Tag: 2024

The press release issued by the Department for Business and Trade on 16 December 2024.

Government reaches legally binding agreement with EP Group that protects Royal Mail’s workers and key services whilst keeping it headquartered in the UK.

• Business Secretary reaches agreement with Royal Mail’s prospective new owners in latest example of government working hand in hand with private sector to improve crucial public services.
• Agreement backs Government’s Plan for Change, creating the strong foundations needed in Britian’s supply chain to kickstart economic growth and deliver for workers.
• Deal protects workers and key services whilst seeing Royal Mail continue to be headquartered in Britain, securing jobs and tax receipts in the UK.

The Business Secretary, Jonathan Reynolds, has today [16 December] received legally binding commitments from Royal Mail bidder Daniel Křetínský that are intended to secure the long-term, sustainable future of Royal Mail whilst protecting crucial services for millions of customers across the UK.

This significant agreement, between the Department for Business and Trade and Daniel Křetínský’s EP Group, contains commitments that protect, and secure investment in, Royal Mail’s postal network which is important to everyone from small business owners in Southampton to online shoppers in Shetland.

These commitments deliver on the Government’s Plan for Change, kickstarting economic growth by providing stability to a national institution that strengthens the foundations of Britain’s domestic supply chain and delivers better public services to people across the whole country.

Business Secretary Jonathan Reynolds said:

For too many years progress on securing a stable future at Royal Mail has stalled, but from day one we have been committed to providing a secure future for thousands of workers and customers.

Today’s agreement is yet another example of this Government’s commitment to working hand in hand with business to generate reform give respite to people right across the UK, as we are working towards ensuring a financially stable Royal Mail with protected links between communities other providers can’t reach.

I’d like to thank EP Group and Daniel Křetínský for their constructive approach to our discussions and their commitment to protecting this national icon. I look forward to working with them to fix the foundations and ensure Royal Mail continues to deliver for the communities and businesses who rely on it most.

Recognising the importance of Royal Mail as an iconic national institution, the government has negotiated a ‘Golden Share’ which will ensure that, with very limited exception, the headquarters of Royal Mail cannot be moved abroad and that Royal Mail cannot change where it pays its taxes, in either case without UK government approval.

These restrictions will apply to any future owners of Royal Mail and, alongside other commitments to the brand and cypher, secure Royal Mail’s identity as an iconic British institution whilst also allowing it to operate as a fully private company without day-to-day government interference.

EP Group have also committed to honour any new agreements entered into with the postal unions, recognising that workers should be placed at the heart of a sustainable Royal Mail.

After months of constructive engagement, these legally binding commitments were voluntarily offered by EP Group in recognition of the significant contribution that Royal Mail makes to Britain’s national identity and the importance that it has in everyday life in the UK.

EP Group Chairman Daniel Křetínský said:

EP Group is very pleased to have reached this historic agreement with the Business Secretary to safeguard the future of Royal Mail, under EP Group ownership.

We would like to thank the Business Secretary for the constructive negotiations that have resulted in unprecedented commitments and undertakings that demonstrate the high regard EP Group has for Royal Mail as an institution, the service it provides to millions of UK homes and businesses, and Royal Mail employees.

EP Group is a long term and committed investor with a mission to make Royal Mail a successful modern postal operator with high quality service and products for its customers. We look forward to delivering on this mission alongside our partners in government.

Millions of small businesses and consumers across the country rely on Royal Mail for everything from magazines to medicine deliveries, which is why protecting its future following any takeover is critical.

The commitment we have offered include significant financial safeguards including assurances around financial investment and restrictions on value extraction linked to the financial strength of the Royal Mail business and the achievement of specific service level standards.

Today EP Group has also announced that it has reached negotiators’ agreements with the unions representing Royal Mail’s workforce. The Government welcomes the negotiators’ agreement and is confident that the constructive and collaborative approach between the unions and the buyer can represent a restart for Royal Mail.

Postal Services Minister Justin Madders said:

We have agreed these commitments with EP Group with the intention of securing the best outcome possible for Royal Mail’s customers, incentivising high performance and protecting the important services communities rely on.

Royal Mail’s workers will also play a crucial role in getting the company back on track, and I’m pleased that EP Group and the CWU have worked quickly to reach an agreement on their part in the takeover.

