Tristram Hunt: Why sell off a service that binds our nation?

[johno47]

http://www.thisisstaffordshire.co.uk/Tr ... z2fHATJnSX" onclick="window.open(this.href);return false;
Tristram Hunt: Why sell off a service that binds our nation?


"THE sale of assets is common with individuals and states when they run into financial difficulties. First, all the Georgian silver goes, and then all that nice furniture that used to be in the saloon. Then the Canalettos go."

So commented Conservative Prime Minister Harold Macmillan in 1985. With his trademark dry-wit, what 'Super-Mac' was objecting to was the wholesale privatisation of state owned industries by the Thatcher government of the time.

And what a list of family silver it was. British Rail, Coal, Gas, Petroleum, Steel, Telecom, Airways and Shipbuilders, along with Electricity, Britoil, Jaguar and Rolls Royce. By the time the curtain closed on Conservative rule in 1992, British industry had been transformed forever.

In the course of privatisation, we lost a great deal of institutional knowledge and scientific expertise. But there were also successes. Jaguar and Rolls Royce are now far more effectively managed than they could ever be in public control, and it would be downright dangerous were a state monopoly in control of all of our broadband access.

However, with its plan to privatise Royal Mail, the Government is finally coming for the Canalettos.

The Government knows the public will oppose this – that is why they are trying to rush this boneheaded scheme through.

It looks odd to sell a business that last year made a cool £435m of profit. But last year the Government took over responsibility for Royal Mail's £10bn pensions deficit. To privatise the profits having just socialised the debt smacks of a carve-up between City financiers and Conservative ministers. Perhaps recent stamp price hikes were a deal sweetener.

The Government claim Royal Mail needs more money to compete in a market transformed by the internet. Certainly, communications is changing fast – far from email killing off the postal business, as many feared, it is our increasing preference for online shopping that has actually led to Royal Mail's bumper profits.

But the idea that privatisation is the only way of increasing investment is bunkum. The Royal Mail has a catalogue of lucrative assets it can sell to raise cash. What is more, the business is currently hamstrung by private sector contractors creaming off the easy postal routes. If the Royal Mail had the same kind of easy returns as TNT, then its finances would be even healthier.

Besides, the government can borrow at far better rates than the private sector. Of course we should always be careful of borrowing more money. Yet it was precisely this type of short-term thinking about public investment that led to many of the more avoidable PFI disasters.

And make no mistake about the consequences of the Government's sale. Once majority control is handed to the private sector, Royal Mail will be placed upon a treadmill of shareholder return and corporate finance.

If dividends and profits do not grow inexorably, then investment can disappear almost overnight. This would place an institution such as Royal Mail under enormous pressure to deliver immediate returns.

First up for sacrifice will be the long-term deal with local post offices: so use yours while you can.

Second in the firing line will be the universal service provision. We have been assured by government ministers that only Parliament could possibly change the first-class, cross UK, next day delivery commitment – but Parliament can do quite a lot of silly things in a single day.

Then will come the attack on rural deliveries and weekend services; the whittling away of workers' terms and conditions; and an almighty fire-sale of historic Royal Mail assets, not to re-invest, but to butter up shareholders.

But these assets are not theirs to sell. The Royal Mail has been part of our social fabric since Henry VII established a Master of the Posts, and it has been publically owned since 1635. Its Royal Charter is symbolic of its national importance, and there is something a little unedifying about the Crown Insignia falling into foreign ownership, as is likely.

Quite simply, the Royal Mail is one of those institutions and practices that bind us together as a nation. Yes, let's bring in some private investment and management know-how, but let's not flog it off in order to balance the Treasury books.

Older Conservatives, like Macmillan and even Mrs Thatcher, who pointedly ruled out selling off Royal Mail, realised that its value went beyond an unseemly fire-sale.

Because once you have cashed out the Canalettos, it is very had to buy them back.