ROYAL MAIL : A PRIVATISATION TOO FAR?

[TrueBlueTerrier]

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WESTMINSTER Business Secretary Vince Cable has vowed to push ahead with privatisation plans for Royal Mail, ignoring warnings that it could devastate the postal service, lead to higher prices and disadvantage rural businesses and customers.


Liberal Democrat MP Cable said last Friday: “Royal Mail is facing a combination of potentially lethal challenges – falling mail volumes, low investment, not enough efficiency and a dire pension position.”


Argyll and Bute MSP Jim Mather responded: “We now have the LibDems in government enthusiastically embracing the implementation of Tory policies that will bring a hugely damaging effect on our rural communities.

“I recall that when the Scottish government launched a consultation document on the partial leasing of a section of the Forest Estate in 2008, Alan Reid, MP, was keen to suggest that we were attempting to “sell off” Scotland’s forests. I will be interested to see how he describes this move with Royal Mail and how he will justify the threats that it will bring to the mail service for rural and island communities within his constituency, many of whom are already experiencing a reduced service.

“The Royal Mail, because of the nature of the service that it provides, is not just another company to be sold off like the family silver. It has already been subjected to disastrous interference and mismanagement from successive national governments but chopping it up and selling it off will open the door to those competitors who have been already permitted to siphon off much of the profitable city business traffic.

“This exercise will inevitably lead to threats to the universal service obligation that presently dictates that a uniform postage rate should apply across the country. Privatisation will lead to the wholesale loss of jobs, cuts in service and a deterioration of working conditions for postal workers.”


Mr Cable made his decision after a government-commissioned report by Richard Hooper said that many of Royal Mail’s problems had worsened in the last two years.


Cowal councillor Ron Simon said: “The Hooper report has highlighted a £10b deficit in the Royal Mail Pension Scheme, It seems that the LibDems are set to transfer this liability to the government, removing this liability makes the business very attractive for potential investors.

“It is particularly concerning that one of the bigger users of the postal service is small business, whilst the private sector will be attracted to the urban areas any move to abandon universal pricing could disadvantage small rural businesses in Scotland and affect their ability to compete effectively.”


The Communications Workers Union said it would fight the ‘unpopular and politically motivated’ move. It accused the government of plotting to sieze the pension assets, which it said were worth £26b.


Argyll and Bute MP Alan Reid, however, defended privatisation. He told the Standard: “Getting private investment into Royal Mail has been the policy of the Liberal Democrats, Conservatives and Labour for a long time. The only reason that Labour postponed their part privatisation plans last year was because the state of the market meant they would not receive a good enough price for the stake they had planned to sell.

“Now that we are coming out of recession it should be possible to get a better price. Under our plans, the Universal Service Obligation will remain, that is delivery and collection of mail everywhere in the country every working day for the same price.
“Jim Mather is right to say that the postal service has reduced in recent years, but if we follow his do-nothing approach it will get a lot worse.

All businesses need to invest in new plant and machinery if they are to stay in business. Labour introduced a competitive market in the mail business, but failed to invest in Royal Mail. This has left it in a position in which it finds it difficult to compete with the private sector and has lost a lot of contracts in recent years.

“Royal Mail's profits are not sufficient for the investment required to sustain the Universal Service Obligation and to bail out its pension fund which is £8 billion short of what it needs. This means that private investment is required.

“The only alternative to private capital coming into Royal Mail would be billions of pounds of taxpayers' money, but, as we all know, the huge debt left behind by Labour means there is no public money for investment in Royal Mail.
“We will also give Royal Mail’s employees part ownership of the business.”


The Financial Times reports that City analysts believe Royal Mail could be worth £4bn.

[DirtyHarry]

"We will also give Royal Mail's employees part ownership of the business." Just what I always wanted, an insignificant amount of shares in a rich man's cash cow.

Well, Reid, you know where you can stick your shares, don't ya?

[barbario]

If TNT buy into us ,i think that would be enough to get me to throw in the towel and take VR. Just look at what they have done to their own full time workers in Holland,sacked about 11,000 of them. Its my understanding that all they have left is part timers. The public are moaning now but wait a couple of years after privatisation and they will be crying.