Royal Mail sell-off gets go-ahead

ROYAL Mail chairman Allan Leighton has won a private pledge from the Government that he can partially privatise the company. The deal was the price he demanded to stay on for another three years.

News that Leighton has been given the green light to hand 20% of the business to workers and sell off 31% on the market for about £4bn will put him on a collision course with the powerful Communication Workers' Union.

But in a move to head off hostile reaction, Leighton intends to pledge some of the proceeds of the sale towards plugging the £2.5bn hole in Royal Mail's pension fund.

This will make it easier to sell the company as investors will be less worried about the pension liability.

Leighton will also be in a stronger position to offer early retirement packages to reduce the 200,000 workforce by a further 30,000, making the company more competitive.

As we have revealed, for the past two months Leighton, 51, has made it clear to Ministers that while he wanted to remain at the helm, he would stay only if he had freedom to take the steps he regards as necessary to protect the organisation from competition.

Leighton not only has the respect of Trade and Industry Secretary Patricia Hewitt, but crucially, the backing of Alan Milburn, the fixer on the Prime Minister's Cabinet who is charged with energising the Labour Party.

The Government has given unions assurances that there are no plans for a sell-off, but a study of the organisation is expected to give the go-ahead for a partial-privatisation after the General Election - which could be within months.

It is understood that major City investors will be approached initially to buy shares in the business rather than making a direct issue to the public - though this has not been completely ruled out.

However, Billy Hayes, CWU General Secretary, made clear his opposition to the idea. He said: 'The Government has given the CWU clear guarantees about its ambition to see the Post Office as a success story in the public sector. This is now Allan Leighton's task.

'It is now essential that Leighton stops dabbling with ideas about privatisation and refocuses his energies on the job for which he is paid - to run an efficient and worldclass public service.'

The DTI and the Royal Mail said they were not aware of any plans for the privatisation of the organisation.