UK Politics

The Royal Mail

I’m confused. It seems likely that the next government will be a conservative one. The economy is a disaster area, city centres are shutting down like they are preparing for a zombie holocaust with shambling hordes wandering the aisles of pound shops, and Brown’s Labour government are going to get the blame. They are toast.

When the Conservatives get in they will privatise the Post Office if it continues in its present form. So why not go with Mandelson’s plan and allow the Royal Mail to remain publically owned, while letting in a partner to help reform and re-engineer the service while Labour has some remaining influence? If such a plan improves the Royal Mail it may prevent the service being fully privatised in the future and safeguard those aspects we want to keep – like the universal postage charge. Apparently ideology is alive and well, perhaps strengthened by taking entirely the wrong message from the banking industry’s rapid descent into part-nationalisation.

As the Independent notes:

The banks are teetering on the brink of collapse because they remain in the private sector. But the Royal Mail could go under if it remains a state-run quasi-monopoly.

The ills of the Royal Mail have been perfectly apparent for many years now. Despite the fact that the service now turns a profit, it remains chronically inefficient, hobbled by the restrictive practices and militancy of its workforce. It is also seeing its share of the delivery market squeezed.

In fairness, this is not entirely the fault of the management or its staff. The Government’s decision to allow private sector companies to compete in the business mail market in 2006 put it at a considerable disadvantage. The Royal Mail lost some of its most profitable work, while retaining its costly statutory obligation to deliver a letter to the furthest outpost of the British Isles for the price of a single stamp.
The revelation of the Royal Mail’s yawning pension scheme deficit this week was doubtless a ploy by the Government to prepare the ground for this legislation. But the point made by the leak is a powerful one: the Royal Mail is not generating enough cash to cover its existing liabilities, let alone any investment in new cost-saving technologies. As the Hooper review into the future of the service recommended last December, what the Royal Mail needs is an injection of private sector capital and management expertise.
Yet these rebellious Labour MPs – and those postal workers who demonstrated against the legislation in Westminster yesterday – are deluding themselves if they imagine that the Royal Mail can survive indefinitely without serious restructuring. What these opponents of reform need is an urgent delivery of reality.