Royal Mail has been in public ownership since the reign of Charles I and is one of the UK's most cherished national institutions, relied on by millions of consumers and businesses over the centuries.
This is all about to change. Following the announcement earlier this month that the government will proceed with the privatisation of the Royal Mail, my opposite number - Business Secretary Vince Cable - set out the timings of the privatisation, the price range of the shares, and what Royal Mail has been valued at this week. Consequently the company will remain in public hands for just two more weeks.
Shares are being offered for between 260p and 330p per share implying a value for Royal Mail of between £2.6billion and £3.3billion, which some commentators believe undervalues the business. The minimum application members of the public wishing to buy shares can make is £750 (£500 for Royal Mail employees).
In addition to the 10% of the company being given to employees, Ministers will sell between 40.1% and 52.2% of the Royal Mail, leaving the taxpayer with a stake of between 37.8% and 49.9% in the company.
Shares will start being traded on the London Stock Exchange on 15 October, by which time a majority of the company will be in private hands and over 370 years of full public ownership of Royal Mail will come to an end.
At the beginning of this parliament, we opposed the privatisation of the Royal Mail when the Postal Services Act 2011 made its way through Parliament, believing that it should remain in public ownership. Why? Because public ownership has given the taxpayer an ongoing interest in the maintenance of universal postal services. It gives us an interest in the all important agreement the Royal Mail has with the Post Office - under which the Post Office provides Royal Mail products and services - crucial to the Post Office in the long term. And public ownership helps ensure the taxpayer shares in the upside of any modernisation and future profit that the Royal Mail delivers.
The government claims it must press on with this privatisation in order to allow capital to be reinvested in the business. But, in so doing, they ignore the fact that the £430million worth of operating profit the business delivered this year could be re-invested into the business, and there is no reason why future profits may not be re-invested in the business too. In fact, the government is promising investors a guaranteed dividend of £200million per year - money that could be used for capital reinvestment.
Above all, the government, having taken on over £37.5billion pounds worth of pension liabilities, in essence nationalised the debt of the business and is now privatising the profit at the very time that the business is beginning to render large profits - profits that are forecast to rise. They do so at a time when Royal Mail has shown it can deliver success in public hands under the efficient stewardship of its current CEO, Moya Greene.
In spite of all this the government is pressing ahead with the sale - in the face of considerable public opposition - when the case is not made and we all know the reason for this: they have a gaping hole in George Osborne's failed economic plan to fill, a plan that has seen borrowing increase by over £245billion more than the government planned.
So, following this week's announcement, by the time of the next general election it is now highly likely that the privatisation of Royal Mail will be complete. Given all this, what will a future Labour government do in these circumstances if we are elected?
I have been very clear that we are not in a position to pledge to renationalise the Royal Mail if we get into government in 2015. I do not know how much Royal Mail shares will be trading at in May 2015, so I do not know how much it would cost to renationalise. No credible future Business Secretary would therefore make such a pledge, given the other competing priorities there will be across the Business, Innovation and Skills brief and across government more widely in 2015. To make such a commitment now would be akin to writing a blank cheque - some, like the SNP in Scotland, may be prepared to write billions of pounds in blank cheques, without considering the consequences, but I am not prepared to do so.
So our immediate priority on entering office - if we are successful in winning back the support of the British people to form a government - would be to safeguard the services consumers and businesses get from a privatised Royal Mail. We will safeguard those services in four ways:
First, the universal service obligation is only guaranteed to last in its current form until 2015 when it is up for review. We will secure that universal service obligation beyond 2015.
Second, the agreement between the Post Office and the Royal Mail is due to expire in 2022 and can be reviewed sooner, prompting the National Federation of Subpostmasters to call the privatisation a "reckless gamble" that could put the future of the Post Office at risk. We will therefore prioritise securing the future of our Post Office network and work to ensure Royal Mail services continue to be provided through Post Offices beyond 2022.
Thirdly, we will ensure there is an appropriate degree of price control over a privatised Royal Mail, given the 30% stamp price hikes we have seen over the last two years. We do not wish to see households and businesses, already dealing with the biggest cost of living crisis in a generation, being squeezed even further.
Finally, other postal service operators are not subject by the regulator to the same high performance and service quality standards as Royal Mail, which has delivered questionable outcomes for consumers. This was laid bare in shocking detail in Dispatches' Missing Mail documentary on Channel 4 earlier this year, in which people's mail and parcels were filmed undercover being recklessly thrown around at a private postal operator's depot. This issue has not been resolved by the Tory-led government, so it will be left to any future Labour government to address it.
It is true that there have been successful privatisations in times past but we also know there are examples, particularly in rail and energy under the last Conservative government, which resulted in sub-standard services and people being ripped off. Our goal on entering government will be to ensure that the same fate does not befall the British people in respect of the Royal Mail.
Chuka Umunna is the shadow business secretary and Labour MP for Streatham
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