Business Secretary Vince Cable announces the privatisation of the Royal Mail, with employees handed millions of pounds in free shares.
Staff will receive 10 per cent of the new company in free shares in what is expected to be a £3bn sell-off during the current financial year.
The government hopes the offer will placate Royal Mail staff opposed to privatisation.
It will be one of the biggest sales of state assets since the Thatcher privatisations of the 1980s, with the public able to buy shares on the same basis as financial institutions.
The privatisation does not affect the Post Office, which is a separate company.
The state will keep hold of a minority of the company after the initial flotation, with the possibility that further chunks could be sold in future.
But the taxpayer has taken a theoretical hit of nearly £3bn on the Royal Mail pension scheme, which was brought on to the government’s books in preparation for the sell-off.
The Royal Mail is currently legally bound by its universal service obligation to deliver to more than 29 million addresses across Britain, six days a week, for the same price.
Mr Cable told the Commons this would not change, but the Communication Workers Union (CWU) believes a private provider will not meet this obligation and that it could be scrapped after the 2015 general election.
Dave Ward, the CWU’s deputy general secretary, told the BBC Today programme that rural areas would be “cut off” because it would be unprofitable to deliver to them.
“The principle that has secured the universal service is one where the high density areas, like the big cities, subsidise the rural areas. The countryside will be completely cut off.
“If you live in a big city you may end up getting two deliveries a day. If you live in a rural area, if you live in a village, you will get none.”
Mr Cable also offered reassurance to Royal Mail employees that the flotation would not lead to any changes to their terms and conditions, an issue the CWU has said it is prepared to strike over.
Soaring profits at Royal Mail are likely to make the stock market flotation a tempting proposition, with the bottom-line figure of £440m this year more than double the £152m announced in 2012.
The state-owned firm has benefited from a rise in parcel deliveries as a result of the boom in online shopping.
Royal Mail returned to profitability in 2012 after four years of losses as many people switched from sending letters to sending emails. Parcel revenues now account for almost half of the group’s takings, which totalled £9.3bn in 2012.