Rt. Hon. Grant Shapps MP

Secretary of State

Department for Business, Energy and Industrial Strategy

1 Victoria Street

London

SW1H 0ET

29 November 2022

Dear Grant,

I write following the recent announcement by International Distributions Services PLC (IDS, formerly Royal Mail PLC) of their results for the half year ended 25 September 2022. These results were alarming, and I am extremely concerned about what they may mean for the future of the Royal Mail and the Universal Service Obligation (USO). It is with these concerns in mind that I write to ask that you launch an inquiry into Royal Mail and how this situation has been allowed to happen.

I believe IDS need to explain why they chose to give out over £400 million in dividends and £167m in share buybacks this year despite the known post-pandemic traffic forecasts, which indicated difficult times ahead for the business. It is also not clear as to why IDS has ended the cross-subsidy arrangements from GLS – profits which fund the USO. You will be aware that this sort of cross-subsidy model is common to many other European postal services, and as such the reasons for these decisions warrant explanation given the potential impact on the business. Further, it is unclear why a business that was thriving a matter of months ago is now threatening to cut thousands of jobs, with a devastating impact on those workers and their families. This in itself must raise serious questions about how the business is being run.

The ability to send and receive letters and parcels from any part of the UK for the same price is a public service we should rightly cherish, and one many members of the public and small businesses rely on. It is therefore important that your Department considers the potentially substantial implications for the taxpayer following these results.

Royal Mail workers acknowledge the need for modernisation in order that the business remains sustainable. These workers take enormous pride in their jobs and want to make sure this iconic institution has a bright future. Such is their commitment, they are keen to explore ways in which their roles can be expanded to better serve the community. The Labour Party shares their ambition for a thriving Royal Mail, continuing to connect people with vital goods and services and providing social value in their communities. A partnership between management, workers and their trade union is the best way to achieve lasting success for the business. However, I hope you share my view that there are questions that need to be answered by IDS about some of their recent actions and the extent to which they represent a risk to that future.

Finally, it remains my fear that recent developments could be a precursor for a takeover of IDS – and subsequently Royal Mail – by Vesa Equity, a company with links to Russia. As such, I also wish to take this opportunity to raise your decision not to challenge the increased shareholding in IDS by Vesa Equity. I would be grateful if you could outline your reasoning for not using the powers given to you in the National Security and Investment Act 2021.

Given the interest in this matter, I will be making this correspondence public. I look forward to your response.

Yours sincerely,

Jonathan Reynolds MP

Shadow Secretary of State for Business and Industrial Strategy

Member of Parliament for Stalybridge and Hyde