Vince Cable has today confirmed that the government will privatise Royal Mail through a listing on the stock market and hand 10 per cent of the shares to its 150,000 UK employees for free.
The deal, which will see a tranche of shares set aside for retail investors, is expected to take place in the autumn and value the company at up to £3bn.
The business secretary told the House of Commons that the move is necessary, mainly because the 497-year-old service will not receive the investment it requires while in public ownership.
"It cannot be right for Royal Mail to come cap in hand to ministers each time it wants to invest and innovate. The public will always want government to invest in schools and hospitals ahead of Royal Mail," he said.
“The key objective of our reforms to the postal market is to protect the one price goes anywhere, six days a week service that businesses and communities throughout the country rely upon."
But unions have vowed to go on strike over the proposal, despite the offer of a legal binding contract that no compulsory redundancies will occur for the next three years.
Billy Hayes of the Communication Workers Union said "political dogma" was behind the decision: "The logical step is for the government to consider the unions proposal to keep the company in public ownership whilst putting in place a not-for-dividend structure that allows profits to be put back to improving service."