A sustainable Royal Mail is a successful Royal Mail, and through this agreement we’re paving the way towards a brighter future where it can be a source of national pride once again.

Communication Workers Union General Secretary Dave Ward said:

We are pleased to have reached a negotiators settlement with EP Group covering crucial areas such as job security, the governance of the company, a meaningful stake in the business for employees, restoring quality of service, legally binding commitments and improving the terms and conditions of our members.

This agreement provides the foundation to rebuild Royal Mail. These have been challenging negotiations but through the support of our members we have delivered what by any measure is a groundbreaking agreement which puts postal workers and customers back at heart of everything Royal Mail does.

NOTES TO EDITORS

Summary – EP Group / DBT – Deed of Undertaking 

Institutional Stability

Significant commitments to provide certainty over Royal Mail’s [and IDS’s] position as a key UK business, including:

• Amending the Royal Mail Articles of Association, to ensure that HMG permission is sought before moving Royal Mail’s HQ, central operations or tax residency out of the UK (by way of a ‘Golden Share’ owned by HMG).
• Committing to IDS retaining its HQ and tax residency in the UK for at least five years.
• Ensuring that the Secretary of State is notified prior to the onward sale of the Royal Mail Group (RMG).
• Ensuring the Royal Mail brand is protected.
• Committing to no change in the control of GLS or Royal Mail for three years.

Financial Sustainability

Commitments from EP to maximise the chances of Royal Mail’s financial success by:

• Committing to prevent value extraction (subject to limited exceptions) until two tests are satisfied:
• A financial test that considers the debts of RMG so that value cannot be extracted if the company is heavily indebted.
• A quality test to ensure that value is not extracted unless RMG has maintained or improved its performance as against its 2023-24 quality of service performance.
•  Restructuring the RMG balance sheet to remove an existing, substantial intra-group debt.
• Ensuring RMG retains ownership or control of, or access to, assets necessary to deliver the universal service obligation.
• Ensuring that Royal Mail has sufficient financial means to meet the planned capital expenditure required to implement its transformation agenda over the next three years.
• Other than in the context of the existing IDS bonds, ensuring that RMG does not assume liability for any non-RMG debt (including any refinancing of the acquisition debt) until such time as the return of value criteria above are met.

Regulatory Environment

Recognising the importance of postal services to UK citizens, there are further commitments from EP to:

• Meet the core regulatory requirements that RMG is subject to, including:

1. ensuring RMG is the universal service provider for as long as EP Group is in control; and
2. maintaining “one-price-goes-anywhere” service, with first class letters delivered six days a week.

• Include a UK/British nationality requirement for at least two RMG directors.
• Continue engagement, funding and participation with the Universal Postal Union (the UN Specialised Agency for international postal cooperation, which sets the rules for international mail exchanges and makes recommendations to boost mail, parcel and financial services volumes, while improving service quality).
• If RMG were ever re-listed on a public stock exchange, commit to do so on the London Stock Exchange.
• Consult certain Crown Dependencies & Overseas Territories on key proposals affecting their designated operators or changes to terms of service.
• Maintain commitments for RMG to achieve net zero by 2040 and GLS to reach zero CO2 emissions  by 2045, including by modernising and electrifying its fleet and cutting emissions.
• Ensure HMG has sufficient access to RMG and information to monitor compliance with all undertakings.

Stakeholders

Royal Mail’s workforce is an integral part of day-to-day life in the UK and the commitments from EP recognise this by:

• Continuing to recognise the relevant postal-worker unions.
• Committing to negotiate in good faith with the relevant unions and comply with any new agreements RMG enters into with those unions.
• Not taking any amount of surplus from the Royal Mail Pension Plan out of RMG.

The press release issued by the Department for Business and Trade on 15 December 2024.

The UK has today officially joined CPTPP as a fully-fledged member, potentially boosting the UK economy by £2 billion a year in the long run.

The UK has today [15 December] officially joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a fully-fledged member, potentially boosting the UK economy by £2 billion a year in the long run.

CPTPP is a major trade bloc whose members – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and now the UK – have a combined GDP of £12 trillion.

The UK’s accession is estimated to benefit all UK nations and regions in the long run, relative to 2019 values, with boosts of £240 million for Scotland, £110 million for Wales, and £70 million for Northern Ireland. All English regions are also estimated to gain, including £450 million for the South East and £310 million for the North West.

