Why Cable's postal Bill must be blocked

[TrueBlueTerrier]

http://www.morningstaronline.co.uk/news ... full/96732" onclick="window.open(this.href);return false;

Friday 22 October 2010
by Billy Hayes

Hence the Bill contains extensive sections on what would happen in the case that the privatised Royal Mail does go bankrupt. A universal service still has to be provided. So the Bill contains detail how this will be achieved. One option is that the privatised company is given the opportunity to receive loans and grants from the secretary of state - that is, from the taxpayer.

So the innovations of privatisation include the need for legislative protection in case Royal Mail goes bankrupt and the opportunity for taxpayers to bail out such a failure.

This amply demonstrates the huge risks that the coalition government is taking with Royal Mail.

The government has decided that it will take the gamble of trying to privatise Royal Mail. This is despite the fact that every opinion poll for the past 20 years has registered a large majority against this step.

Even among its own voters, the coalition is going against the grain of opinion.

If among its own supporters there is the view that privatisation will worsen services and increase prices, then what is the government's rationale for privatisation?

Business Secretary Vince Cable has said that only through privatisation will Royal Mail be able to compete.

Yet this is not demonstrated either on an international or national level. Internationally, Royal Mail has weathered the recession better than its key privatised rivals, TNT and Deutsche Post.

In 2008-9 Royal Mail's profit rose to £321 million. In 2009-10 they rose again by 26 per cent to £404m.

In comparison, in 2009 TNT's profit margin fell by 3.7 per cent and its profits were down by 25.4 per cent. Deutsche Post saw reductions of 5 per cent in its profit margins and 36.5 per cent in its profits.

Both of these companies experienced far smaller decreases in mail volumes and shorter recessions than Britain in their home markets. In addition, Royal Mail delivers letters at approximately half the stamp price of these two firms.

On the national level, the postal market has been completely liberalised - any firm can enter. Yet Royal Mail continues to deliver over 99 per cent of previously reserved mail. Its efficiencies of scale and scope simply cannot be matched.

The area where competition has made inroads is in the so-called "access" work. This is where bulk mail from businesses is driven to Royal Mail sorting offices for final delivery by Royal Mail.

The regulator has imposed constraints on Royal Mail pricing which mean that this discrete market has been rigged for competitors.

Royal Mail has not won a contested contract for this work. Indeed, for delivering this work, Royal Mail is losing 2p per item - amounting to a £100m subsidy to the competitors.

This rigging is so bad that even the coalition government has accepted that something must be done. But this confirms that it is regulation that is the problem, not that Royal Mail cannot compete.

Employment Relations Minister Ed Davey and others have suggested that privatisation is the only way that Royal Mail can obtain investment capital.

This is despite the fact that, as the minister well knows, the current three-year modernisation programme is fully funded.

But even if we overlook Davey's oversight and look to future funding three years hence, it is clear that there are other options for Royal Mail investment.

To start with, Royal Mail is profitable and these could be retained for future investment.

Second, if competition is equalised, Royal Mail would have an additional £100m a year in income.

Third, the government has accepted that it must take its responsibility for the pension deficit as previous governments had failed to contribute to the pension fund for 13 years. This will reduce Royal Mail's pension expenditure by a further £280m a year.

Of course, additional investment can come through loans, like any normal company. If it is unfashionable to apply "best value" by the use of government loans, then Royal Mail could still borrow from the private markets without having to be privatised.

But the truth is that Royal Mail is up for privatisation because that's the political prejudice of the Tories and their Lib Dem accolytes.

Cable denounces the City spivs at Lib Dem conference - and offers them Royal Mail in Parliament.
The threat to universal service

The Postal Services Bill has been drafted in such a way as to assuage concerns among coalition supporters.

It reasserts the universal service of six-day deliveries and affordable and uniform tariffs for stamps.

This is in one sense an immediate concession to the anti-privatisation campaign, as we know from a leaked letter from Cable to George Osborne that six-day delivery was under threat.

But the Bill also reflects the fact that a privatised Royal Mail will want to reduce the universal service obligation (USO).

The Bill authorises the regulator Ofcom to review the USO. More disturbing again, is the fact that for the first time in legislative proposals there is the prospect of more than a single provider, and for partial provision of service by a provider.

