Terry Murden: Cable keen to stamp his mark by delivering Royal Mail deal

Published on Thursday 20 May 2010 19:36

THERE can be few who are surprised that Royal Mail is facing another attempt at privatisation. It was a campaign issue for both coalition partners and after the progress it has made under the modernisation programme, Royal Mail is ripe for an injection of private capital to take it to its next stage.

Another profit reflects the benefits of the difficult but necessary changes that have been introduced and come against a harsh economic climate, a fall in letters posted and a series of strikes.

But despite its changed fortunes, it remains one of the more politicised businesses in the UK. When it makes a loss, there are calls for privatisation to sort out its problems. When it makes a profit, there are similar calls on the grounds that it is a business that would perform even better if released from the dead hand of the state.

Adam Crozier, the former chief executive, oversaw a programme that saw thousands of jobs go in the process of turning round a business that in 2002 was losing 1 million a day. But success has, to some extent, added to Royal Mail's problems by encouraging unions to demand a greater share of the spoils

Producing a profit was never going to be the end of the story. Royal Mail is dogged by a huge pension-fund deficit and Business Secretary Vince Cable is talking up the part-privatisation plan in order to put Royal Mail on a firmer footing.

But he will have to achieve something that eluded his predecessors. Former Conservative minister Michael Heseltine tried and failed to reform it and Lord Mandelson, the previous business secretary, had to abandon his plans, allegedly because of difficult market conditions but really because of a rebellion among Labour's back-benchers. Cable, who will spearhead the revived plan, at least can be guaranteed support among the coalition partners.

But getting the plans past the more belligerent postal workers is another matter altogether. Offers of employee ownership have been tried before and the unions may not buy into the promise to retain the post office network in public hands and to develop the Post Office bank.

Cable's plan is for an injection of private capital, with private equity firm CVC Capital reviving its interest in taking a stake in Royal Mail.

This will be his toughest battle to date and will show if one of the coalition's most articulate and brightest thinkers can put his fine thoughts and reasoning into action.

But the prospect of union unrest will continue to simmer and will prove a test of his determination to get his way.

German actions may shortened odds on euro's survival

ANOTHER jittery day on the stock markets followed weaker than expected job figures in the US and growing concerns about the possibility of tighter monetary policy in China.

But the bigger worry for investors remains the future of the euro, now being talked about in terms of its survival as much as its revival.

The Germans continue to cast a shadow over the eurozone after chancellor Angela Merkel's unexpected ban on naked short-selling – the practice of selling stock which a trader neither owns nor borrows – made worse yesterday by rumours that the ban would be extended across the eurozone and that she wants tighter fiscal controls.

David Cameron will meet Merkel today in the latest leg of a whistlestop tour of European leaders and the Prime Minister will resist her calls for more interference in national budgets.

He will also look for assurances that the Germans are not putting the need to resolve domestic squabbles ahead of the wider European interest. Against accusations from confused and concerned traders that the continent's political leaders don't understand the markets, there is a danger of wrong-headed decisions being taken for the wrong reasons. France has already expressed its disappointment at having the short-selling ban sprung on it without notice and the tensions with Germany are not helping to bring calm to nervous markets. The FTSE 100 fell more than 100 points again yesterday, and at one point was a mere fraction above the psychologically important 5,000 level, wiping more billions off the values of companies and pension schemes.

As for the euro, it is at risk of crashing and burning as countries threaten to pull out and it plummets in value against the dollar and sterling.

Merkel admits the euro is in danger and says the crisis has to be tackled. It's just a pity that her actions have not helped.