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Royal Mail to be floated on stock exchange Royal Mail to be floated on stock exchange
(35 minutes later)
Business Secretary Vince Cable has confirmed that the government will sell Royal Mail through a flotation on the London Stock Exchange.Business Secretary Vince Cable has confirmed that the government will sell Royal Mail through a flotation on the London Stock Exchange.
Mr Cable told MPs that employees would be given 10% of shares for free, and the public will be able to buy shares.Mr Cable told MPs that employees would be given 10% of shares for free, and the public will be able to buy shares.
The sale is likely to value the business at £2bn-£3bn.The sale is likely to value the business at £2bn-£3bn.
Members of the Communication Workers Union (CWU) are overwhelmingly opposed to the privatisation, and have threatened strike action.Members of the Communication Workers Union (CWU) are overwhelmingly opposed to the privatisation, and have threatened strike action.
"Now the time has come for the government to step back from Royal Mail," Mr Cable said. "Now the time has come for government to step back from Royal Mail, allow its management to focus wholeheartedly on growing the business and planning for the future," Mr Cable said in a statement to the House of Commons.
"This government will give Royal Mail the real commercial freedom it's needed for a long time."
He said the decision was a commercial one, designed to "put Royal Mail's future on a "long-term sustainable basis".
He said employees should take a stake in the business and described plans to give postal workers free shares in "the biggest employee share scheme for nearly 30 years".He said employees should take a stake in the business and described plans to give postal workers free shares in "the biggest employee share scheme for nearly 30 years".
Strike warning
Selling shares on the stock market has been chosen over selling off the business to a private operator.Selling shares on the stock market has been chosen over selling off the business to a private operator.
Companies such as TNT and DHL had been suggested as possible buyers.Companies such as TNT and DHL had been suggested as possible buyers.
Speaking earlier on BBC Radio 4's Today programme, Business Minister Michael Fallon said the time was now right to "free up" Royal Mail and give it access to private capital that would allow it to grow.Speaking earlier on BBC Radio 4's Today programme, Business Minister Michael Fallon said the time was now right to "free up" Royal Mail and give it access to private capital that would allow it to grow.
"It's been turned round in the last two or three years, and it's ready now to be a successful commercial business," he said.
Strike warning
Royal Mail is revamping its business in order to focus less on the delivery of letters and more on parcels, following the rapid growth of internet shopping.Royal Mail is revamping its business in order to focus less on the delivery of letters and more on parcels, following the rapid growth of internet shopping.
A boom in parcel delivery helped Royal Mail to more than double its profits last year, after many years of losses.A boom in parcel delivery helped Royal Mail to more than double its profits last year, after many years of losses.
Royal Mail staff may be in line for a windfall if the government opts to give postal workers 10% of shares at a discount or for free, as part of the share sale plan. The CWU, which represents around two-third of the Royal Mail workers, opposes privatisation.
But a spokesman for the CWU said on Monday that postmen were "deeply suspicious" of the idea of a share scheme.
In a letter to Mr Fallon, the union warned that if the government did not think again about the privatisation, then "the threat to terms and conditions of postal workers will inevitably lead to strike action".In a letter to Mr Fallon, the union warned that if the government did not think again about the privatisation, then "the threat to terms and conditions of postal workers will inevitably lead to strike action".
CWU general secretary, Billy Hayes, said: "Nobody outside of government and their potential investors wants their postal service sold. The public consistently oppose the sale and recently 96% of workers voted against."CWU general secretary, Billy Hayes, said: "Nobody outside of government and their potential investors wants their postal service sold. The public consistently oppose the sale and recently 96% of workers voted against."
'Unresolved issues''Unresolved issues'
The CWU represents about two-thirds of Royal Mail's 150,000 workforce.
The flotation is likely to be one of the biggest since large utility companies such as British Gas were privatised in the 1980s.The flotation is likely to be one of the biggest since large utility companies such as British Gas were privatised in the 1980s.
It will not include the Post Office. The two are separate companies with independent boards.It will not include the Post Office. The two are separate companies with independent boards.
The Royal Mail sorts and delivers letters and parcels, while the Post Office is the national network of branches that offer postal, governmental and financial services. The Post Office itself is not for sale.The Royal Mail sorts and delivers letters and parcels, while the Post Office is the national network of branches that offer postal, governmental and financial services. The Post Office itself is not for sale.
The sell-off of Royal Mail is not a big surprise - the government enacted the necessary legislation through the Postal Services Act 2011. The idea was first mooted under the last Labour government.The sell-off of Royal Mail is not a big surprise - the government enacted the necessary legislation through the Postal Services Act 2011. The idea was first mooted under the last Labour government.
Chuka Umunna MP, Labour's shadow business secretary, said the government was pushing ahead with the privatisation simply to "dig the Chancellor, George Osborne, out of a hole of his own making".Chuka Umunna MP, Labour's shadow business secretary, said the government was pushing ahead with the privatisation simply to "dig the Chancellor, George Osborne, out of a hole of his own making".
"There are still huge unresolved issues around competition, and ministers haven't said how much capital they expect the business will be able to raise after privatisation or how the proceeds of the sale will be used," he said."There are still huge unresolved issues around competition, and ministers haven't said how much capital they expect the business will be able to raise after privatisation or how the proceeds of the sale will be used," he said.