At present, only Royal Mail provides a universal service. A universal service is very expensive to maintain, as a huge amount of equipment, vehicles and employed workers are necessary.

But such a network also creates economies of scale and scope. Such economies are removed if the universal service is broken up.

Of a different concern is that under the legislation Ofcom can simply designate a universal service provider or providers.

In a strike situation, Ofcom would be able to designate some other company to provide the service instead of a strike-bound Royal Mail.

This may well not be the main point of this element of the legislation, but some of the Bill's backers will certainly see this as a bonus.

Obviously the government knows that competitors would be anxious to take on the USO if it only covered restricted, urban and profitable areas.

The Bill's proposal would create a huge downward pressure on the USO service standard and threaten its very coherence.
Post office network jeopardised

A major issue is the proposal to separate Royal Mail from Post Office Limited (POL), the counter network.

The government is playing this up as a progressive move, insisting that it would keep POL in the public sector.

Indeed, it is preparing to turn POL into a "mutual" suggesting this demonstrates the government's radical spirit.

None of this covers up that POL is facing imminent decline outside of Royal Mail.

The simple fact is that a privatised Royal Mail will have no obligation, beyond the existing contract, to use POL.

Any retail network would do, in which case we can expect a wave of closures among local Post Office branches.

Such an analysis is regarded as alarmist by the coalition, but the facts are eloquent.

In 2009-10 POL received £343m in revenue directly from Royal Mail. It has become increasingly reliant upon Royal Mail as government business has declined.

In 2003-4 revenue from Royal Mail was 27.5 per cent of POL's income. By 2009-10 this had risen to 35 per cent.

In the same period revenue from government services fell from 43.1 per cent to 24 per cent.

It must also be remembered that POL is already dependent upon the government for a direct subsidy to maintain its network of post offices.

This is currently running at £150m a year, and will rise to £180m from 2011-12. After the subsidy, POL still had a total recognised loss of £130m in 2010.

There is also a long-running dispute between POL and Royal Mail management concerning the correct pricing of services used.

Royal Mail management is of the view that it overpays POL, while POL management believe it is underpaid.

On central services provided to POL by Royal Mail there is an assumption of around £150m subsidy to POL.

The dynamic of separation is then clear. POL will be dramatically weakened. Talk about innovative staff involvement in a mutual is then just whistling at a hurricane.

For these, and many other reasons, the CWU is committed to a campaign against the Bill.

We know that the shadow cabinet and the Parliamentary Labour Party will oppose it. But the support is much broader.

Recently the Women's Institute pledged its support for the campaign to Keep the Post Public.

It is vital that everyone who values the public postal service lends their support to the campaign.

This will be a tough fight - but it is one we can win.

Billy Hayes is general secretary of CWU.
The second reading of the Bill takes place on October 27, when the CWU will be organising a parliamentary lobby. Contact your local CWU branch to get involved, addresses can be found at http://www.cwu.org" onclick="window.open(this.href);return false;

[MinisterofCucumber]

"There is also a long-running dispute between POL and Royal Mail management concerning the correct pricing of services used. Royal Mail management is of the view that it overpays POL, while POL management believe it is underpaid."

There is also an internal POL service that POL underpays. Cash centre workers are paid pitifully low wages in comparison to other workers in Royal Mail Group. For years, we have been led to believe that we are some sort of irrelevant backwater of RMG. We don't even get uniforms.

Cash centres were originally set up by Postal Officers before a new grade of Postal Assistant was introduced. PAs are amoungst the lowest paid workers in Royal Mail Group, despite doing a job that is comparable to higher paid Mail Centre workers and involves, arguably, more responsibility. Union officials tell us that POL believe we are overpaid compared to the workers in the external cash processing market. However, the vast majority of our work involves servicing the Post Office contract and so our pay should be in line with other RMG workers who also provide a public service. The public want Post Offices and there is great opposition to any more closures. The public use Post Offices because they provide a service that the private sector cannot provide. Post Offices are mainly used for their banking facilities, by individuals and small businesses, because the private banks cannot offer branches in the diverse and easily accessible locations that the Post Office can. The Post Office can only do this because it is a service and not a business. As the people supplying the Post Offices, we are part of this service and so we deserve to be paid in line with our workmates in other parts of Royal Mail Group who also provide the public with a service.

