Following on from the Hooper Report, the government is proposing to part-privatise Royal Mail, the letter delivery arm of the Post Office. There’s no silly nonsense about putting the arrangement out to tender so we the taxpayers get the best deal either. They’ve already lined up TNT to take 30% of Royal Mail.
The announcement has roused fury among millions of people – trade unionists and just ordinary people who use Royal Mail, which is pretty well everyone. Why mess about with something that works well? We have the cheapest postal service in Western Europe. We are the only country in the European Union that still has a Saturday delivery.
The government has form on mucking up the Post Office. They have already closed thousands of small post offices, seriously inconveniencing millions of elderly and disabled people and ripping the heart out of isolated communities. They did this despite receiving a petition signed by four million people, begging them to stave off the closures. Their half-witted commitment to neoliberal slash and burn policies continues despite the fact that the ruins created by the failure of free market capitalism lie all around us. It continues despite the fact that a year before a general election privatisation is a huge vote loser. It continues despite the fact that everyone knows privatisation means job losses, and the last thing we need at the moment is more job losses.
They have a fight on their hands. More than 140 Labour MPs, including many who have always acted as voting fodder for the government, have finally declared that ‘enough is enough.’ Virtually the only support they can drum up from the labour benches is the payroll vote. New Labour has decided to railroad the proposal through with Tory support. Fair enough really, as it is basically a Tory measure. The Tories are revelling in Labour’s discomfort.
No wonder Labour MPs are angry and upset. The 2005 Labour Party manifesto specifically stated, “Our ambition is to see a publicly owned Royal Mail restored to good health, providing customers with an excellent service and its employees with rewarding employment.” Millions of people voted Labour on the basis of that pledge. Not clear enough? The Labour party’s 2008 National Policy Forum restated, “We have set out a vision of a wholly publicly-owned, integrated Royal Mail Group in good health, providing customers with an excellent service and its employees with rewarding employment.” This was endorsed at the 2008 Labour Party Conference.
What has changed? Well, Peter Mandelson has become business minister. But who ever elected Lord Mandelson?
Royal Mail bosses say that the Royal Mail is technically insolvent. But how can this be? The Mail makes money, a lot of money. In the nine months to December 2008 it made £225 million in profit. The reason for this ‘technical insolvency’ is the black hole in the pension fund, currently £9 billion and likely to soar. Why will it grow? Because the price of shares, pretty well all shares, are going down and the pension fund has been punted at shares. Payments in will have to rise to compensate for the lack of earnings from shares. How is the stock market collapse the fault of the postal workers? It’s not. But the consequence is that £284 million will have to be put in to the pension pot in order to staunch the bleeding.
Now the pension fund is very important. Nearly half a million workers are or will be covered. Over many years these workers have been made firm promises, in return for working loyally for the company, of a certain steady income in retirement. Now Mandelson says the pension fund is in danger. He released a scare story last week designed to worry the more docile and stupid Labour backbenchers into supporting the government proposal. It was also intended to put the wind up postal workers and convince them that part-privatisation was their pensions’ only safeguard.
Now this is a complete red herring. In the first place Royal Mail is a publicly owned company. It has been since 1516! The government has a duty to Royal Mail pensioners to carry out their promises. Where will the money come from? Well, they could stop stuffing the exorbitant pension funds of the crooks and incompetents who ran the big banks into the ground with taxpayers’ money to start with. They have a duty to honour their promises to ordinary working class people who spend their whole working lives being useful to other people. The Royal Mail pension fund is sacrosanct and bullet proof. That is as it should be.
Secondly, why is the pension fund in such a pickle? The government decreed a pensions holiday from 1990 to 2003. In plain English the government decreed that it was ‘not necessary’ to pay in to the fund for thirteen years. The accumulated money would be quite sufficient to pay the commitments to the pensioners, they said. Sharp eyed readers will notice that, though started by the Tories who we expect to get up to this kind of skulduggery, the holiday was continued by brainless New Labour minions for years after they were elected in 1997. Now they complain there’s no money in the pot. Why didn’t they fill it up, then?
