Just when a lot of people were starting to believe a little of the new politics stuff, along comes an old chestnut; privatisation of the Royal Mail. This is old politics and old dogma wrapped in the budget deficit. And it is the opposite of Cameron's Big Society.
Ownership was never the problem with the Royal Mail, so why should it be the solution?
In the mid nineties I worked for the CWU as their head of campaigns and we beat off privatisation for two reasons: 1) We successfully showed that the Royal Mail is a valued public service that must be treated as such. 2) We set out a coherent business case for its future in the public sector. Whilst times change and the pension fund debt has grown (thanks in large part to pension fund payment 'holidays' taken by the Royal Mail during the good years) the case remains as true today as it did then.
The case can be harder to make sometimes because managers, with government acquiescence and against union advice, have brought in legions of casual labour, abolished the second delivery and dramatically changed rotas (By the way, who remembers Consignia? That was managers too). This disrupts the service and takes good people away from what they do best; sorting and delivering the mail.
But the fact remains that people rely on the postal service and no private operator can guarantee a single price universal service to anywhere in the UK. If it doesn't make economic sense for them, then you have to conclude that it is a service that may require subsidy. "Socially necessary" services qualify for state support. So why shouldn't we do the same with a post office and mail service for Tobermory for example? But look closer and the issue of subsidy is not the problem either. The Royal Mail made big profits of £184 million in the last two quarters - in the teeth of the recession. It can probably afford to support many loss making elements of the postal system. So, to return to my earlier point, ownership has never been the problem.
The answer therefore is to get some imagination and managers who are committed to delivering an excellent public service into the Royal Mail. The People's Post Bank idea is already out there. (And didn't we have a Big Society Bank proposal announced this week?) Socially useful banking services to communities and those excluded from financial services would be the epitome of Big Society. Secondly, why is the National Lottery run by people like Camelot and greedily eyed up by the Virgin Group? Let the Post Office run it and take a 10% cut. They have the branch network and it would give them a foothold in tens of thousands more outlets. Give the Royal Mail more freedom to innovate. Let them borrow on the markets to invest. But create a new charter that puts a strong, professional public postal service at the heart of our Big Society. And, yes, where services lose money because they serve tiny populations, bloody well subsidise them if needs be.
So, back to the pension deficit - the real reason that Mandelson and now Cable see it as "necessary" to privatise the Royal Mail. It is illusory. It is a smokescreen designed to make the media and the public think there's a crisis that requires a sell off. Any full or partial privatisation will require the government to take on or underwrite the debt. As with universal services, the Royal Mail becomes unbuyable if it has the pension debt around its neck. So, if it can be written down for a sale, it can be written down for its new public sector role.
This is old politics. It is old dogma. It is about a cheque for the government for the Post.
Think big. Think better, Cleggeron.
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As a successor and current post holder of the job you once held its no surprise to me that we have had to deal with a succession of government after government dogmatic policy to deal with the Royal Mail. This latest attack from this so called progressive alliance, which will turn quickly into Thatcherite Union bashing, coincided with Royal Mail’s annual financial results.
ReplyDeleteI remember when Allan Leighton was appointed Chair, he created an immediate impression of financial despair. The spin was £1.5m per day loss, which was quickly followed some six months later with record profits. The pension’s deficit will soon report a deficit of £10 billion. This will be the FRS 17 figure or “Doomsday” figure as we call it. The pension’s trustees will be making their recommendations shortly and an extension to the repayment period and crown guarantee would help to alleviate the nervousness with the trustees, regulator and accountants.
The downside to stability with the pension’s deficit is the one area that stopped the previous government attracting a buyer. If the pensions are stable the company looks more attractive to investors. Even hedge funds would start to seriously look at acquisition prospects.
The sale in itself that’s proposed is straight from the Lib Dem manifesto. Sell Royal Mail and pump the revenue straight into Post Office Ltd. The CWU are currently in a coalition with a number of organisations campaigning for a peoples “Post Bank”. The very same policy that the new alliance is saying it wants to underpin by the Royal Mail letters division sell off. Including an employee share option, favoured by a number Labour Co-op MPs of which Ed Balls, potential front runner for the Labour leadership race is one. In 2005, I came to see you about that campaign then Daniel and we fought the employee share option issue off as we have with all previous attempts. Only last year did we mounted another massive campaign “Keep the Post Public” to fight off Lord Mandelson’s attempts.
Here we are again exactly a year on and its back to our annual conference next week with a bag full of knee jerk emergency motions that will commit us to god knows what. There’s even an emergency motion to pull out of the Labour Party? Someone needs to explain the dynamics of opposition and the “Star Wars” type alliance and the sell off being planned in the “Dark Star” of politics..
I’m dusting down my “Keep Calm and Carry On” t-shirt…..