The Impact of Privatisation on Royal Mail

[TrueBlueTerrier]

http://www.pitneybowes.co.uk/pbse/blog/ ... tter%22%7D" onclick="window.open(this.href);return false;

Royal Mail's privatisation had been in the pipeline for a number of years, finally coming to fruition on the 15th October 2013.

As Business Secretary Vince Cable explained, this important step has given Royal Mail access to the private capital it needs to modernise, as envisaged under successive governments, and enshrined in law by Parliament two years ago

Royal Mail argue this modernisation is necessary for them to take advantage of the booming parcel delivery market caused by the rise of online shopping. This change of strategy is crucial for growth as the letters business dwindles.


Facing Vocal Opposition

Privatisation has faced a great deal of criticism from a number of groups including the Conservative Bow Group, the Countryside Alliance, the National Federation of Sub postmasters, the cross-party BIS Select Committee as well as Royal Mail employees themselves, with 96% of employees against it.

Opponent's feared privatisation would expose the company to profit-obsessed large investors who will pressurize management into slashing costs, regardless of the consequences. They prophesized privatisation would lead to:

A deterioration in service standards
The likely end of the universal six-days-a-week single price service in rural areas
Post Office closures
Worsening working conditions for postal workers
Much of this panic is unjustified, with most of the campaigners' claims based on pure speculation and a misunderstanding of the current regulatory regime.

In fact:

Royal Mail is required to meet service standards set by Ofcom, no matter who it is owned by
Royal Mail will still be the UK's designated universal service provider and will continue to provide deliveries to all UK addresses, rural and urban, 6
days a week, as regulated by Ofcom
The Post Office is a completely separate business from Royal Mail so will not be affected by privatisation
Working conditions for postal workers are actually set to improve as Royal Mail agreed to a 9.1pc pay rise for staff over three years, as well as a host of employment protections. The deal was finalised by Royal Mail board and a CWU ballot on 5th February 2014, but was agreed in principle in December 2013.

Limited Effects

So the postal service should not be overly affected by privatisation itself.

Royal Mail has warned that more postal workers will lose their jobs. This is part of an ongoing modernization and efficiency increasing drive that has been running for a number of years in an effort to keep the institution alive.

On the subject of prices, Ofcom have introduced a seven-year price cap of 55p for second-class mail, but asserted last year that Royal Mail needs to materially increase prices in order to support the sustainability of the universal service.

Royal Mail will be increasing tariffs for their big business Access' customers by between 3.4% and 4.1% on 31st March 2014. However, there will be discounts for postal operators who provide detailed forecasts of their future requirements.

The privatisation of Royal Mail should not itself cause any big changes to the core services we rely on. In fact, the strong competition they face from other delivery service providers means it would not be in Royal Mail's interest to let standards drop or hike their prices up dramatically. Similarly, it is in the investors' interest that Royal Mail grows stronger and therefore more profitable, so seems unlikely they would risk upsetting the customer base by forcing unpopular changes.

[pants123]

what humans do on this this planet makes me laugh.......... politicians fight over money... and there wealth as humans .. its funny as hell...