Fallon Michael April 2011Michael Fallon is the Minister for
Business and Enterprise and MP for Sevenoaks

Royal Mail rightly has a
special place in public affection as an essential part of Britain ’s economic
and social fabric.  The iconic red – and glittering Olympic gold – pillar
boxes and the one price goes anywhere universal postal service are an important
part of our heritage.  But as with all institutions, if we are to preserve
Royal Mail for the long term then it needs to change to keep with the

That’s why the government
is implementing a package that Parliament enshrined in the Postal Services Act
2011 to ensure that it is successful over the long term.  We’ve already
reformed the regulatory regime and removed Royal Mail’s historic £10bn pension
liability.  The final step is to give Royal Mail access to the private
capital so that it can innovate and invest.  The Coalition is clear that
2013-4 is the year that this should happen.

Royal Mail is one of
Britain ’s biggest businesses with a turnover approaching £9bn. It is
ridiculous to deprive it of the same access to capital that other large
businesses enjoy so it can make the investment necessary to seize new market
opportunities. With the huge deficit we inherited, it’s simply not tenable for
any government to prioritise scarce public capital for Royal Mail over schools
and hospitals. There has been much
speculation that we have decided to sell shares via an IPO. While this is a
potentially attractive option the government remains open minded about what the
best approach would be.  I meet both management and the CWU regularly to
discuss the sale.

Fundamental to Royal
Mail's modernisation is the largest employee share scheme for 25 years. 
Privatisations of the 80s and 90s extended share ownership to millions and gave
employees a tangible stake in the success of their companies.  But our
plan breaks new ground in guaranteeing that at least 10 per cent of shares
should be reserved for employees.  It’s now two years since Parliament
made that commitment – it would be wrong to deny 140,000 Royal Mail employees
any longer the chance to own shares in the business.  

This isn’t some
ideologically-driven policy.  The Coalition is united in securing reforms
that will ensure Royal Mail can continue to become more efficient and compete
successfully. It is opponents of private capital that are stuck in an
ideological straitjacket. Given Royal Mail’s
importance, it’s also essential to debunk some myths about a sale.  There
are claims that selling shares in Royal Mail threatens the minimum requirements
of the universal service.  That is untrue: the six day a week service at
uniform and affordable prices to all areas – rural and urban – is protected in
legislation.  Only Parliament could change it.

Parliament has also
legislated to ensure the Queen’s head remains on stamps. Other claims that free
services for blind people or for the armed forces would be scrapped play are
simply scaremongering and equally untrue.  Our reforms and the hard
work of Royal Mail employees and management have put the company on the path to
sustained profitability.  The delivery of Parliament’s commitment to new
private capital and employee shares will be good for employees, consumers and
business, and will ensure a better capitalised, more adaptable company able to
meet its customers’ needs.