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Royal Mail to get £1.75bn State handout

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18/05/2006

Royal Mail has confirmed that it is to get a £1.75bn package from the Government to help make up its pension fund deficit and pay for urgently needed modernisation to its sorting offices. Around £900m will be in the form of a loan repayable by 2013 and charged at market rates of interest.

“This is rich for what we are increasingly encouraged to think of as a private enterprise company,” said industry analyst David Boulden. “I suppose the thousands of Royal Mail pensioners need to know that their money is safe, but to my mind it’s the taxpayer coming to the rescue of a State-subsidised operation once again.”

However, BBC business editor Robert Peston said: “The fact that the £900m is being given as a loan makes it difficult for competitors to call it a subsidy and claim that it breaches European rules.”

Boulden concluded: “A subsidy is a subsidy by any other name.”

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