It is in the best interest of all who use them for Britain’s postal services to remain in public hands backed by proper investment
THE contrast between the Government’s attitude to the pensions of £14,000-a year postal workers and those of former banking chiefs should not be lost on anyone. The injustice is even greater when we remember that Royal Mail bosses took a pension holiday from contributing to the pension fund for 13 years up to 2003. During this period, the Government was receiving increased profits from Royal Mail, so why is there a problem now in meeting the deficit?
The two main parts of Royal Mail business are the delivery service and the post offices, with the latter hived off into a separate entity, Post Office Limited. Manipulation of the market has been used to destroy both parts of this previously thriving business. The Government proposes to take care of the pension deficit by privatising 30 per cent of the delivery business, while leaving the POL arm a separate entity.
It is true that the number of letters and parcels being delivered has diminished over recent years due to the growth of electronic communications. However, this decline can be exaggerated, as there also been a growth of online businesses creating deliveries.
The deliberate destruction of the service began with the appointment of a management team, led by former Football Association chief executive Adam Crozier, committed to privatisation. The only reason this has not come about so far has been because of trade union resistance and the pension deficit in excess of £4 billion. No private firm would buy the business with such a millstone around its neck.
The Government tilted the playing field against the Royal Mail in 2006 when it opened up the British mail market to private companies ahead of the rest of Europe. The European Union directive on liberalisation did not require this until 2009.
As a result, foreign and domestic private companies were able to cherry pick from the business mail. Some 80 per cent of postal industry profits come from business mail. Previously, when the Royal Mail held a monopoly, it was able to use profits from the business side to subsidise the loss-making delivery of residential post.
The Royal Mail has always been bound by the obligation to provide a universal service. By exempting private companies from this obligation, the public sector was effectively hamstrung. This one-sided way of implementing liberalisation was overseen by postal regulator Postcomm.
Other limitations placed on the Royal Mail were caps on stamp prices and restrictions on what could be charged for the final mile delivery of mail to competitors. Mail delivered by private companies is actually put through the letterbox by a Royal Mail postman or woman.
This is because there is an arrangement whereby the private company collects the post but the Royal Mail handles the final part of the delivery. The private companies pay a fee for this service, but this has been kept deliberately low.
It is against this background that claims of a failing postal service need to be seen. One major difference between Royal Mail workers and those in private companies is terms and conditions. In addition to their wages, Royal Mail employees get a pension, holiday and sick pay entitlement. Private company employees could well be on the national minimum wage and receiving none of the other entitlements. Those who advocate postal privatisation would drive the whole service towards this state of insecurity.
A similarly underhand approach has been adopted with the devastation of the post office network. Thousands of post offices have been shut. Ministers claim they are not viable in the internet age. But the Government has given a helping hand to accelerate the closures by awarding contracts to issue television licences and driving licences to other franchise holders.
The Royal Mail’s future must be as a wholly publicly-owned and run service. A private company may invest, but will want a return for its shareholders. Anything used to pay shareholders is money that could have been invested in services. Instead, taxpayers could end up subsidising private companies to deliver unprofitable residential mail.
Instead of shutting post offices, why not give them new and more business and build the network? The bedrock for this revival could be a people’s bank, backed by the Government. With imaginative thinking and the political will, the Royal Mail can be restored to its former glory.
