Vince Cable has confirmed the coalition will press ahead with controversial plans to privatise the Royal Mail by selling shares on the stock market.
The Business Secretary said an initial public offering (IPO) could be expected "within the coming weeks", describing today as an "important day" for the Royal Mail and its staff. The move would be much sooner than expected, with ministers previously saying it would happen in the next financial year.
Ministers confirmed that 10% of the shares will be given to 150,000 Royal Mail staff, with members of the public able to buy a minimum of £750 in shares. Up to 50% of the Royal Mail is expected to be sold through the stock market flotation, with analysts expecting the sell-off to raise £3 billion.
Cable said: "The Government is taking action to secure a healthy future for the company. These measures will help ensure the long-term sustainability of the six days a week, one price goes anywhere universal postal service.
"By announcing that we intend to move ahead with a sale of shares in Royal Mail we are completing the third and final part of the reforms agreed in Parliament two years ago."
All shares will be sold at the same price, with a prospectus containing full details to be published "in due course".
Royal Mail chief executive Moya Greene said: "Our strategy is delivering a revitalised company, with a unique, UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens."
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Chuka Umunna, shadow business secretary, said: "Ministers are pushing ahead with this politically motivated fire sale of Royal Mail to fill the hole left by George Osborne's failed plan.
"This is taking place despite opposition from a huge coalition including the Conservative Bow Group, the Countryside Alliance, the National Federation of Subpostmasters (NFSP), the cross-party BIS (Department for Business, Innovation & Skills) Select Committee as well as Royal Mail employees themselves.
"The Government has not addressed the huge concerns which remain on the impact the Royal Mail sale will have on consumers, businesses and communities, but ministers are ploughing on regardless."
Arguments For And Against Royal Mail Privatisation:
- Royal Mail needs private capital to survive and grow, with a Business Department spokesman saying: "Royal Mail needs future access to private capital to be able to continue its modernisation programme and to seize opportunities for growth such as the boom in on-line shopping." However, critics point out that the Royal Mail made £440m in profits last year, arguing that it doesn't need extra private capital.
- Privatising the Royal Mail was backed by Labour, after Lord Mandelson, ex-Labour business secretary, tried such a move but failed to find bidders for a 30% stake.
- The move is rushed and a "fire sale", according to critics. Officials say "this has hardly been a rushed process, it is 4 years since the Independent Review of The Postal Sector led by Richard Hooper recommended a sale."
- The move will see service standards fall, with rural areas suffering. Officials insist "Royal Mail is required to meet service standards which are set by Ofcom, which will still be the case whether Royal Mail is owned by the government, public or anybody else."
- Margaret Thatcher balked at privatising the Royal Mail. The Iron Lady would not contemplate the sale of the Royal Mail, declaring she was "not prepared to have the Queen's head privatised".
The government's announcement comes as Royal Mail's chief executive is set to meet with the postal workers' union, the Communication Workers Union, which is planning to ballot its members for strikes over pay, jobs and other issues stemming from the privatisation.
Business minister Michael Fallon said it was a "very exciting day" for the Royal Mail, adding: "It is the final step to help modernise the business and allow it to invest in the future."
Asked about the prospect of a strike by postal workers, he said: "Strike action will not derail the sale. There is no need for strike action - a pay rise of 8.6% over three years has been offered.
"Teachers and nurses are only getting 1%."