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
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.