A government Report has confirmed what everybody already knew. The ‘liberalisation’ of the postal service has benefited big business, but not ordinary people.
This is no surprise. The Post Office works on a ‘one price goes everywhere’ principle. The monopoly on letters enables the huge volume of business to business mail from and to central London head offices to in effect subsidise highland crofters and little old ladies who live on remote Scottish islands keeping in touch with their loved ones. Does anyone have a problem with that?
It’s official. The Report explains there are "no significant benefits" for everyone else. The Report goes on, "There is now a substantial threat to Royal Mail’s financial stability and, therefore, the universal service. We have come to the conclusion, based on evidence submitted so far, that the status quo is not tenable. It will not deliver our shared vision for the postal sector.”
Now the monopoly is in the process of being dismantled, it means commercial firms can undercut the PO in the business to business market, doing the easy stuff and leaving the public sector to make losses on account of their ‘public service obligation.’ This is called ‘cherry picking’ or ‘cream skimming’ in economic textbooks. It is classic predatory behaviour.
In effect the finger has been withdrawn from the dyke and the flood waters are rolling in, what the Report calls "a substantial threat". Royal Mail will be systematically stripped of its profitable sub-markets. The first reaction of ultra-Blairite Minister Hutton has been in effect to ignore it and spout clichés about ‘change.’ These people are saboteurs
When New Labour came into office the Post Office was making £100m profit a year, for all of us. The service was popular. So it was run down. Regulators Postcom, seriously afflicted with the Thatcher virus, demand part-privatisation as a ‘solution’. The Post Office lost £279m last year.
Gordon Brown blames an EU Directive on postal deregulation. But the Directive doesn’t come into force till next year. The government in the UK has already implemented it, in effect tying one hand behind Royal Mail’s back in the face of competition from foreign post offices that retain their domestic monopoly as a subsidy.
PO card account
At the other end of the network, the Post Office relies on thousands of local branches. Viewers of the recent BBC costume drama ‘Lark Rise to Candleford’ will recall that, in the reign of Queen Victoria, these were places where you could always amble in for a neighbourly cup of tea and a gossip. Though those days are long gone, local post offices remain centres of the local community and retain a ‘public service obligation.’ Just watch the staff patiently talk worried and confused people through complicated benefit claim forms.
One of the ways the service is subsidised is through the PO card account by which state benefits are paid out to millions of recipients. So the government is determined to put the card account out to tender. This would probably lead to the closure of 3,000 additional offices on top of those already due to disappear. A House of Commons Committee warns, "There would be a public outcry if changes to mail services resulted in a further reduction in the network." Too right. That would cause an explosion of anger.
The government has already planned to close 2,500 sub-post offices by 2011. Four million have signed a petition against the closures. The wooden heads of New Labour would probably go ahead with the closures if 44 million signed the petition. They seem determined to lose the next election. All most of them would lose is their precious careers. But the Tories are not committed to even the present level of public support for the Post Office. Don’t let them rip the heart of local communities. Stop the madness of creeping PO privatisation now.