There was some good news this morning for a change. I heard that “There may not be time in the legislative programme” to sell a minority stake in Royal Mail to a foreign company. It was presumably phrased like that by the BBC because they have both been told it has been dropped from the legislative programme, and told they must not confirm it until Parliament has been told officially just in case Parliament and the new Speaker wakes up on the issue of briefing before Statements.
This would be good news indeed. Selling a minority stake in current markets to a foreign company was always going to be a rip off deal at the expense of the taxpayer. Adding to it nationalising the very expensive and deficit ridden pension scheme made this government proposal yet another part of their scorched earth approach to the public finances. It would strip out assets at low prices and increase liabilities so the next government faces an even more impossible task to bring the public sector into balance.
Any new government serious about curbing the deficit will need to sell a majority of the Royal Mail and transfer responsibility for the pension fund to the private sector. It would be well advised to encourage and allow a substantial employee participation, as this is a people business where we need the saff to be well motivated to deliver a good service. The current position of a poorly managed Royal Mail starved of capital to grow, modernise and change the busienss is not a good one. Making the Royal Mail the creature of a foreign owner who controlled a blocking stake but did not own a majority would be even worse, leaving the taxpayer with the main liabilities and offering taxpayers a low share price for the stake. A foreign buyer of such a shareholding might well be more interested in blocking a competitior from full takeover, and in running down those parts of the business were they had spare capacity to take up the slack.
This is a rare case of the government deciding against making the public finances worse. At least it leaves the problem for someone else to sort out, instead of doing another bad financial deal at our expense.