27. The Mint's next quinquennial review will take
place in 2003-04 and the Minister told us that it would involve
a fundamental study of "all the options that could conceivably
face the organisation".
By 2003, the Government will be able to judge the impact of the
1999 reforms and the change programme. Crucial issues will include
the extent to which the change programme has boosted productivity
and profitability; the identification of further institutional
barriers to increased profitability; and the success or otherwise
of the Mint's venture into the market for non-coin gifts and collectibles.
With improved financial reporting and the clearer delineation
of shareholder and customer interests, the Treasury will be better
able to decide whether the Mint needs to be given further commercial
freedoms, and how this can be achieved.
28. The 1999 reforms threw into sharp relief the
Treasury's dual role as the shareholder and a customer of the
Mint. The Minister explained that there were now two Treasury
teams interacting with the Mint in these different capacities,
which were "completely separate".
Miss Johnson argued that "the arrangement is working well".
We are not convinced that the Treasury's attempt to divide
its own shareholder and customer interests can be made to work.
However officials are organised, the Minister continues to represent
the Government's interests as the Mint's owner, its sole customer
for UK circulating coins, and as the determinant of its strategy.
The Minister told us that the Mint's shareholder interests did
not give her "a hard time" during the negotiations of
the last contract for UK circulating coins, despite that contract's
impact on the Mint's profitability.
This does not suggest to us that the Treasury is adequately able
to take shareholder interests into account during key negotiations
of this kind.
29. We agree with the Minister's aspiration for
the Mint to become "a very commercial organisation".
The Mint is an important employer in south Wales, a major British
exporter, and a manufacturer with a worldwide reputation for quality.
It is essential that the Mint's business flourishes in future.
Of the three factors identified by the Minister as decisive against
privatisation in 1999, twothe change programme and the
Mint's lack of commercial focuswill not be relevant when
the next quinquennial review is due in 2003. We welcome the
Minister's assurance that the 2003-04 review of the Mint's status
would "fundamentally go through all the options that could
conceivably face the organisation". We note that, in reply
to questioning, she confirmed that this would "routinely
include the option of privatisation".
30. Although selling off the Mint as a whole is one
option to be studied in the 2003-04 review, others merit consideration.
The Mint's functionsincluding manufacturing, marketing
and salescould be divided up to assess which are best done
by a state-owned enterprise and which could be sold or contracted
out to the private sector.
The Mint's businessesincluding collector coins, UK circulating
coins and overseas circulating coinscould be similarly
divided. There is no question that the State should retain
control over the design and specification of its coinage and other
issues of this sort. Decisions about the status of the Royal Mint's
manufacturing and marketing capabilities, and its overseas work,
should be made on the basis of which arrangements maximise value
to the UK economy. We do not believe that the Royal Mint should
be immune from fundamental innovation, especially given its recent
poor financial performance.