Royal Mail Privatisation

The coalition government today announced its plans to sell-off another public service - Royal Mail. The deal has been sweetened by offering 10% of the shares to Royal Mail staff, while the rest will sold on the stock market (rather than sold to another operator).

The sell-off of Royal Mail is economically illiterate, of course. In the twelve months up to March it made £403m - that’s money going into the public purse and reducing taxes for all. Indeed, this profit growth looks set to continue thanks to the growth of Internet shopping, with the volume of parcels seeing a 5% annual rise. While selling the company may raise £2bn, that’s only around five year’s worth of profit. This is plainly bad value for the taxpayer, but handy for George Osborne to fix short-term holes in his budget.

Royal Mail is, of course, obliged to provide universal service for post. That is to say, you can post a letter from anywhere to anywhere for the same price. This is a basic requirement of a service, whether phone, post or electricity supply. However, clauses in the Postal Services Bill show that the regulator will have a new duty to decide whether the universal guarantee places an “unfair” burden on Royal Mail, so a privatised Royal Mail will not have to bother delivering post to rural areas if it decides it is too expensive to do so. Do the government really think that these deliveries will continue once profit is the motive, rather than public service?

So why are the government privatising yet another publicly owned organisation given how appallingly bad value previous privatisations have been? Vince Cable has said “It’s now time for employees to hold a stake in the company and share in its success.”, but he seems to have forgotten that they already do since we all own it already. The employees may well get to own a bit more, but every other person in the UK will own a lot less. There are also claims that privatisation will allow ‘much needed investment’, but requiring the private sector to do this is one of the biggest myths peddled by neoliberal voices in the main three parties. The government could invest if it wanted to, and public sector borrowing is the cheapest borrowing and has never been cheaper. You don’t magically find investment in a service by selling it - look how well that has worked with the railways, where subsidies are higher than they ever were under British Rail with little investment to show for it.

No, this move is nothing to do with improving Royal Mail. It’s not improving its efficiency, value for money, or quality. It’s about everything else this government does - selling-off every publicly owned asset we have in a mad rush before the next election in the vain hope that it will be undo-able by future government. The neoliberal dream of ‘small government for the rich’ is moving ever closer, and we must be aware of the lies being peddled to make it that way. The public do not want this. The staff do not want it. Who does? Tory and Lib Dem friends in the City who are hungry for another asset-stripping operation on something we all own that will be sold for far less than it’s worth and we’ll all miss when it’s gone.

And we will miss it. In ten year’s time the post will be like the trains. Do you want to post a letter to granny in Devon? Well, you’ll have to find out which of several ‘postal operators’ deliver to her village. If any do, you’ll have to get a price for sending a letter of that size/shape/however else they all (differently) calculate the cost. Then, of course, you’ll have to find a post-box for the correct company. If there is one near you, that is. And even if you’re prepared for all of that to get cheaper stamps, prepare to be disappointed - postal services really only work with scale. With several smaller services they will all cost more.

If you think this is simply scare-mongering, the real world has plenty of examples. You can read about what happened to the Dutch postal system after privatisation. Even the Daily Mail, stalwart of all that is repellant, said “Privatisation in Holland…also led to the closure of around 90 per cent of the country’s post offices…Dutch post boxes are emptied only once a day…complaints about the reliability of Holland’s privatised post are widespread. The move was supposed to increase competition and lead to better services. But the opposite occurred. New firms paying workers below the minimum wage hit deep into the profits of TNT. In response, TNT replaced 11,000 workers who work more than 25 hours a week with cheaper part-time workers and franchisees. TNT says it wants to cut deliveries to just three days a week. ‘If politicians want six days a week, then they will have to finance it,’ declared Peter Kuinz, TNT’s managing director.”

That’s the reality of what the government is doing, and it really isn’t to help you or save you money, it’s about changing our postal system to deliver the maximum amount of unwanted mail at the minimum cost to businesses. And remember that Labour want to privatise Royal Mail too, however much you might see them in the news objecting to this.

We will lose our public services if we don’t fight for them. Whatever Cable says, this is not yet a done deal. Support the strikers and make your views known. It’s the only way to hang on to a sensible system that we all depend upon, especially the elderly and vulnerable.