Fallon readies Royal Mail for sell-off

The Royal Mail, even for Margaret Thatcher, was a privatisation too far. The recently deceased prime minister claimed she would not be "prepared to have the Queen's head privatised".

But business minister Michael Fallon has declared the business should be sold off within the year via an IPO, potentially raising £3bn. What will it mean for you?

Quick buck?

It's unclear, because there is no clarity on who the Royal Mail would be sold to. Fallon's preference is for a public sale. However a trade sale to the likes of, for example, TNT, could also be on the table (though something of a public relations worry given the Royal Mail is a national postal service operator).

Equally, were Royal Mail to fall into the hands of private equity operators, that would also be a huge concern on the voter front. The aggressive private equity culture of stripping out value and looking for a quick buck would be a hard public sell (though some private equity companies are adept at creating genuine value and operational improvements).

"We recognise the attractions of an Initial Public Offering and we have received positive investor feedback to date," Fallon told the House of Commons recently. "However all options remain open. If an IPO is not possible, we will pursue the option of a private sale if this can be achieved on acceptable terms."


The Communication Workers Union claims staff numbers are likely to be hit, and services reduced, particularly in rural areas.

"Privatisation is an old fashioned idea and poll after poll has shown the UK public don't want their mail service sold off to become profit, rather than service, driven," says Billy Hayes, general secretary of the CWU union.

The CWU - which recently warned Labour it must renationalise the Royal Mail or lose millions in donations - says millions of small businesses would be hit by rising prices "and by the undoubted reduction to the one price goes anywhere, next day delivery, universal service."

Information priced

A float, though, would be open to all and it's likely 10% of company shares would be retained by Royal Mail workers, though probably at a price. Additionally, it has also emerged that the Postcode Address File UK's national database of postcodes - typically used by marketing agencies - of everyone who lives in Britain is also to be privatised.

Although there are short-term cash advantages, there is the worry the Government could be forced to buy back information in future at inflated prices from private companies.

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