Neglect imperils Royal Mail: Government ought to have discovered from the Thames Water catastrophe, says ALEX BRUMMER

The current generation of British politicians are on a steep learning curve.

There can be no excuse for indifference when the fate of a critical national asset is on the line.

Minority investors increasingly are concerned that the Government and the board of International Distribution Services (IDS), the owner of the Royal Mail, will allow the postal service to be sold on the cheap for £3.6billion to a Czech billionaire who has not fully unwound Russian connections.

As The Mail on Sunday revealed, IDS’s 27.56 per cent shareholder Daniel Kretinsky is embroiled in a £174million dispute with a Russian firm which allegedly did not fulfil a contract when the war with Ukraine broke out in 2022. 

The legal wrangle shows the depth of the past entanglement of Kretinsky’s EP Group with President Putin’s Russia. 

The scale and depth of this involvement, and that of the Czech predator’s allies, should have given pause to the ‘jejune’ Business Secretary Jonathan Reynolds ahead of describing Kretinsky as a ‘legitimate businessman’.

Sphinx again: Minority investors are concerned that the Government and the board of Royal Mail-owner IDS, will allow the postal service to be sold on the cheap to Daniel Kretinsky (pictured)

Reynolds might have waited until he had seen the full findings of the National Security and Investment (NSI) review before making such a judgement. 

If he has the NSI verdict, he has a responsibility to share findings with the public to give them assurance that the Royal Mail, which began life in Tudor times as a secure medium of communications, is not falling into improper hands.

The lack of political curiosity about a deal which affects all our lives is surprising. The last thing that Britain needs, with manufacturing and commercial confidence collapsing, is another poor decision in Whitehall. 

The fate of Arm Holdings in overseas control and Thames Water, a broken utility, should have the alarm bells ringing in Cabinet and Whitehall.

The suspicion must be that Labour is only too glad not to have to deal with the Communications Workers Union which is understandably seeking to inoculate itself against redundancies and wage freezes. The IDS board equally is keen to rid itself of sometimes troublesome union colleagues.

Minority investors, such as Abrdn, Blackrock, Vanguard and activist Redwheel, have different concerns. 

Their eyes are on the Ofcom review of the Universal Service Obligation (USO). It is proving a slow process and, in the meantime, rivals are eating Royal Mail’s cake by offering superior reliability and tracking.

Market testing, consultation and final resolution of the USO are expected by the summer of 2025. It potentially could be favourable to Royal Mail’s desire to upgrade misfiring First Class and downgrade Second Class deliveries. 

The offer price for IDS on the table will be perceived as a bargain. Fast-growing European parcels delivery, Global Logistics Services, will be thrown in at a giveaway valuation.

There are hard security and commercial reasons why the Czech Sphinx Kretinsky bid should be stopped. A government up to its knees in sewerage spilled by Thames Water should recognise the pitfalls.

Dutch courage

Unilever chief executive Hein Schumacher has been frugal in his dealings with the media since taking over at Unilever, Britain’s largest consumer goods group, 16 months ago.

He has opened-up to the Dutch press, disclosing that the company is preparing to dispose of some £1billion worth of superfluous Dutch brands.

He is also planning to sell food brands in Britain, telling the Dutch financial daily FD that the group has a ‘rather eclectic portfolio of brands’. 

UK investors, consumers and colleagues would be fascinated to know if esteemed brands such as Marmite were up for disposal.

Schumacher also needs to clarify whether the spin-off and listing of ice cream brands will take place, as it should, on the London Stock Exchange.

Debt distress

Britain made a costly error when it allowed 25 per cent of our national debt to be indexed to inflation.

When inflation soared post-pandemic and amid the war in Ukraine, so did the taxpayer bill.

The Debt Management Office is asking gilt market players if they would prefer a new 35-year gilt to be a conventional offer, with a predictable coupon, or index linked.

An index-linked gilt would doubtless be attractive. But it would layer on new risk to overwrought public finances.