Britain’s Royal Mail has a proud 400-year history. It’s been copied worldwide, built on the universal service principle of ‘one price goes anywhere’.
We’re proud of our ‘posties’ delivering mail six days a week from John O’Groats to Land’s End – come hail, rain or shine.
It keeps us in touch with relatives and friends and helps drive our economy. It delivers 99% of all items posted – 75 million every year – to our 28 million homes and businesses six days a week. 88% of small businesses send post every day.
So Royal Mail has a great public service past. But its future is now under threat from the Tory-Lib Dem government.
The Lib Dem Minister in charge of the post Ed Davey says he is looking at plans to sell it off – even though privatising the Royal Mail is against Lib Dem policy.
That’s why with the postal workers union the CWU I’m today launching a campaign to Keep the Post Public. And I’m urging Nick Clegg to stand by his manifesto commitment which rules out full privatisation.
A You Gov poll published today, commissioned by my campaign and the CWU, shows voters reject plans by the ConDem coalition to sell off the Royal Mail to a private company.
The Government is considering three main options: 100% privatisation – either by selling shares on the open market or else exclusively to venture capitalists – or partnership with a commercial operator. There may or may not be some staff shares.
But the question remains: would privatisation really make the future easier?
The 21st century has certainly brought fresh challenges. Emails and texts mean the letters market has declined and Royal Mail needs to invest in new technology. The company hasn’t found it easy to adapt, hampered without doubt by poor industrial relations and lack of investment.
But there are also new opportunities. The internet itself is boosting the parcels business through online purchases and lost mail business can be replaced by new financial products and services. Labour underwrote the future of 11,000 Post Offices nationwide which we planned to transform into a trusted People’s Bank and a £1.2bn loan was offered to fund modernisation.
And there are real signs of change. A new chief executive has been lured from Canada Mail. Royal Mail’s new modernisation plan has been backed overwhelmingly by CWU union members. Modern machinery is being introduced, replacing 50,000 jobs over the last two years, reducing staff costs by £266m last year alone. Operating profits improved by 26% last year – and rose by 98% the year before.
Pension benefits have been curbed and the retirement age raised. Trustees have sensibly proposed to correct the pension deficit over a longer timescale, boosting Royal Mail’s viability.
There is recognition of the unfairness which holds back its performance. Private operators handle bulk mailings and use the Royal Mail to deliver to homes and businesses. Many consider they pay too little for this service.
That’s why the 2008 Hooper report called for regulatory reform. It also urged Government to take responsibility for the historic pension deficit, partly resulting from the 13-year employer contribution ‘holiday’.
Relieved of the debilitating burden of the pension fund legacy, with healthier staff relations and a more even-handed regulatory regime, I am sure Royal Mail has a bright future. We should be prepared to consider innovative ways to finance Royal Mail’s success within the public sector, for the benefit of the customer, the company and the taxpayer.
But the case for privatising or selling off parts of the Royal Mail has not been made. With the economy so uncertain it’s unlikely to fetch a fair price and the taxpayer may still be expected to carry the burden of Royal Mail’s pension deficit – a massive public handout to whoever bought the company.
Private investors might cherry-pick the most lucrative parts of the business, in particular the growing parcels business. If rival postal firms bought Royal Mail, a conflict of interest would exist. And the result could one day see the end of the current universal service and the post office network itself – a disaster for all who rely on the post, especially pensioners and people in more remote areas.
I am not opposed in principle to using private finance to strengthen public services. But I reject the ‘private good, public bad’ philosophy at the heart of Conservative-Lib Dem thinking. In complex natural monopolies privatisation can go badly wrong. The reason we needed a windfall tax in 1997 was because mishandled privatisation can cost the taxpayer billions.
On Royal Mail, the case for private ownership has simply not been made. The risks are substantial and long term – it could end up like another Railtrack.
So rather than gamble with public trust, risk the universal Royal Mail service and squander the public service ethic of the workforce, the right solution now is to make a modernised Royal Mail work as a 21st century public service.
That’s why, as I tour the country over the next few weeks, I will be campaigning with the CWU to Keep the Post Public. Sign up at http://www.edballs4labour.org" onclick="window.open(this.href);return false;