CWU proposes ‘not for dividend company’ – instead of organising for strike action to stop Royal Mail privatisation

CWU leaders HAYES & WARD on the picket line at Stockwell Post Office
CWU leaders HAYES & WARD on the picket line at Stockwell Post Office

THE CWU leadership is seeking to make a deal with the coalition over the terms and conditions of the privatisation of Royal Mail, when any such deal is out of the question, since the crisis of the capitalist system demands privatisation and profits and nothing else.

On Tuesday, the day before Business Secretary Cable announced the terms of the privatisation of Royal Mail, the CWU published a letter it has written to Tory Business and Enterprise Minister Michael Fallon

MP, urging him to to think again on privatisation and consider a ‘new approach to secure the future of the company’.

The letter, signed by the union’s General Secretary, Billy Hayes and Deputy General Secretary, Dave Ward, called on the government to consider ‘more innovative business structures that would align the interests of the company, customers and the workforce’.

Calling for a partnership between the union and the government, they wrote:

‘Dear Michael

‘Following our recent meeting we said we would write to you restating our position on a range of issues associated with the Postal Services Act.


‘As you know the CWU remains fundamentally opposed to privatisation. It is not the answer to the long-term success of Royal Mail and neither will it secure the future of the Universal Service.

‘The Government has framed its arguments for privatisation as though Royal Mail is in imminent danger and a sell-off is the only way it can survive.

‘This is simply not true. The Royal Mail does not have to compete with the NHS or education services for sparse Government funds.

‘There are alternative ways for the company to access capital and more innovative business structures that really would align the interests of the workforce, customers and the company.

‘We have spoken about these social business models at various meetings and it is disappointing that Government dogma continues to stand in the way of any serious debate about an alternative.

‘It is patently obvious that from the outset this Government has never been interested in any new ideas – instead it relies on the tired old thinking of the past.

‘To ensure our position is not misrepresented in the ensuing public debate, we are reaffirming that the CWU would support an alternative business model based on the following:

‘The Royal Mail Group should be a “not for dividend company” with profits reinvested back into services and the workforce. It would operate for public good, balancing its social obligations with commercial opportunities.

‘The company would be able to access capital by borrowing on the commercial markets without this contributing to Government debt. Network Rail is a perfect example of this. By creating a new Board structure it has been able to borrow over £27 billion in recent years.

‘A fully modernised Royal Mail with proper employee alignment will also be able to self finance some of its own investment.

‘Neither the Government nor the company can put forward any rational argument as to why this type of structure is not viable.

‘Such a structure would protect over 300 years of Royal Mail heritage as one of the last Great British institutions and still achieve Government objectives.

‘There would be a company charter set out in legislation that would confirm Royal Mail as the USO provider and act as a locking mechanism against any further attempts to alter the structure of the company. The charter would set out a list of ethical principles and values that the company would be bound by, including its approach to employee and industrial relations.

‘There would be an overhaul of the governance structure and the main Board representatives would be balanced between appointees with social, commercial and ethical responsibilities. The Unions could nominate a small number of Board members, but not from within their organisations.

‘The company would implement the High Pay Commission recommendations with a fixed pay differential between what Board members, Senior managers and the workforce earn.

‘The company would operate single status benefits from the top to the bottom. Incentive schemes would relate to a fixed percentage of people’s overall salary.

‘It is entirely possible to develop the aforementioned social business structure and we would urge you to consider such an alternative. To continue to ignore the views of 96% of the workforce will only serve to destabilise and reverse the progress made on modernisation.

Assurances on Future Terms and Conditions

‘As you know the Union is engaged in negotiations with the company to secure an agreement on assurances over the future terms and conditions of CWU members in the event of privatisation and the growing threat of End to End competition.

‘As we discussed, these negotiations are reaching a crucial stage and CWU are seeking an agreement that would be legally binding on both parties and any potential new owner.

