It has been decided that some shares will go straight to staff and others will be available for public purchase soon. While proponents argue the announcement is long overdue, unions are unhappy with the decision.
After 500 years of delivering our post as a public service, just what will be in store for the new, private Royal Mail?
Figures over the last five years have not been in the postal service’s favour, with the volume of letters being delivered falling by a quarter and that number expected to keep falling by 7-8% every year.
Ex chief economist at industry regulator Postcomm Stephen Gibson believes that while office inbox trays used to lie at the heart of businesses, now email services carry the bulk of our daily messages.
The money today is with the online shopping market, which is how delivery companies make their money.
Of course by releasing the Royal Mail to the private sector, the organisation will face stiff competition from other businesses, meaning it will have to improve its parcel delivery service to stay at the top.
While critics remain sceptical, supporters think the Royal Mail is flexible and responsive enough to change to make the privatisation work.
Postal economist Ian Senior said: “In the Netherlands, with TNT, and Deutsche Post in Germany, these services have become very profitable, and very successful. They had light-touch regulation, were privatised, and have been able to sustain a profit.”
He believes there is no reason why Royal Mail would not be able to replicate this success in the UK.
The Royal Mail has already undergone restructuring over the past few years, and at one point the government helped the organisation out with an £8.4 billion deficit.
The company is now estimated to be worth £3 billion – but will Britain’s most iconic postal service continue to profit? We will have to see.
As the market continues to shift and change, it is vital for businesses to remain flexible and open to restructuring. An accountant can help business owners make important decisions based on solid financial evidence. To find out more, please visit our Business Valuation page.
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