Northern Rock and the Royal Mail : why we should all be dish

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Northern Rock and the Royal Mail – why we should all be disheartened

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Despite a lack of commercial justification, the national postal service is on the same road to ruin as the now Branson-owned bank
By Mike Cattell


Two bits of news this week have managed to be equally disheartening although one, at first glance, looks like good news. This was yesterday’s announcement from Royal Mail that its financial performance has improved so much that in the first six months of this year revenue rose 4 percent. Losses on parcels and letters were down from last year; the Post Office made an operating profit of £55 million and profits on Royal Mail’s European parcel business rose 10 percent.

I’ll come back to why this is disheartening, because I think its directly linked to the other news this week- that the Government is to sell Northern Rock to Richard Branson. As Aditya Chakraborrty wrote it in The Guardian, another way of putting this is to say that every taxpayer in the UK has just promised to give the bearded one £13 each. The public finances are to lose £400 million on the deal – and an unknown quantity in terms of what the future of the bank could be.

As it happens, I don’t think its right to join in the universal cat calling of Branson. His trains seem to me to be good, staffed by great people. But this is not about him.The point is that by selling off what was once a great mutual savings organisation and could be a radical, publicly owned bank which really does introduce diversity into our monolithic banking system, is typical of the outdated policies the Government is adopting.

Which is the link to Royal Mail and the Post Office. Here is a truly great and astoundingly long lived (a recognisable postal service began in the mid 16th century) national institution which the Government is in the process of preparing to sell off to any passing entrepreneur (or even asset stripper- there’s nothing to stop this in the privatisation Act) on the grounds that no one writes letters any more and anyway competition and private enterprise are – blah blah, fill in the rest yourselves.

There is little commercial justification for the sell off of Royal Mail, as these improved financial figures show. A sell off is going to lead to a vastly inferior mail service than the excellent one we have now. Northern Rock will disappear into Virgin and possibly be asset stripped further down the line. Royal Mail and the Post Office will shrivel – all because of a worn out ideology which can’t even summon the right financial figures to give it a bit of decency.