Thirdly, to demonstrate what a complete red herring the pension fund argument is, the government has declared it is quite prepared to guarantee the pension fund – provided the workers accept part-privatisation. This is blackmail! Actually it’s worse than that. The government is saying pensions are safe provided TNT gets its foot in the door. It is in effect subsidising TNT entry into the British letter delivery service, when it is not prepared to give the same guarantee and the same subsidy to a company it actually owns!
Another argument is that all postal services (‘snail mail’) are in terminal decline because of the advent of new technology. Actually internet-based technology can have a contradictory effect on the post. Amazon.com and other web based companies have actually provided a big boost to parcel deliveries, sometimes at the expense of local shops, sometimes substituting themselves for local shopping facilities that have never existed or have long since disappeared.
Royal Mail is written off as an inefficient service compared with shiny continental rivals. But if we take the Dutch postal service, it costs twice as much to post a standard letter as in the UK. Does that show the British service is inefficient? The government wants to cure our inefficiency by inviting in TNT – which runs the Dutch postal service!
It is true that PO management have been slow to take up some mechanised procedures compared with some European postal services. The reason is that successive governments have been very happy to just pocket the profits that Royal Mail has consistently generated over the years and not allowed them to plough them back into the service. In effect they have used it as a milch cow.
There are also problems with Royal Mail’s management. In 2006 the government offered a loan of £1,200m for investment. Three years later more than half of that offer remains unclaimed. So they put their hand out for more money and part privatisation to TNT. Even Mandelson has lost his rag with the management about that.
But TNT are not the people to improve efficiency and save Royal Mail. Quite the reverse – they hope to get in for what they can get out of the company. First a warning to workers. TNT provided the scab lorries that were used to break the printers’ strike against Rupert Murdoch at Wapping in 1986-87. The company has just spent the past year battling against the German government in the courts to try to stop them imposing a minimum wage for the benefit of postal workers in Germany. Everywhere they operate, TNT leads the race to the bottom.
Secondly the universal service provision gives predatory firms the chance to privatise the profits and leave the losses of the post in public hands. Orthodox economists even have a name for the practice – cream skimming or cherry picking. The foundation of the service is that a single price stamp can get a letter sent anywhere in the UK. Roland Hill’s principle turned the post into a mass popular service, affordable for anyone. But, of course, it costs much less to deliver a sheaf of business letters from one office in London W1 to another than to deliver a single letter to a lady in the Shetlands. If private provision is let in, they’ll inevitably slaver for the W1-W1 business and leave the rest of us to subsidise the postie schlepping round the Shetlands. That process is already in process with parcel deliveries. The net result of this predation is to destroy a universal, affordable service.
Liberalisation is a policy allowing free entry into providing postal services. It lifts the monopoly that protects the universal service provision. Liberalisation is on its way through EU rules. These rules will destroy the popular postal provision – a service that works – for certain. New Labour claims it can do nothing to protect the service from EU rules. We know this government is actually the most insistent in the EU in lobbying for Thatcherite measures of deregulation and liberalisation. Then they hide behind the EU as an excuse. If EU rules are really going to destroy the postal service, then New Labour should refuse to implement them
TNT is an active supporter of liberalisation – in the UK. In Holland, where TNT is the postal service, they have fought tooth and nail against any attempt at lifting their monopoly. Instead they have relied on New Labour’s stupidity in liberalising delivery provision way before EU rules declare it necessary, therefore unilaterally disarming our service from the predations of the likes of TNT, securely protected by the walls of
monopoly dug around the Dutch service.
TNT are a snatch and grab outfit. If they get 30% they’ll soon be back for more. And they are in trouble. Last year their profits plummeted by 37% to 716m Euros. What they need is our money. And they’re not having it! The idea that they are in business to improve efficiency is ludicrous. They will suck Royal Mail dry, if we let them get away with it.
The government’s plan is completely bonkers and deeply unpopular. Their path is strewn with obstacles. Nine out of ten oppose part-privatisation. All the main trade unions and any Labour MPs with the capacity for independent thought are against the plan. We can win this one. Let’s make sure we do.
This article first appeared on Socialist Appeal.
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This post was written by Mick Brooks