ADAM CROZIER, the chief executive of Royal Mail, is to be rebuked by MPs for demanding that the Government back his proposal to give staff shares in the group.

The Trade and Industry Select Committee, in its report into Royal Mail, which it is due to publish today, criticises management over the share giveaway and issues a warning that rural communities will suffer if the post office network is cut back.

In unusually stark language for such a report, the MPs have criticised Royal Mail’s management for demanding that their share-ownership proposals be adopted as a condition of receiving government financial aid.

The Department of Trade and Industry and Royal Mail came to an agreement this year that will commit the Government to funding the group’s future investment programme. This will include a £900 million loan and the release of £850 million held in reserve accounts.

Royal Mail’s management wants to tie this funding to an agreement to give shares worth about £5,000 to staff. This would be equivalent to giving away about 20 per cent of the company. Mr Crozier, who gave evidence to the committee, has identified himself strongly with the scheme.

The report says: “We were surprised to hear from Royal Mail that it had the temerity to place conditions on agreeing to the Government’s proposed financial package. We hope the Government does not accept these conditions . . . The Royal Mail Group managers’ insistence that they would not accept the new financing framework unless their proposed share scheme was agreed by the Government is perverse, given that the company is technically insolvent [as a result of its pension liabilities].” Royal Mail’s pension deficit is about £5.6 billion.

The committee also gave warning that the termination of the Post Office Card Account, used by 4.3 million people to claim benefits, such as their state pension, would make it difficult for many rural post offices to survive. The Committee urged the Government to give the post office network the support needed to keep outlets operational. “If the Government fails to act, the network and all the benefits that it provides for communities could be lost forever,” the report says.

£5.6bn
Royal Mail pension deficit

£1.75bn
Government’s rescue package

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