Royal Mail and government clash over privatisation

by Daniel Farey-Jones, Brand Republic 17-Oct-06, 07:00

LONDON - Royal Mail has reached a stand-off with the government over its plan to issue shares in the company to 200,000 of its employees, leading chairman Allan Leighton to issue a 'back me or sack me' warning.

The row concerns the size of the stake the government is prepared to hand over to the workforce, with Leighton calling for 20% and the Department of Trade & Industry and the Treasury opposed to more than 15%.

It is another stumbling block on the road to the introduction of private ownership of Royal Mail, which has been talked about for years, but is slowly coming to fruition, despite stiff opposition from 199 Labour MPs and the Communication Workers Union.

It is also holding up the delivery of the money the government has promised Royal Mail to reduce its pension deficit and invest in new machinery.

Leighton's uncompromising stance was reported by the Mail on Sunday, which claims he has the full support of his boardroom colleagues and will force the government to sack him if it does not accept his proposals.

Alistair Darling, trade and industry secretary, and Chancellor Gordon Brown are also believed to be concerned at the cost of the share scheme to the taxpayer.

Separately, rival operator TNT was last week reported by The Times to be planning to set up its own delivery network of postmen within five to 10 years, initially covering Birmingham, Manchester, Glasgow and Edinburgh.

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