In a significant development, the UK government is set to examine the proposed acquisition of Royal Mail by Czech billionaire Daniel Kretinsky.
The move follows Royal Mail’s owner, International Distribution Services, accepting a hefty £3.5 billion takeover bid from Kretinsky.
If approved, this would mark the first time the historic postal service, established by Henry VIII in 1516, falls into foreign ownership.
The Cabinet Office has decided to review this deal under the National Security and Investment (NSI) Act.
This discreet investigation aims to determine if the takeover could potentially harm the UK’s economic infrastructure.
The government will only make the inquiry public if it decides to block the deal or impose specific conditions.
Business groups and unions have expressed cautious optimism about the government’s investigation.
They view it as a sign that Labour is taking their concerns seriously.
Labour has promised to thoroughly examine the takeover and ensure that workers have a stronger voice in its election manifesto.
Dave Ward, general secretary of the Communication Workers Union, criticized the current assurances from Kretinsky and Royal Mail.
He believes they are insufficient to protect workers, customers, and the vital infrastructure provided by the postal service.
The union advocates for a new ownership model that includes worker stakes, giving employees a greater say in the company’s future.
Concerns Over Service Changes
There are growing fears that Kretinsky, often referred to as the “Czech Sphinx,” may reduce the frequency of second-class deliveries.
Small business groups worry about the potential for a “21st-century Beeching Axe,” reminiscent of the 1960s railway cuts.
Amanda Fergusson, CEO of the UK’s Greeting Card Association, emphasized the need for reliable and affordable postal services, especially for small businesses and consumers.
Organizations like the British Independent Retailers Association (BIRA), the Booksellers Association, and the National Federation of SubPostmasters have urged Business Secretary Jonathan Reynolds to implement protective measures.
They are concerned that second-class deliveries could be reduced to just three days a week and that first-class postage rates might soar.
Impact on Postal Services and Jobs
Royal Mail has already proposed cutting second-class deliveries from six days a week to every other weekday.
This move, aimed at saving £300 million and improving service standards, would also result in nearly 1,000 job losses.
In April, the cost of a first-class letter increased by 8% to £1.35, while a second-class stamp now costs 85p—equal to the price of a first-class stamp from early 2022.
Ofcom, the postal watchdog, is currently reviewing how Royal Mail’s obligations could be reformed, potentially allowing for less frequent service. The regulator is expected to provide an update on these reforms later this year.
Recent Developments
Kretinsky, a prominent shareholder in West Ham United and Sainsbury’s, recently met with Minister Reynolds.
Their meeting was described as “cordial and constructive.”
Despite Kretinsky’s assurances about maintaining six-day delivery for first-class letters, there are lingering concerns about the future of second-class services.
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