From today businesses across the country will face lower tariffs and fewer barriers when selling to economies across three continents, with the financial services, manufacturing and food and drink sectors in particular set to benefit, helping to support the Government’s Plan for Change by boosting household wages by £1 billion every year and delivering on one of the five missions of kickstarting economic growth.

Business and Trade Secretary Jonathan Reynolds said:

Britain is uniquely placed to take advantage of exciting new markets, while strengthening existing relationships. Today’s news is further proof that the UK is a wonderful place to do business, with an open, outward looking economy driving the growth people can feel in their communities.

Agreements like this boost trade and create opportunities for UK companies abroad. This is a proven way to support jobs, raise wages, and drive investment across the country which is key to this Government’s mission to deliver economic growth.

Our Trade Strategy, published next year, will finally put in place a long-term, strategic plan for international trade that helps businesses and consumers and, ultimately, grows the economy.

CPTPP is designed to expand over time, further growing the economic and strategic benefits of the agreement. Costa Rica was recently announced as the next country to go through the process of joining, and other economies such as Indonesia  – the largest economy in Southeast Asia, with a GDP of over £1 trillion and home to around 280 million people in 2023 – have already expressed an eagerness to join the bloc.

CEO of HSBC UK Ian Stuart said:

Being part of the CPTPP signals that the UK is open for business with some of the world’s most exciting growth markets. Since the announcement of the UK’s accession in July 2023, we have seen an increase in payments between the CPTPP markets and the UK, and we expect this growth to continue. As the world’s leading trade bank, with deep roots across many CPTPP countries, we are well-positioned to connect UK businesses with growth opportunities in markets such as Japan, Singapore, New Zealand, Vietnam, Malaysia, and Australia.

Chairman and CEO of Chivas Brothers Jean-Etienne Gourgues said:

At a time of increasing barriers to trade globally, the UK’s accession to the CPTPP is welcome news for Chivas Brothers Scotch whisky business.  Improved access to markets in dynamic regions like South East Asia and Latin America in a trading bloc which covers almost a fifth of the total value of Scotch whisky exports should help boost our £1BN annual exports.

Chief Executive Officer of Scalerr Matthew Borthwick said:

International expansion isn’t just for the big businesses out there. Due to agreements like the CPTPP, UK SMEs will also benefit, making it easier to trade with CPTPP countries. As a tech scale-up consultancy with customers across the world, we at Scalerr welcome the support the CPTPP will provide by reducing costs, easing administrative burdens, and facilitating international trade.

Sectors like automotive and food and drink will be able to benefit from CPTPP membership, including through modern “rules of origin” provisions which allow goods to qualify for lower tariffs when built from parts from CPTPP countries then exported to a CPTPP country. For example, a UK car engine manufacturer using components from other CPTPP countries could more easily qualify for lower tariffs when exporting the final engine within CPTPP.

UK services firms, which employ over 80% of our workforce, could also find it easier to export their services to CPTPP countries, with firms allowed to manage funds across the world from the UK and provide services to CPTPP markets on a level playing field with domestic firms in key sectors.

Prices on consumer goods could also fall if savings are passed on by importers, with tariffs removed on items like fruit juices from Peru and vacuum cleaners from Malaysia.

Through CPTPP, the UK now has free trade deals with Malaysia and Brunei for the first time, economies with a combined GDP of over £330 billion last year.

CPTPP’s entry into force comes as the UK edges closer to securing trade deals with partners such as the Gulf Cooperation Council, India, Switzerland and South Korea. These form one half of this government’s twin-track approach to trade which seeks to reset our relationship with the EU at the same time as striking new trade deals.

Background

• The CPTPP agreement enters into force on 15 December between the UK and members who ratified our accession by 16 October: Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, and Vietnam. It will enter into force shortly afterward with Australia, on 24th December. It will enter into force with Canada and Mexico 60 days after they each ratify.
• New guidance for businesses published today will inform them of new ways to reach these markets.
• ONS research has found that UK businesses exporting goods were on average 21% more productive than those that do not export.
• Source (£12 trillion in 2023): IMF World Economic Outlook Database, October 2024 edition and Bank of England exchange rates
• Source (21% more productive): ONS, UK trade in goods and productivity: new findings, July 2018
• Source (£2 billion long run impact and £1 billion to household wages): CPTPP impact assessment