Yesterday the Secretary of State for Trade & Industry, Alistair Darling MP, told the Trade & Industry Select Committee that he could not agree to an employee share-ownership scheme for Royal Mail.
The reasons given for this decision were the immediate impact on public finances and further costs when employees were eligible to cash in their shares in 5 years time. A significant barrier to introducing such a scheme was also the fact it would require primary legislation taking 18-24 months to pass through Parliament.
On a more positive note, Alistair Darling also confirmed that he was "anxious to ensure there was a scheme in place to allow employees to participate in the increasing value of the company. I agree with Allan Leighton that, given the scale of the challenges in front of Royal Mail, it is right employees should be rewarded."
Fiona Downes, Head of Employee Share Ownership at ifs ProShare said: "We are naturally disappointed that the Secretary of State has ruled out an Employee Share Scheme to enable Royal Mail workers to have a stake in their employer. That said, we understand the unique situation at Royal Mail and the problems associated with passing legislation to introduce such a scheme.
"We are also very pleased that the Secretary of State indicated that he is very keen to ensure a scheme is soon put in place to allow employees to participate in a reward scheme and we would certainly welcome a compromise scheme involving 'phantom shares'."
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