Royal Mint (Hansard, 12 July 1999)

§ Ms Hewitt

On 8 July 1998,Official Report, column 569, the then Economic Secretary announced the terms of reference of a review of the Royal Mint. The review was wide ranging with the aim of identifying the actions needed to enable the Royal Mint to develop closer partnership with the private sector. The review was conducted by the Treasury working closely with the Royal Mint's management and taking the views of employees and other interested parties.

After weighing the options, the Government have decided in favour of a new direction for the Royal Mint, which will bring it up to date with best practice in the private sector. A package of measures will put the Royal Mint on a modern, commercial footing updating the way it is run, the business it does, and its relationship with the Treasury, private partners and customers.

This a bold step forward in the Government's approach to managing their agencies. The new framework will make the Treasury a better shareholder and the Royal Mint a better enterprise to the benefit of all stakeholders. It will ensure the Royal Mint makes the best possible use of the opportunities it faces, including the ability to offer an extended range of goods and services and to make fuller use of its expertise and its capacity.

The new framework contains a number of elements. First, more rigorous shareholder discipline, delivered through a new Treasury panel of top private sector analysts and managers. The panel will inject greater private sector expertise into the Treasury's oversight of the Royal Mint, as shareholder. The expertise of the panel will be used to improve and sharpen the incentives on the Royal Mint, with the aim of making its decision taking more transparent, and more commercial.

Building on this new relationship, we will better define the role of the non-executive directors of the Royal Mint, who, like the directors of private companies, will in future have a clear responsibility to enhance the prosperity of the business over time. We will also bring the number of executives and non-executives on the board into more even balance, in line with best-practice corporate governance.

Consistent with this process of modernisation, the Royal Mint's financial reporting will be more closely aligned with that of private companies, making it more easily understood by customers, potential partners and analysts.

These changes will complement a relaxation of the controls which currently restrict the Royal Mint's activities. At present it can only make coins and a narrow range of related products. In future it will be free to exploit its technical skills and assets by offering a wider range of products and by expanding into non-coinage business, where commercially viable. It will also be able to participate in a wider range of ventures with the private sector. With these new freedoms, the Royal Mint will be able to reach its full potential, on its own, or in partnership with private sector firms.

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The updated model of corporate governance, and the private sector expertise it will inject, will help develop the Royal Mint as a business. It will also be vital in securing the best possible use of the new commercial freedoms that will be given to the Royal Mint. I believe the Royal Mint has the skills, the aptitudes and the opportunities to expand into wider markets on its own, and in partnership with commercial companies. In future it will be able to exploit them to the full.

These fundamental changes will put real business expertise at the heart of the management of the Royal Mint, and will help maximise its value as a business and its contribution to the UK economy, to the benefit of all stakeholders.

The Royal Mint has a successful track record. It has seen its business grow internationally, making it a world leader we can all be proud of. But the coinage business is increasingly competitive across the world, and we cannot stand still if we want to maintain its position at the forefront in the global marketplace. The package outlined above is an important first step in laying the foundations for the Royal Mint's future prosperity.

We envisage a process of continuing development and improvement of the Royal Mint, its strategic direction, and its operating framework. We will be looking on a continuing basis at how best to expand and improve the business, and to help it adapt and respond to the challenges ahead.