Royal Mail chief Simon Thompson in talks to put stamp on exit plan
The chief executive of Royal Mail is in advanced talks to leave the company just weeks after his credibility was questioned by MPs investigating the performance of the former state-owned monopoly.
Sky News has learnt that the board of International Distributions Services (IDS), Royal Mail’s London-listed owner, could announce as soon as this week that Simon Thompson is to step down.
City sources said that Mr Thompson had become increasingly disillusioned about the job in recent weeks amid a bitter fight with union bosses over the company’s future.
An industry source said that some board members had also concluded that the business requires fresh leadership after a turbulent period.
One insider said on Monday that key details of his exit had yet to be finalised, suggesting that a formal statement could yet be delayed beyond this week.
The person added, however, that an announcement was “likely” to be made before IDS reports annual results on 18 May.
If confirmed, it would bring a largely unhappy tenure, which began just over two years ago, to an end.
Mr Thompson initially joined the IDS board as a non-executive director in November 2017, having had spells as an executive at companies including Lastminute.com, Honda, HSBC, Motorola and Wm Morrison, the supermarket chain.
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His most recent role was at Ocado, the online grocer.
He has come under fire from all quarters in the last few months, with MPs on the business select committee forcing him to give evidence for a second time after accusing him of misleading them at a hearing in January.
The committee’s chairman, Labour MP Darren Jones, said failures in company policy relating to working conditions and the monitoring of postal staff “can only be due to either an unacceptable level of incompetence or an unacceptable level of cluelessness about what is happening at Royal Mail”.
IDS announced last month that it had reached an agreement with the Communication Workers Union (CWU) after protracted negotiations which had featured suggestions that Royal Mail could be placed into administration without a deal.
The company has a workforce of about 140,000 people, making it one of Britain’s biggest private sector employers.
The deal with the CWU includes a 10% pay rise over three years and a £500 lump sum for eligible Royal Mail and Parcelforce staff.
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A profit-share scheme would also entitle workers to 20% of Royal Mail’s earnings if it succeeds in turning around its performance during the term of the agreement.
In return, the company plans to overhaul working practices, including requiring regular Sunday working and new seasonal working patterns.
A ballot of CWU members opens on 17 May, and is due to close on 7 June.
Executives have consistently warned in recent years that Royal Mail’s universal service obligation (USO), which is overseen by Ofcom and requires the company to deliver mail to every UK address for the price of a stamp, has become increasingly unsustainable in the face of new competition.
It is unclear whether the company, which is chaired by the former British Airways chief Keith Williams, has a successor lined up to replace Mr Thompson.
Any payoff for the Royal Mail CEO, who earned just over £750,000 last year, would be highly controversial given the circumstances of his exit.
Royal Mail Group, as the company was called at the time, was privatised by the Conservative-Liberal Democrat coalition government in 2013, with the then business secretary, Sir Vince Cable, saying it was a necessary step to allow it to modernise.
The shares were priced at 330p, and initially soared, reaching a peak of over 500p, prompting accusations that it had been sold too cheaply.
However, its stock has struggled in recent years and on Friday closed at 245.8p – down a quarter over the last 12 months.
A spokesman for IDS refused to comment on Monday.
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
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Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
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