Royal Mail Sell-Off Bombshell

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Royal Mail Sell-Off Bombshell








25 January 2009 by Editors Comment (Steve Lawson) - © Hellmail.co.uk




Its difficult to guage the strength of any revolt to plans by Lord Mandelson to sell a share of Royal Mail to possibly another postal operator, but Mandelson will be determined to push them through and resistance merely move from boil to simmer.

However, recent concerns raised by the Business and Enterprise Committee that Royal Mail's costs were far from transparent, a long-running disagreement between Postcomm and Royal Mail over the true financial state of the company, and Royal Mail's announcement that last nine months of 2008 had seen profits of £255 million, have done little to clarify the situation. Confused? So are most of us.

Mandelson maintains that even if the responsibility for the present pension deficit were transferred to the nation, Royal Mail would still require hundreds of millions of pounds to modernise and that without a minority stakeholder, Royal Mail is, well, doomed.

However, as members of the Business and Enterprise Committee and the Communication Workers Union recently pointed out, without true figures, it was impossible the know just how much money is needed to help Royal Mail slot into a liberalised postal market and yet still retain the Universal Service and there is still the small matter of some £600m of Royal Mail's modernisation loan unspent apparently. The rest of the country is also wondering why around a fifth of the post office network has been sacrificed and yet we are apparently no further forward than we were before the UK first adopted a liberalised postal market. The rest of Europe has yet to adopt the model in full and the situation in the UK is one which many other European countries are watching closely.

The last straw probably, has been the recession and a mass borrowing binge to take the edge off a deep financial crisis within the UK's banking system but whilst email and texting has undoubtedly had an impact on Royal Mail's business, by far the greatest damage has been done by apparent blissful ignorance of Royal Mail's future during a pension holiday of over ten years and a complete lack of investment prior to liberalisation. To be trying to modernise Royal Mail at this late stage seems absurd.

To make matters worse, the relationship between union members and Royal Mail bosses is frosty at best, a void that if anything, appears to widen. Its an issue lightly touched upon within the Hooper report, but to date the government has avoided even discussing it, particularly as the Labour party relies on donations from the union. The reality is that as time goes on, the problems faced by Royal Mail just continue to grow and even with a backbench revolt, the financial pressures are likely to be the deciding factor rather than a wholly political one.

The complete fallout from rural post office closures has yet to be felt. Clearly without these focal points, many rural areas will witness the death of nearby businesses as villagers shift their buying habits to large supermarket chains, and all at time when many will be scratching around for a living.

Even transferring the Royal Mail pension deficit opens yet another can of worms with so many already victims of private pension fund losses who saw little or no government help when their own pensions collapsed. Shifting the pension problem on to everyone else does make Royal Mail a far more attractive proposition for any potential stakeholder and the government doesn't see a minority shareholding of 30% or more a sell-out at all and that it is committed to a publicly-owned postal service. Those against say exactly the opposite and the rest are left scratching their heads as to what is or isn't privatisation.

Perhaps it is the wording that fuels the confusion but until someone can actually work out how much modernisation will cost and how much money Royal Mail is making or losing, we seem to be drifting towards a radical shake-up/break-up based on guesses and hunches. Perhaps if someone could point out to me what real gains have been made since we liberalised the UK postal market, this unease that seems to grip me could finally be lifted.

It doesn't matter how many ways you attempt to rephrase "we're about to sell a third of Royal Mail" - it still sounds the same and 'minority' seems a superfluous word in this context. Trying to soften a bombshell of that magnitude changes nothing. We've already lost thousands of post offices, and for what?

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