Memorandum from the Royal Mint Trade Union
1. This submission has been prepared on
behalf of the non-industrial trade unions with membership at the
Royal Mint: the Public and Commercial Services Union (PCS) and
the Institution of Professionals, Managers, and Specialists (IPMS).
Together, PCS and IPMS represent over 300 non-industrial staff.
2. The intent of this submission is to outline
the concerns of the trade unions and our members about recent
problems at the Mint. We want, however, to underline our commitment
to the success of the organisation. Despite the recent predicaments,
the Royal Mint continues its long history as a world leader in
the production of coins. We also wish to restate our support for
the Government's decision in 1999 to retain the Royal Mint in
the public sector but with more commercial freedom.
3. The Royal Mint has over 1,000 years of
history. It has been a huge success as a public sector enterprise,
expanding from its base in the UK into wider markets, by building
on its reputation for high quality, security and flexibility.
In recent years, it was afforded Trading Fund status in 1975,
and in 1990 it became an Executive Agency. Following the Treasury
status review, which was completed two years ago, the Mint's remit
was changed to enable it to diversify into other products. These
moves established the Mint as a commercial enterprise, employing
best practice from the private sector.
4. In 1968, the Royal Mint was relocated
from Central London to South Wales. It now employs 1,140 people
and is a very important contributor to the local economy. Ensuring
the long-term success of the Royal Mint is crucial for the economy
of South Wales.
5. While unions have serious concerns over
the recent performance of the Royal Mint, we strongly believe
that it is vital to the future success of the organisation that
it remain in the public sector. Not withstanding the previous
two years, the Mint has had a long history of growth as a public
sector organisation to become a world leader in coin production.
Even now, the Royal Mint continues to run at a profit, and is
therefore a net contributor to the Treasury. Reopening discussion
of the Mint's status would endanger its future, as well as that
of the local community. It is worth noting that privatisation
of the Mint was rejected not only by this Government, but also
following two reviews conducted by the previous Conservative government.
6. The Mint has had considerable success
in building up its share of the world coin market to become an
international leader in minting. 55 per cent of its sales are
in exports. Sixty-four countries, including Hong Kong, New Zealand,
France and Jamaica have their coins minted, and/or blanks cast,
by the Royal Mint. In addition, the Mint is a leader in the production
of the new Euro coins. It has won contracts with five of the eleven
first-round sintgle currency participants; and is gearing up to
produce the middle three denominations. Without doubt, whatever
decision is made as to the future of the Mint, its leading position
in the European and international coin markets cannot be undermined.
7. The nature of the Mint's business, producing
blanks for coins to be used as legal tender for the UK and foreign
customers, requires a high level of security. Foreign customers
must be confident that the blanks for their coins are secure from
counterfeiters. We remain concerned that renewed deliberations
over a possible change in status would undermine the confidence
which foreign customers would have in the security of the Mint.
8. While it is possible to incorporate within
contracts between the government and private sector, minimum standards
of security to which the contractor must adhere, it is difficult
to minimise risk, particularly where the threat (in this case,
the counterfeiting of a national currency) has such great economical
and political ramifications.
9. If foreign customers have doubt about
the level of security in the Mint, the majority of its business
will be put into jeopardy. This will no doubt further destabilise
the Mint's standing.
10. Consideration also needs to be given
to the potential impact that privatisation or similar change in
status would have more widely, such as on the circulation of coins,
and on the economy nationally and locally.
11. We are very concerned that privatisation
will have a negative impact on the smooth circulation of coins.
Currently, as two public sector bodies, the Royal Mint and the
Bank of England can interact over and above contractual terms.
Accordingly, it the Bank requires more coins minted than originally
requisitioned, the Mint is able to focus production on meeting
the Bank's requirement. We understand from our members that shifts
in production of coins can occur on a weekly basis.
12. Privatisation would formalise the relationship
which the Mint will have with other public sector entities, including
the Bank. The management of the Mint will not have a public service
mandate, but an imperative to maximise profits for shareholders.
Accordingly, the only way in which the government will be able
to guarantee that the Mint will be able to meet the needs of the
Bank, and in a larger sense the UK economy, is to formalise sufficiently
robust contracts with a privatised Mint which guarantees that
these priorities will be met.
13. We believe that the development of a
more formal contractual relationship between the Bank and the
Mint will have an adverse effect on the circulation of coins in
Britain. Privatisation will remove the public interest element
from the Mint's mandate. Accordingly, the resulting relationship
which the Mint has with the public sector, and the Bank of England
in particular, we fear, to become less flexible.
14. Following a review of the Royal Mint's
status in 1999, the Treasury recommended the setting up of a Treasury
advisory panel to help sharpen the Mint's commercial operations.
The Treasury also appointed private sector non-executive directors
on the Mint's Executive board.
15. The trade union side is aware that these
changes have not yet been given the opportunity to develop. We
believe that the Mint can benefit significantly from external
influence, and these measures will help the Mint acquire best
practice from other organisations.
16. Additionally, we believe that there
is a strong case for reserving a seat on the Executive board for
a trade union nominee who will be best placed to provide shop
floor expertise. The perception of employees is that management
exhibits an over-reliance on the advice of external consultants
who lack in-depth expertise of the unique operations of the Mint.
While recognising that, like other large businesses, the Royal
Mint uses consultants to improve operations, the workforce believes
that their expertise is being under-utilised. Union members are
committed to the success of the business. They believe that they
are well placed to identify problems and suggest remedies.
17. Union members believe that there is
scope for co-operation between management and trade union side
in working together to improve the operations of the Mint. We
want to look for ways to develop a more productive approach to
the industrial relationship, both at the board and shop floor
levels. The Cabinet Office has recently agreed with Civil Service
unions a partnership framework covering all departments and executive
agencies, including the Royal Mint. The intent of the Civil Service
partnership agreement is to facilitate a joint approach to enabling
the success of public organisations, which in turn will ensure
employment security for the workforce. The trade unions want to
stress our commitment to the success of the Royal Mint, and want
to work with management in developing a co-operative approach
to resolving the current problems.
18. In summary, the trade union side shares
with management great concern over recent financial and organisational
problems manifest over the previous two years. However, we believe
that these can be addressed successfully without a further review
of the Mint's status which would only lead to further destabilisation.
The unions are committed to the success of the Royal Mint and
want to work in a spirit of partnership with management in ensuring
the long-term future of the Royal Mint.