Britain’s Royal Mail to be sold off to private investors

LONDON – Britain’s Royal Mail, whose origins date back to the reign of Henry VIII, is to be sold off to private investors, the government announced Thursday, setting up a bitter battle over the selling of a national icon.

Even former Prime Minister Margaret Thatcher, who happily sold off other services such as Britain’s railways, considered unloading the Royal Mail a step too far, reputedly saying that she wasn’t ready to “have the queen’s head privatized.” Queen Elizabeth II’s profile appears on all stamps in this country.

But the Conservative-led government says that letting go of the Royal Mail is an idea whose time has come as officials try to shrink the public purse in an age of austerity.

Never mind that previous administrations have floated the idea before and abandoned it in the face of vociferous public opposition, or that postal employees have already been planning to vote on a strike over working conditions and pensions. The government of Prime Minister David Cameron insists that privatization will improve service and profitability.

“It’s one of Britain’s biggest businesses. It turns over 9 billion pounds [$14.2 billion], employs 150,000 people and delivers the mail six days a week right across the United Kingdom,” Michael Fallon, the business minister, told the BBC. “So it’s one of the strongest, biggest brands that there is.”

The opposition Labor Party – which had itself contemplated a selloff of the Royal Mail when it was in power – immediately accused the government of mounting a “fire sale.” It questioned official assurances that selling off a majority stake to private investors would not affect the service’s guarantee of delivery six days a week at uniform prices throughout Britain, regardless of distance.

“This is a decision that will have significant impact on consumers, businesses and communities up and down the country,” Labor spokesman Ian Murray told lawmakers in the House of Commons. “The government is playing politics with the queen’s head, and should think again before it’s too late.”

The Royal Mail traces its lineage back 500 years, to the appointment of a Master of the Posts in 1512 by Henry VIII. In 2012-13, the service collected and delivered 15 billion letters and packages across Britain, from the white cliffs of Dover in southeast England to the Outer Hebrides far off the coast of western mainland Scotland.

Analysts say the Royal Mail could be worth more than $5 billion. Both institutional and individual investors will be eligible to buy shares, and 10% will be set aside for employees.

Fallon told the House of Commons that the service has run a loss in five of the last 12 years.

“It’s now going to be able, for the first time, to properly access the markets and raise the money it needs to invest in the future,” Fallon said in his interview with the BBC. “Because it’s part of the public sector, it’s not able to borrow money. It has to compete against schools and hospitals. There are investors out there who are ready and able to invest in this business.”

But the union representing postal workers called the privatization plan “a breach of the public’s trust.”

“This is simply about dogma from old-fashioned Tories wedded to privatization,” Billy Hayes, the general secretary of the Communication Workers Union, said in a statement. “It would destroy a centuries-old public service.”

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henry.chu@latimes.com

Twitter: @HenryHChu