, and were 92 percent in favour of boycotting the delivery of competitors’ privately sorted mail.

The CWU believes private sector rivals such as TNT Post, which wants to launch a full rival UK service in five years’ time, could undermine its ability to maintain a universal nationwide service.

TNT Post, which stepped up its own delivery service recently, has been accused by the Royal Mail and CWU of targeting only the profitable parts of the mail bag and leaving Royal Mail to deliver the rest.

Postal regulator Ofcom has said it would intervene if direct competition threatened Royal Mail’s universal service.


A boycott could see 26 million items a day - including bills, statements, and business mail contracts won by companies including TNT and UK Mail - go undelivered, dealing a serious blow to Royal Mail’s business.

The union said it had not decided how to take these issues forward but did give an undertaking in the High Court later on Wednesday to not take any strike action until June 28, when there will be a further court hearing.

Royal Mail had sought an injunction to prevent strike action, which it said would be unlawful.

Several attempts to sell off Royal Mail - Britain’s dominant postal player with a history stretching back to 1516 and King Henry VIII - have foundered, with the previous government abandoning the last attempt in the stock market chaos of 2009.

Some people within the private equity industry have said that the politics attached to the company, together with not being able to own the firm outright, make it a less attractive proposition, although such investors remain government’s plan B.

Speaking to Reuters in May, Royal Mail Chief Executive Moya Greene acknowledged union members would never drop opposition to privatisation but glossed over whether investors had expressed concern at such a response from the company’s workforce.

Greene’s focus has been on emphasising to pension and mutual funds Royal Mail’s shift away from a structurally declining letters market towards a growing parcels business that now makes almost half its revenue and helped the firm more than double annual profit recently.

Editing by Pravin Char

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