Warnings over Royal Mail free share deal overruled

BUSINESS Secretary Sajid Javid has overruled civil service warnings that parts of the controversial sell-off of Royal Mail are a bad deal for taxpayers.

It comes after officials cautioned that plans to give Royal Mail staff an extra one per cent of shares free would not represent value for money. But Mr Javid ordered the policy to go ahead anyway by an unusual process called a “letter of direction”.

It involves the top civil servant in a department putting his objections in writing. In turn, the Secretary of State writes to order the policy be implemented.

Martin Donnelly, the Permanent Secretary at the Department for Business, Innovation and Skills, said in the document he had concluded that “while a decision to allocate more shares to Royal Mail staff ... is an entirely legitimate policy it does not provide a tangible return to the taxpayer and so is not value for money as defined in the legislation”.

In response, Mr Javid wrote that he noted the concerns, but added that he had taken into account the “wider benefits” of the policy.

He also said there was “merit” in rewarding Royal Mail employees for their hard work and that staff formed an “important part” of the company’s shareholder base.

Chancellor George Osborne has already faced accusations he is selling Royal Mail shares off too cheaply.

The SNP and Labour have also warned that plans to sell off all of the Government’s stake in Royal Mail could mean the end of six days a week deliveries to any address in the UK for the same price. The Government said the promise is written into law.