I hope that Dingo and his crew will support our campaign to have all the PAs in Supply Chain regraded to POs and for existing POs to have additional allowances to reflect their extra responsibilities.

The Post Office contract is the biggest single cash handling contract in the country and the only firm capable of taking it off us is G4S. The last time POL tried to offload us to G4S(Securicor), the Competition Commission would not allow it because it would have meant G4S gaining a monopoly in Northern Ireland and an unacceptably large slice of the mainland market. Conditions are more or less the same now as they were then. This puts Supply Chain workers in a very strong position by having the capability to shut down the whole Post Office network if provoked beyond endurance.

It's time we got paid fairly.

[adrianjames]

I DO NOT SUPPORT THE PRIVATISATION, BUT WE SHOULD NOT TAKE LECTURES FROM THE MORNING STAR,S.W.P. ETC,THESE PEOPLE KEPT LABOUR OUT OF POWER FOR MANY YEARS WITH HAMMER AND SICKLE BANNERS ANTI EVERTHING, POWER TO THE WORKERS AND GENERAL STRIKE NOW CALLS,

[TrueBlueTerrier]

I DO NOT SUPPORT THE PRIVATISATION, BUT WE SHOULD NOT TAKE LECTURES FROM THE MORNING STAR,S.W.P. ETC,THESE PEOPLE KEPT LABOUR OUT OF POWER FOR MANY YEARS WITH HAMMER AND SICKLE BANNERS ANTI EVERTHING, POWER TO THE WORKERS AND GENERAL STRIKE NOW CALLS,

Please turn off caps locks it detracts from your point. Perhaps people who want to shout should use this smiley

2nd Thing - check out the author its our Billy a Labour Party Loyalist and card carrying member.

[andy2007]

True. But you know what they say: "The enemy of my enemy, is my friend".

[Wessex]

I DO NOT SUPPORT THE PRIVATISATION, BUT WE SHOULD NOT TAKE LECTURES FROM THE MORNING STAR,S.W.P. ETC,THESE PEOPLE KEPT LABOUR OUT OF POWER FOR MANY YEARS WITH HAMMER AND SICKLE BANNERS ANTI EVERTHING, POWER TO THE WORKERS AND GENERAL STRIKE NOW CALLS,

It was the Labour government that supported the evisceration of the service through their encouragement of the liberalisation for the postal system, the positioning of placemen with a privatisation agenda,their support of Postconn and their campaign under Mandleson to have Royal Mail sold off.The Labour MP's who did not support this are the ones who read the morning star

[Danelectro]

I DO NOT SUPPORT THE PRIVATISATION, BUT WE SHOULD NOT TAKE LECTURES FROM THE MORNING STAR,S.W.P. ETC,THESE PEOPLE KEPT LABOUR OUT OF POWER FOR MANY YEARS WITH HAMMER AND SICKLE BANNERS ANTI EVERTHING, POWER TO THE WORKERS AND GENERAL STRIKE NOW CALLS,

It was the Labour government that supported the evisceration of the service through their encouragement of the liberalisation for the postal system, the positioning of placemen with a privatisation agenda,their support of Postconn and their campaign under Mandleson to have Royal Mail sold off.The Labour MP's who did not support this are the ones who read the morning star

Exactly,left wing policies havnt created the current economic crisis or the mess that royal mail is in,for the last 30 years in this
country its been a free market ideology under thatcher,major,blair and brown.You can debate wether a socialist economy would
do any better but you cant blame the left wing for where this country and the world is at,its global capitalism that all countries have to live under even the countries with socialist governments.

[dvbuk55]

Strange that the CWU accept that profits are increasing and yet there isn't any for the workforce that actually make it - 26% increase and what we get is a pay cut and a measly 1.5%. Is the conclusion that they are in collusion to make RM look profitable at the expense of the workforce or do the CWU also have the opinion that we are paid too much.

[MinisterofCucumber]

Thank you for answering my post, dvbuk55, our CWU brothers seem to want to change the subject.

If the CWU wants to continue to be our union of choice, they should listen to their members and represent their views.

