The UK Government ruled out pumping funds to plug Royal Mail’s £4.5 billion pension deficit. Barry Gardiner, secretary of state for competitiveness at the Department of Trade and Industry (DTI), told the MPs on the Trade and Industry Select Committee said such a move would amount to the government breaking European state aid laws.
But, Mr. Gardiner was hopeful of pumping some government money on a loan basis after Postcomm, the new price regulator comes out with a new pricing plan. He said: “After Postcomm has taken its decision about the price we will look again at what further investment from the Government may be needed.”
Postcomm is expected to announce the price control that Royal Mail will have to maintain between 2006 and 2010 this month.
Mr. Gardiner added: “If the Government were to put in funds (to plug the pension deficit) specifically on a non-commercial basis there would be a question of legality over that. Were we to be that on a non-commercial basis it could be regarded as state aid.”
The plan to decide pricing on stamps and services is to enable that Royal Mail will hold its own in an open market. It is being suggested by some sources suggested that the proceeds from the sale of BNFL’s clean-up division, Westinghouse, could be transferred to Royal Mail. Royal Mail is now banking on the government to bail it out before the market is liberalised in January.
Communication Workers Union, however, criticised this approach of solving Royal Mail’s pension deficit by citing it as “grossly irresponsible”.
On the other hand, defence group BAE Systems is also reportedly planning to fund Royal Mail 500 million pounds through a mix of cash and assets.
BAE spokeswoman, however, said: “We can't comment while we are in negotiations.”
Posted
on : Thu, 17 Nov 2005 10:40 GMT | Pensions News
By : Mike Lawson
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