‘Assurances on future terms and conditions without a binding legal framework would not be worth the paper they are written on.

‘The Government has a central role in bringing talks to a successful conclusion.

‘However, if the Union cannot reach an acceptable agreement in the near future then we will ballot our members for National Industrial Action.

‘We expect the Industrial Action policy to be ratified at a Conference of the Union on 31st July 2013.


‘We have discussed the latest pension developments with you and it is now essential that the Government intervene in this matter.

‘As you know the Union has engaged our Lawyers to check the legitimacy of these latest pension changes in light of the previous Government settlement and the European State Aid ruling.

‘The Government should be in no doubt that this development is likely to be part of a National dispute unless we can find an urgent solution. CWU members were promised that their pensions were secure and believe the Government has a legal and moral responsibility to uphold its promises.

Employee Share Ownership

‘The Union has been consistent when asked about our views on Employee Ownership.

‘These have been stated in evidence before Parliament during the passage of the Bill and were set out in a broader context in our letter to you of 9th May 2013, a copy of which is attached for ease of reference.

‘We have also exchanged views on this matter in our regular meetings.

‘Nevertheless, to again ensure our position is not misrepresented in public, we are happy to restate the points we have consistently made:

‘If this is really about engaging employees and giving them a real say over the future, then there are far better ways of achieving this than the narrow thinking the Government has restricted itself to on Employee Shares.

‘For example the alternative social business model concept with a properly negotiated incentive scheme would be far more effective.

‘Please remember the starting point is the failed Government Colleague Share Scheme. Postal Workers still believe they are owed around £2500 each and they expect their Union to pursue this.

‘Postal Workers are more concerned about their basic pay, pensions and proper bonus arrangements that relate directly to their efforts at work.

‘If despite our views, the Government just press on regardless then we would make the following points about an Employee Share Scheme:

‘The employee stake should be maximised. As a minimum it should at least hit the threshold of 25%.

‘Employee shares should be held in a Collective Trust and the CWU should have a formal role on the Trust Board.

‘Employee shares should be free. The majority of postal workers do not have spare cash to buy shares, even at discount prices.

‘Employee shares should not be tradable. If this were the case the majority of employees would sell them at the first opportunity.

‘We fail to see how anybody can suggest that tradable shares will align the workforce with the objectives of the company.

‘Instead of dividends there should be options for an incentive scheme to top up pensions.

‘If as we expect, the Government announce the detail of an Employee Share Scheme this week, based on what you told us at our last meeting, then this will be another missed opportunity.

‘Incidentally, are you aware that the company are now presenting Employee Shares as an integral part of their three year pay offer?

‘They have told us that these shares will replace all future bonus/incentive arrangements.

‘Can you let us have your views on this aspect as CWU members will want to know if this has been agreed with Government.

‘Could you also confirm that under your proposal employees will automatically receive free shares unless they opt out?

‘This is the position that was explained to us by your Team and we would like complete clarity on this process.


‘In recent years Postal Workers have gone through an unprecedented amount of change.

‘This was based on an agreement that set out a shared vision of modernisation.

‘Privatisation was never part of that vision. Even at this stage we urge you to consider an alternative approach and continue dialogue with the Union on all the issues covered in this letter.

Yours sincerely

Billy Hayes

General Secretary

Dave Ward

Deputy General

Secretary (Postal)’

All mail workers know that privatisation means the end of their union, their jobs and all their conditions of labour.

Cheap labour will take over, once the wolf gets its foot in the door.

Far from treading softly, the CWU and Unite must take the bull by the horns and organise strike ballots to fight privatisation, while taking the issue to the TUC General Council to demand its support.

The TUC must be made to call a general strike to bring down the coalition and bring in a workers government.

Union leaders are saying that to take strike action against privatisation would be to challenge parliament and would be illegal.

However, defending the basic gains and the basic rights of the working class are far more important than the niceties of a bourgeois legality which is only there to protect the bosses.