Royal Mail Partnership

[ChrisJCook]

Hi

By way of introduction I am a regular Royal Mail customer. I used to work in the City years ago, including a spell as a director of an exchange, for what that's worth. In recent years I've been working in the area where the Internet and markets converge, and become interested in alternatives to the conflicted and inequitable legal and financial frameworks - or "enterprise models" we take for granted.

I am currently working with a Scottish Charity - Nordic Enterprise Trust - to develop partnership frameworks, and we had a little Norwegian government funding for a while to refine the concepts, which are now getting a lot of interest in view of the fact that the conventional methods have seized up, as I have been forecasting they would for several years now .

I posted what follows on a Facebook group re keeping Royal Mail a public service, since I reckon we have identified a simple but radical approach which might best be described as a networked "Co-operative of Cooperatives" operating on a "Not for Loss" basis - as the Nobel Prize-winning Dr Yunus - of Grameen Bank - put it. ie without returns to "rentier" shareholders.

Brian Bailey, a postie in that FaceBook group suggested I should post re the concept here.

A Royal Mail Partnership
The conventional view is that there are two mutually exclusive alternatives: Public and Private.

By "Public" is meant "owned by the State" - by "Private" is meant owned by a Limited Liability Company. But these two are no longer the only games in town.
For instance Glasgow Council (Labour) now has three municipal Limited Liability Partnership ("LLP") joint ventures, albeit they use conventional debt funding for working capital.

I advocate the following Royal Mail Partnership framework, constituted as an LLP. Note that this LLP will not be an "Organisation": it won't do anything; employ anyone; or own anything: it is simply an agreement between "stakeholders".

Structure
Firstly: the "Custodian" ie the State, which will continue to own the assets in the public interest and have certain veto powers aimed at preserving the aims and objectives set out in the LLP agreement (which is a totally "open" agreement);

Secondly: the "Investor" - Day One, the State entitled to 100% of revenues.

Thirdly: the "Operator" - this is the management and staff of Royal Mail, currently working for a Plc in state ownership.

Fourthly: the "Customer" - ie a User group.

These would be the "stakeholder" members of the Royal Mail Partnership framework.

How it works
The Users pay for the use of the service, and for the use of the capital employed in the service, and this revenue may then be divided PROPORTIONALLY into %age "Units" or "n'ths" eg a billion Units, each of which carries the right to one billionth of GROSS Royal Mail revenues.

These Units are shared in agreed proportions between Investor and Operator. The interests of the Investor (State) and Operator are therefore aligned, and if efficiency savings are made, they are shared between them in agreed proportions.

The ownership of Royal Mail Plc - which becomes the key "Operator" partner providing the service - will be passed to and remain with (possibly through a Trust arrangement) the staff - as with John Lewis Partnership, or Tower Colliery - and there is no reason why there need be any further fat-cattery. The staff and management are capable of working out among themselves how best to organise the work efficiently and to spread the revenues fairly. The Scandinavian approach - where salaries and benefits are spread much more equitably between management and other staff, is a good example, as is the John Lewis Partnership.

A proportion of the "n'ths" / Units would be transferred by the State to the Post Office pension scheme - thereby plugging the pension hole. For tax reasons these Units would necessarily be sold either to overseas investors - particularly Islamic investors (this structure happens to be Sharia'h compliant at a basic level) - or to any UK investor without pension tax treatment. But note here that that this will not be to sell "Ownership" or "control" of Public assets: it is merely to share with investors "Unitised" rights to revenues.

Such revenue sharing with investors allows necessary working or development capital to be raised in a much less risky way than the alternative of secured borrowing, where a failure to pay debt would put Royal Mail at risk. "Unitisation" replaces BOTH conventional toxic "Equity" in a PLC, and equally toxic secured debt created by credit institutions and creates a simple but radical new continuous class of finance in "nth's" or %age Units. If it is thought fit to bring in new partners (eg for new business lines such as generic public interest Post Office banking) then this may be done simply by sharing the revenues from the joint activity.

It's not Rocket Science , but you won't hear about it from anyone paid by the hour, rather than by the outcome.

Anyone interested in the potential of partnership-based models for unitisation as an alternative to debt may instructive find this presentation concerning a way out of the Credit Crunch

http://www.feasta-multimedia.org/2008/Chris_Cook.mov

Happy to discuss this here or offline at cojock AT hotmail.com

Best Regards

Chris Cook

[fmrPOSTIE]

Thanks for your detailed reply Chris. Maybe if the John Lewis style of partnership had been introduced earlier, then we may not find ourselves in this position.

If im correct the CWU (the main postal union) is against any form of partnership, JV or minority sale. In anycase - do you really think postpersons, the Union and Management could REALLY agree on anything under this structure? I'd be very surprised.

[DGP1]

If I understand this correctly, everybody gets paid based on how much their unit makes which would make every unit more efficient.

Let me know if this is right.