Business Secretary Vince Cable today announced that at least 10% of the shares in Royal Mail will go to its employees.   

 
This makes it the largest employee shares scheme of any privatisation for 25 years in terms of the number of workers who will benefit – second only to the privatisation of British Telecom in 1984.

Rolls Royce, a much smaller company, offered 10% to employees when it was privitised in 1987. When Railtrack was privatised in 1996 a mere 0.6% of shares went to employees.

Vince Cable said: “I want to take action to secure the future of two cornerstones of British life – Royal Mail and the Post Office. The much valued Post Office is not for sale and there will be no repeat of the previous closure programmes."

This new commitment will be written in to the Postal Services Bill, which the Government plans to introduce in the autumn.

The decision has been made following the publishing of the Hooper review in which Richard Hooper made three main recommendations:

• A new less burdensome regulatory framework is needed with responsibility for regulation moving from Postcom to Ofcom
• The pension deficit should be taken over by the Government as part of the wider range of measures
• Private sector capital must be introduced into Royal Mail in the form of sale to a partner/trade investor or an IPO.

Cable admitted Royal Mail was struggling under huge pressure and added: “The only way to save it for the future is to bring in new private capital to support the ongoing modernisation and growth opportunities. This will bring new commercial disciplines and the enormous public sector deficit means that the taxpayer does not have an endless supply of money to meet the company’s investment needs."

He also vowed to tackle the pension deficit and cites the employee shares scheme as key to motivating and engaging employees. H said: “But just as important is the engagement and participation of staff in turning this company around. That is why our legislation will include a specific provision to make available at least 10% of the shares in Royal Mail to employees, as part of the privatisation process. This is a once in a generation chance to transform the culture at Royal Mail – energising everyone and allowing employers and employees to share in the company’s future success.”
 

• Further detail on this will be announced as part of the Postal Services Bill which will be introduced by the Government in the autumn.

To read the Hooper review for yourself click here.