by René Lavanchy
LORD Mandelson was accused of driving “the final nail into the coffin” of Royal Mail this week, as he unveiled plans to invest in and modernise the company by partly privatising it.
Speaking as the Hooper review of the postal sector was finally published by ministers, the Business Secretary said the Government was committed to maintaining a universal postal service, but that falling letter volumes meant that Royal Mail needed to innovate and become more efficient if it was to survive.
The plans, revealed by Tribune in September, will see a private postal firm such as TNT or Deutsche Post buying a minority stake in Royal Mail. While controversial, a part-privatisation would not require Parliamentary approval.
Lord Mandelson said: “To improve the Royal Mail’s performance it should forge a strategic minority partnership with a postal operator with a proven record in transforming its business”.
“This, Hooper believes, would give Royal Mail the confidence, the experience and the capital to make the changes needed to improve performance and face the future. In other words, save the Royal Mail by investing in its future.” TNT have already expressed an interest, he added.
But Lord Mandelson insisted that Labour was not breaking its election manifesto pledge, restated at the National Policy Forum at Warwick this year, for a publicly owned Royal Mail Group.
The Communication Workers Union, which lobbied hard at Warwick for the commitment, reacted angrily. Deputy general secretary Dave Ward said: “There is no need to seek private funding from outside companies in a joint venture. This would open the floodgates for full-blown, damaging privatisation.”
Lord Mandelson said that Royal Mail was forty per cent less efficient than private sector competitors such as Business Post. He also warned it lagged behind the rest of Europe in automated mail sorting. Other European operators sequence 85 per cent of mail by machine for delivery to the letterbox, while Royal Mail does it entirely by hand.
MPs and peers lined up to attack the plan for failing to address the access fees private companies pay for Royal Mail delivery, which they say are unfairly low. Labour peer Lord Clarke said: “Today the final nail is being driven into the coffin of a once-great public service… did not this and the previous Government interfere with the tariff and pricing policies of the Royal Mail? We are subsidising the competitors.”
Peter Hain, the former Work and Pensions Secretary, agreed: “Is not the real villain of the piece, notwithstanding the threat of electronic communication, the problem of unfair competition rigged against the Royal Mail in favour of private competitors, which undermines the universal service obligation and the ability of the Royal Mail to deliver it?”
But Lord Mandelson and postal minister Pat McFadden defended their position, saying Royal Mail lost five times as much to e-communication as to competition. However, Hooper’s report calls for the access fee regime to be re-examined.
Ministers also announced that the Government would take on Royal Mail’s £5.9 billion pension fund deficit and that Ofcom would take over the role of regulator from Postcomm. The CWU, which has often criticised Postcomm, welcomed the plans.
