Tribune – news, features and comment from Britain's left-wing magazine

by René Lavanchy

ROYAL MAIL will be earmarked for privatisation through the back door of a joint venture with a private company when a Government-commissioned inquiry reports this autumn, the Communication Workers’ Union warned this week.

Union officials, who have been in regular contact with the review panel, told Tribune that there was a “very strong likelihood” that they would recommend liberalising rules on the issue of Royal Mail shares, so that it could enter into a joint venture with a partner such as private mail firm TNT or Deutsche Post.

Such a move would allow the Government to privatise a large part of Royal Mail’s operation without parliamentary approval, unlike a full-scale privatisation.

Postal regulator Postcomm has already recommended some form of joint venture to Richard Hooper, who chairs the review. The union will be campaigning for a publicly-owned Royal Mail at the Labour Party conference next week.

A CWU spokesperson said: “Our take on Hooper is that he’s liable to be much more influenced by Postcomm than the CWU and public concern… We think there’s a very strong likelihood of joint venture.”

“This would almost certainly involve a break-up of Royal Mail, with the counter services being retained by the public sector, but the profit making parts going to the private sector.”

If the Government accepts such a report, it will break the commitment it agreed to after Labour’s National Policy Forum this year to a “wholly publicly owned, integrated Royal Mail group”.

An interim report by the Hooper review in May warned that Royal Mail’s worsening finances posed a “substantial threat” to the universal service obligation, under which it delivers to all addresses at regulated prices. However, the CWU and Postcomm differ violently on how to make it sustainable.

Royal Mail is responsible for almost all deliveries within the “final mile”, the least profitable part of the business.

The CWU says that access fees – which private companies pay in order to hand over their mail for final mile delivery – are set artificially low by

Postcomm.

Postcomm has told the Hooper team that further liberalisation of the postal industry is need to protect the service. While they believe in making access fees fairer, they also call for Royal Mail to start paying VAT, from which it is currently exempt.

Such changes, they believe, could lead to private companies seeking to do business across all postal services, including the final mile.

Another CWU official who has met the Hooper team said: “Having accepted the analysis that competition hasn’t really worked, what do they propose to do about that? They don’t propose a period of reflection, but if anything to take competition forward.”

He added that that review body had ‘put down markers’ indicating their views: “One said, ‘Why wouldn’t you want a joint venture?’” and said the review was acting beyond its remit in considering public-private partnership for Royal Mail.

But a spokesperson for the Hooper team denied this: “In determining how you maintain a universal service, that discussion has to be had.”

They also said that the review was not likely to recommend reducing the universal service, over which the CWU has voiced concern.