Royal Mail universal service will be regulated by Ofcom

Business secretary Vince Cable has sought to quell concerns that there would be mass layoffs and a cut in rural services when the Royal Mail is privatised in a speech this afternoon.

He confirmed that there will be a three year contract ensuring continued use of a full-time workforce and no additional outsourcing. The Communications Workers Union would continue to represent them and manage their pensions.

In addition, only an affirmative resolution in Parliament would be able to alter the commitment to universal service, and Ofcom would be watching closely to ensure that this is not threatened by competition. He also confirmed that the government would become a minority stakeholder.

Some ten per cent of shares from the initial public offering will be available for eligible employees, and they will receive priority if they wish to buy on the retail offer. The public will be able to buy shares on the same terms as individual investors. Employees must retain their shares for three years to give them a real stake in the business, said Cable.

But shadow business secretary Chuka Umunna questioned the wisdom of selling off Royal Mail just as it is becoming profitable, accusing the government of looking for a quick boost to the coffers at a time when policy is failing to bring in revenue.

This morning, the Bow Group think tank advocating delaying privatisation to raise awareness and garner public support.