SPEECH TO NE TUC ALTERNATIVE ECONOMIC SEMINAR SESSION

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THE FUTURE OF THE POST OFFICE

At the moment the future of the Post Office is in the balance.

If the Government has its way, a minority share sale will be made which results in Royal Mail being owned by a trans-national company, most probably TNT.

Even if it only has a minority share, the actual management and direction of Royal Mail will be in the hands of the competitor.

Now of course, the CWU is campaigning against this proposal.
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We secured a commitment from the Labour Government in 2004 that Royal Mail would not be privatised.


That formed part of the Labour 2005 General Election Manifesto. So it became a promise to a whole electorate.


Now we got this commitment reinforced at the Warwick National Policy Forum last July and endorsed by the Labour Party Conference 2008 which agreed :

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“………. a vision of a wholly publicly owned, integrated Royal Mail Group in good health, providing customers with an excellent service and its employees with rewarding employment.”

We are being asked what is our alternative to privatisation? The subtext being that there is no alternative.

But we know that there is an alternative economic strategy to asset stripping.

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Royal Mail can be a success in the public sector.

It has been starved of investment by successive Governments. As a consequence Royal Mail has lagged behind on new machinery, and new services to customers.

This under-investment has only been partly addressed by the Labour Government.

Certainly Royal Mail Management have concentrated on lobbying for privatisation rather than expanding the industry in a positive sense.
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In our view, Royal Mail offers a unique combination of social and commercial services.

Through the Universal Service Obligation, Royal Mail offers a guaranteed daily delivery and collection to 28.4 million addresses at a uniform tariff.

Now the impact of privatisation will be to remove this uniformity of service and move towards profit maximisation.


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It is more profitable to deliver in urban areas, and particularly in business areas.

It is more profitable to prioritise the mail of large business posters than domestic customers, or small and medium enterprises.

Inevitably the profit imperative will cut into the service provision.

None of this is necessary. Royal Mail can effectively fund itself with supported policies from Government.

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At present Royal Mail is making a profit.

Royal Mail is providing the cheapest stamp prices of any major provider in the EU.

Royal Mail has the highest level of quality of service in its history.

This can be improved upon if the Government supports a number of policy changes.

Firstly, Government must review the pricing arrangements which force Royal Mail to provide a form of subsidised access to its network with competitors.
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The postal market has been liberalised.

Competitors can provide an alternative service to any part, or all of Royal Mail’s services.

Yet the competitors have merely completely confined themselves to collecting mail from large companies.

This mail is collected and then driven to Royal Mail sorting offices for delivery by Royal Mail.

So the competitors have won 40% of this work – which is very profitable.
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Yet the competitors only deliver 0.2% of letters.

The competitors have been given a free lunch by the regulator Postcomm, which guarantees that Royal Mail can’t compete on this access work.

Secondly the Government must take responsibility for the pensions deficit.

Under the last Conservative Government, legislation was introduced which allowed employers to get out of making pensions contributions.

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Royal Mail were allowed to do this for 13 years, although the workers continued to pay their contributions throughout.

When this deficit was last assessed, in 2006, it stood at £3.4 billion.

As a consequence Royal Mail was forced into making an additional payment each year, for 17 years, of around £275 million.

This deficit is crippling the company.


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Without the debts of this deficit, Royal Mail would have a major amount of additional capital each year which could be used for investment, improvement in services, and improvement in the conditions of postal workers.

Now, the Government is saying to us that only if Royal Mail is privatised will they address this deficit. We call this the Richard Branson solution – if you remember he asked the Government to take on Northern Rock’s debts so he could take on Northern Rock’s profits.

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That was rightly rejected by the Government which nationalised Northern Rock.

We are being asked to accept the opposite – the pension deficit is to be taken by Government – but the profit from the industries is to go to TNT or some other trans-national company.


Nationalise the debt – privatise the profit.

This is clearly wrong. –

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The Government should take its responsibility for the deficit and allow the company to go forward with a positive balance sheet in the public sector.

The alternative is to provide a subsidy to TNT – immediately worth over £3 billion – as an inducement for them to buy the company.

Thirdly the Government needs to ensure that Management carry out a policy of capital investment, technological modernisation and supportive industrial relations.

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Whatever the depth of the recession, Government action can seriously change its outcome. If, as the Tories suggest, public services are cut, then recession is made deeper and longer.

If the Labour Government were to more consistently support industries such as Royal Mail, then the recession will be shortened, and the upturn faster.

The CWU rejects the idea that the postal industry is in permanent decline.


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You cannot explain why the competitors want a piece of Royal Mail if the industry is actually declining.

And if the new postal technologies are introduced then a wider range of services and products for customers can be provided.

In particular a new generation of machinery can link the postal industry closer to new information technology, and internet trading.


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Instead we have witnessed a Management culture which has lobbied for privatisation, and seen cost cutting as its sole priority.

As a consequence industrial relations in Royal Mail have been very bad on occasion.
As a Union, we do not apologise for standing up for our members’ rights, by any means necessary.

But we do not relish a permanent state of mobilisation against Management initiatives.


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Instead we want a more positive engagement, with Management who are comfortable in the public sector and want to innovate rather than slice up services.

Now we are in a serious fight at the moment.

We are engaged in a whole series of alliances working with members of the PLP, other Trade Unions, community organisations, and so on.
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We believe we can win, and recent work encourages this – for example, last year we fought the possibility that the Government was going to award the contract to replace the Post Office Card Account to a private company. This loss of revenue could have resulted in the closure of a further 3000 local post office branches.

In conjunction with many allied organisations and individuals, the CWU campaigned for Royal Mail to retain this product.


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The dangers became clear to the Government, and in the end they tore up a tendering process and simply gave the contract back to Royal Mail.


This was a very good illustration that these questions are based on political will, not some impersonal working of the market, or the law.


Also we are encouraged, that the Government seems to be looking positively on proposals by the CWU and others, to introduce The Peoples’ Bank through the Post Office.
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Such a new service would offer the working class, and poorer communities, a very safe banking home in a dangerous financial situation.

This is a very good example of how alternative economic policies put forward by the Labour movement can connect with broad public support and interests.

I think events such as these which allow us to explore a range of economic policies are crucial to the Trade Union Movement.


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The Movement has a major responsibility to show that genuinely, progressive policies offer and alternative to the despair that the recession is creating.

Thanks for listening.

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Posted by Billy Hayes | @ Thu, 12 Feb 2009 18:55:37 +0000

[Big Daz]

I wouldnt mind the job of GS get paid to make speeches here there and everywhere

[dvbuk55]

A bit like taking coals to Newcastle this speech - I mean the North East Trades Union Council on Alternative Economies - ?

[borders]

in a nutshell its a stitch up job.