Lib Dems to float Royal Mail Sell-off

Crown Corporations, Frontier Centre, Uncategorized, Worth A Look

The Liberal Democrats will test the willingness of activists to move towards radical reform of public services by proposing the partial privatisation of the Royal Mail at their autumn conference.

Norman Lamb, trade and industry spokesman, has won the parliamentary party's approval to put the controversial motion to rank-and-file members. Downing Street and the Department for Trade and Industry are believed to be sympathetic to similar plans developed by Allan Leighton, chairman of the Royal Mail, who wants to sell shares in the organisation to its 200,000 workers.

He believes it needs £2bn investment to compete against overseas rivals when the postal market fully opens to competition on January 1 next year. But the fierce opposition of the Communication Workers Union, firing the antagonism of many backbenchers, will force the government to tread carefully in considering such a move.

If passed by the Liberal Democrats in Blackpool, the policy would signal a significant victory for the Orange Book economically liberal tendency on the right of the party.

But Mr Lamb believes that he can win over activists, generally more leftwing than MPs, by showing that selling shares to employees would safeguard the dwindling post office network and give employees much more of a say in the way the business is run.

Under his plans, Post Office Ltd would be taken out of the Royal Mail Group and maintained within the public sector. One third of the shares would be placed in an independent trust for the benefit of staff, who would receive a dividend each and would become much more involved in the running of the business.

Another third would be reserved for small investors and post office customers, although they might be sold on in time.

The remaining third would be available to other investors. The government would have a statutory obligation to maintain the post office network because of the important social role it performs. The network would receive a boost from an endowment fund, created with the profits from the sale of shares, which would allow the reopening of 500 sub-post offices.