No government aid for Royal Mail pension deficit

by Staff, Brand Republic 17-Nov-05, 07:00

LONDON - The prospect of the government providing money to fill Royal Mail's £4bn pensions hole has been ruled out by a minister.

Barry Gardiner, secretary of state for competitiveness at the Department of Trade and Industry, told MPs on the Trade and Industry Select Committee that the government might break European state aid laws if it agreed to Royal Mail's request to put money into its pension fund.

However, he did hold out the possibility of investment in Royal Mail by the government.

"After Postcomm has taken its decision about the price we will look again at what further investment from the government may be needed," he said.

Postcomm, the postal regulator, is expected to reveal this month the price control Royal Mail will have to adhere to between 2006 and 2010.

Royal Mail says it needs £2bn to invest in updating its equipment, which the government may find easier to justifying contributing to.

In other postal market news, the DTI has appointed Urmila Banerjee, Ofcom non-executive director, as chairwoman of watchdog Postwatch, replacing outgoing chairman Peter Carr from December 1.

This week shares in Business Post, the parent company of Royal Mail competitor UK Mail, slumped after it warned that its profits for the year would be 20% below expectations.

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