Amid the furor of an election campaign, in which the desire to be seen as pro-business and pro-economic growth have been the dominant themes, the future of Royal Mail, a vital part of the country’s infrastructure, is barely has stood out.
Royal Mail’s board of owners, International Distributions Services (IDS), accepted a £3.6bn offer from Czech billionaire Daniel Kretinsky as if there was no other option.
The casual way in which a vital public utility, which provided critical services during the horror of Covid-19, is being eliminated is a source of fear and hatred for the company’s workforce.
‘This could be a disaster. “If it’s asset stripping, which we know is definitely possible, the debate has to be how to avoid it,” argues Dave Ward, general secretary of the Communications Workers Union (CWU).
Ward warns that City rules mean Royal Mail could become foreign owned “within the next 28 days” – while all eyes are focused on the general election result.
Job threat: The board of Royal Mail owners International Distributions Services accepted a £3.6bn bid from Czech billionaire Daniel Kretinsky
Their frustration that the fate of such a critical enterprise can be resolved without proper public debate is palpable.
The CWU chief questions the IDS board’s narrative that the company has been largely destroyed by union intransigence and declining mail delivery, the volume of which has fallen from a peak of 20 billion a day to 7 billion.
It accuses Royal Mail’s board, headed by former BA director Keith Williams, of “breaking up an agreement allowing modernisation” because it was expecting a takeover bid.
The CWU boss is furious at the way Britain’s public services have been betrayed and hates the idea that the same fate could await the country’s postal services.
“It is a very extractive model within the United Kingdom,” he argues. “All it does is funnel money out of the business to shareholders.”
Ideally, in Ward’s view, a Labor government would step in and nationalize the Royal Mail. But he is politically astute enough to recognize that renationalization is not going to happen.
He believes there can be a social ownership model, similar to that of John Lewis, where all stakeholders – workforce, consumers and management – have a say in how the business is run.
Shattering fears: Dave Ward, general secretary of the Communications Workers Union
At the time of privatization, an effort was made to align the interests of Royal Mail’s 150,000 employees with those of management.
This was done by giving staff 10 percent of the company’s shares. This might have been expected to act as a bulwark against a future takeover.
Ward believes the horse has escaped. As employees left and management diverted executive bonuses, its members’ shareholding fell to 5 percent.
By contrast, Kretinsky, advised by JP Morgan and others, has quietly built up a 27.6 percent stake that comes close to giving his EP Group effective control.
Despite the intervention powers granted by the National Security and Investment Act, the Conservatives at no time chose to put serious obstacles in their way.
Ward also criticizes regulator Ofcom. But successive Royal Mail management teams have claimed it was the CWU that stood in the way of modernization and left it open to a takeover.
Maybe. But successive generations of managers have abolished responsibility.
Ward notes that in Germany and France postal services have used profitable subsidiaries and acquisitions to help finance a universal service.
IDS has taken exactly the opposite path by spinning off its successful European arm Global Logistics Service (GLS) and erecting barriers against cross-subsidization.
Ward has not given up on the idea of reaching agreements with the new owners.
But after yesterday’s meetings with Kretinsky’s representative, Roman Silha, he warns that the commitments made “are not strong enough nor durable enough.”
Further conversations will be held, also with Kretinsky. No one should expect a breakthrough.