Royal Mail sell-off plan puts Highlands postal service at risk

THE future of the universal guarantee on postal services for the Highlands and Islands was being questioned last night after Business Secretary Vince Cable revealed that a foreign company would be allowed to buy up Royal Mail.

• With 90% foreign ownership a possibility, remote areas may find services reduced. Picture: PA

Mr Cable unveiled his bill to reform the postal network, including privatising Royal Mail and mutualising the post office network.

The newly privatised Royal Mail would be 90 per cent owned by other companies and 10 per cent owned by its employees via shares.

But Mr Cable insisted that there would be "no nationalist jihad" against foreign companies stepping in to effectively buy up the Royal Mail.

His comments have raised the prospect of Dutch rival TNT moving in - and with it concerns over the universal service for remote parts of the country. In the Netherlands, TNT has successfully used European legislation to reduce the service for some areas from six to five days.

Postal unions have also warned of job losses after the government revealed there would be no upper limit on how much of the business would be sold to a company.

Billy Hayes, general secretary of the Communication Workers Union (CWU), said: "The government has wasted no time in flogging off the country's state assets without exploring other options. This obsession with privatisation is deeply worrying."

Unite, which represents managers, said it was already experiencing job cuts, which it warned would get worse under privatisation.

Mike Weir, the SNP's business and enterprise spokesman, said the bill confirmed some of the worst fears about the reforms.

He said: "If the company is sold off it is inconceivable that there will not be increased pressure on the Universal Service Obligation.

Vince Cable has already indicated that he is prepared to reduce the six-day-a-week service."

Mr Cable also revealed that the government was considering converting the Post Office arm of the business into a mutual structure, in a similar manner to the John Lewis Partnership or the Co-operative Group.Handing ownership and running of post offices to employees, sub-postmasters and the local community would "empower" the people who knew the business best, he said.

Ministers declined to say how much money the government hoped to raise through the sale, how much the employee shares will be worth, or how quickly the privatisation would go ahead - although it will not be before next summer.

The plans were aimed at securing "vibrant futures" for both, said Mr Cable, adding: "My policy is to put them on a stable footing for the future."

Moya Greene, Royal Mail Group chief executive, argued that deregulation of the UK postal services market was long overdue and welcomed the pledge by ministers to take on the Royal Mail pension, which is running at a deficit of 10.3 billion.

George Thomson, general secretary of the National Federation of SubPostmasters, said: "Years of neglect, broken promises and lack of vision from government towards our post offices mean that we really are now drinking in the last-chance saloon. It is absolutely essential that ministers get this right this time."