The EU Postal Directive was brought in to comply with the World Trade Organisation's attempt to give some sort of legal legitimacy to the rich countries objective of controlling the poor countries' trade. If you look on the WTO's website, you will see their childish rationale for imperialism. Their policy is justified by using the argument of an outdated economic theory called "comparitive advantage". This theory has been moved on by our own Ha-Joon Chang who argues that unregulated international trade (free markets) has very rarely succeeded in producing economic development.

http://www.wto.org/english/thewto_e/wha ... act3_e.htm" onclick="window.open(this.href);return false;

http://en.wikipedia.org/wiki/Ha-Joon_Chang" onclick="window.open(this.href);return false;

The idiot Mandelson and his New Labour cronies bought this crap and their lapdogs in the CWU obeyed their orders instead of representing their members' interests.

Shame on you, CWU.

[Martin Walsh]

Minster i have heard it all now !!

Look the union opposed the Labour Government decision to bring forward European Liberalisation into the UK. We also had a lobby outside post comm who rolled this change.

The Union has opposed downstream access which has now meant that our competitors have over 50% of the bulk mail market.

So the CWU have not supported in any way the change. It was nothing to do with mandleson or the European union , the then Labour Government decided to liberalise years before any other european government.

We also opposed the Mandleson and Hooper report which if you care to Mandleson diaries our campaign was very effective and the then Labour Governent did not get their way.

Now in terms of what Royal Mail made last year, do you know what a net profit value is compared to a profit. A profit is what you make but you might still have to pay out other costs so its not a strict profit . A net profit value is what you have made once you have paid every other cost. Well lets look at what Royal Mail had it had a government subsidy in the profit and it did not include the loan payment.

So by all means Royal Mail made a profit but they spent more than they recieved. Not a great position for any company but hey dont you worry as you have no repsonsibility for anyone other than yourself. You can post what you like or ingnore any Royal Mail claim. However the CWU reprsent over 100 000 members and have to deal in facts not what we want to believe or what we want to post on here.

[dvbuk55]

Another onion layer!

Tell it like it isn't and hope people believe it.

I believe the representation is a lot less than 100,000, a lot lot less.

[rockytony67]

Another onion layer!

Tell it like it isn't and hope people believe it.

I believe the representation is a lot less than 100,000, a lot lot less.

You may well be right dvbuk55, but who do you represent? your opinion is valued and I love reading your post's but you speak only for your self, Dingo has to put himself up for votes to stay in his position and is accountable to the membership, you are accountable to no one, do I always agree with Dingo? the answer is no, he's never answered my question on how executive member's can be involved in negotiations and then when they've accepted the deal, sit with other executive member's and recommend the deal, when they are supposed to be neutral as regards the negotiations, as for Ministerofdougnuts he once accused me of being a union plant because I had a go at Night Tonic at every opportunity, that say's it all

[dvbuk55]

Another onion layer!

Tell it like it isn't and hope people believe it.

I believe the representation is a lot less than 100,000, a lot lot less.

You may well be right dvbuk55, but who do you represent? your opinion is valued and I love reading your post's but you speak only for your self, Dingo has to put himself up for votes to stay in his position and is accountable to the membership, you are accountable to no one, do I always agree with Dingo? the answer is no, he's never answered my question on how executive member's can be involved in negotiations and then when they've accepted the deal, sit with other executive member's and recommend the deal, when they are supposed to be neutral as regards the negotiations, as for Ministerofdougnuts he once accused me of being a union plant because I had a go at Night Tonic at every opportunity, that say's it all

Well it is true that I don't represent anyone but me - then I don't purport to be a spokesman. If the union was truly representing the membership it would be the whole of the membership. As for putting up for union positions do you believe it is easy to break into the inner circle? I know of very able union reps who are frozen out of union affairs.

[MinisterofCucumber]

Hello Dingo,

Dvbuk is not elected but how democratic are the elections for senior CWU reps?

Anyway, this is irrelevant unless you are trying to say that only a few people have the right to present an argument. Hardly democratic, is it?

When dvbuk wins the argument you say that he shouldn't be allowed to express himself.

All this bullshit about being profitable shows how out of touch the CWU Ponserati on full time release are. Royal Mail Group is a service, not a business. The public, especially vulnerable individuals and small businesses, want the UK to keep this service.

Cash centre workers are disgracefully underpaid compared to other RMG workers. This problem will not be resolved by senior CWU officials intimidating local reps into submission. If cash centre workers want to, they will close down the whole Post Office network. If they want to, they will leave the CWU and join another union.

Fight with us to get us our fair pay.