A privatisation too far
In July 2013 shortly before the summer recess of the Westminster UK Parliament Vince Cable, Business Secretary, announced that they will now be moving to formally privatise Royal Mail in the Autumn of this year, thus bringing to an end the near 500 year history of a public service deemed ‘essential’ by successive governments throughout this period.
How did we get here? This is a question frequently asked of our CWU activists as we carry out our continuing campaign against this proposed privatisation in the streets and squares of our towns and cities across Scotland.
When the Conservative and Lib-Dem Coalition Government was formed in 2010 the privatisation of Royal Mail was not part of their agreement; although it had been part of the Lib-Dem manifesto it had not been part of the Tory manifesto that the parties had gone to the electorate with in May 2010.
Polling of the public across the UK for the last twenty years has continually shown support for the postal services in this country to remain as a public service with the numbers ranging from above 75% to the most recent poll carried out by YouGov showing a figure of 67% against any privatisation of the postal services.
The fact that it was in the Lib-Dem manifesto was only due to Vince Cable’s insistence as he had tried three times to get their Annual Conference to accept his proposals to privatise Royal Mail and to separate the Post Office off into some strange governmental department outwith the main Royal Mail Group.
The future of the Post Office on our high streets and in our communities is to become some sort of ‘mutual organisation’ akin to John Lewis or similar companies. The government has consulted widely on this proposal but has still to come out with any clear, definitive answers as to how it would work. This has led to the current situation at Post Office Ltd where the company has been told by the Coalition government to cut its losses and be in profit by 2015 while the self-same government continues to remove essential government work from the Post Office network e.g. the payment of benefits/allowances being changed from once a week to once a month and the applications for access to these services to be completed only ‘online’ in future.
After what can only have been some sort of internal ‘to and fro’ within the Coalition the policy of privatisation of Royal Mail emerged in 2011 and it was entrusted to Vince Cable’s Business Department under the guidance of Ed Davey as Minister responsible for Royal Mail to pilot through their legislation. This is the same Ed Davey who trumpeted in 2011 that it was his mission to ensure the privatisation of Royal Mail thus freeing it from the ‘dead hand’ of ministerial intervention.
Ed Davey has since been moved to wreak havoc in the Environment Department and some of the current mess over ‘fracking’ is no doubt to due to him and his worship of the free market on these matters.
Throughout the late parts of 2010 and through most of 2011 the Coalition Government pushed through the House of Commons and the House of Lords, despite serious opposition, it’s Postal Services Act. This legislated for the privatisation of Royal Mail, the separating out of Post Office Ltd from Royal Mail Group and the government being given the permission to take over responsibility of the Royal Mail Pension Fund. The Royal Mail Pension Fund became a government scheme to cover the so-called ‘pension deficit ‘of £35bn but also inheriting the pension fund assets of £25bn which it promptly used to write down government debts to make the UK Treasury’s balance sheet look better in its in its ‘deficit reduction’ bid. Yet another illusory move by George Osborne and his cronies in the Tory party.
So we reached this position finally after four attempts by the UK Government to get away with privatising Royal Mail. Firstly Michael Heseltine was defeated in the 1990s, then secondly in the early 2000s Tony Blair was defeated in his attempts to liberalise and thus lever in private capital and control of Royal Mail and then thirdly Lord Mandelson and his attempts to semi-privatise Royal Mail ably abetted by Pat McFadden and several other notable New Labour neoliberals in 2008/9. All of these attempts by politicians to privatise Royal Mail were defeated by an alliance of the CWU, other Trades Unions, the general public (who have continually opposed Royal Mail privatisation) and in many cases concerned and committed back bench MPs of several parties who doggedly opposed this as ‘a privatisation too far’.
Polling of the public across the UK for the last twenty years has continually shown support for the postal services in this country to remain as a public service with the numbers ranging from above 75 per cent to the most recent poll carried out by YouGov showing a figure of 67 per cent against any privatisation of the postal services.
The reasons for this opposition are an understandable fear that privatisation will inevitably lead to :
Diminution of the Universal Service Obligation (USO) which provides the one price go anywhere service provided by Royal Mail across the UK and ensures daily delivery of mail to every address in the UK six days a week and daily collection of mail from post-boxes, Post Offices and other outlets six days a week;
Deterioration of services in rural, urban, suburban and other ‘non profitable’ areas;
Higher prices for small businesses and domestic consumers;
Prioritisation of shareholder dividends over service provision.
Every single one of these reasons are examples of what has happened subsequent to privatisation of other UK utilities and services.
We only need to think of Electricity and Gas across the UK and Water services in England to see the prime examples of the latter two reasons.
The privatisation of BT provides an example of the first reason; just think how few telephone boxes you now see across wide swathes of rural, urban and suburban areas despite a so-called ‘USO’ for BT in this case.
A consequence of the privatisation of BP with the closure of petrol filling stations showing the BP brand despite the growth of car ownership and the many other examples of BP reducing costs while increasing charges to consumers show examples of the second and third reasons.
The Coalition Government says that in its Postal Service Act it has secured the USO by making the regulator Ofcom responsible for maintenance of the USO in the UK and for ensuring that any competition companies entering the postal market do not affect the USO by monitoring their delivery and collection services to make sure they do not have a detrimental effect on RMs ability to provide the USO by undercutting costs and services.
However, by the same token the USO can be amended or altered on the recommendation of Ofcom with a supportive vote in both of the Houses of Commons and Lords. Since the Coalition Government controls the vote in both of these Houses of Parliament, if a private owner of the newly privatised Royal Mail wants change to the USO then there would be no serious impediment to this barring a massive revolt by back bench Tories. The Lib-Dems of course would follow the government mantra as they have done all along in this privatisation process.
The Labour Party, the SNP, Plaid Cymru, all of the Northern Irish parties and the sole Green MP all opposed and continue to oppose the sell off of Royal Mail but we do not know nor can we foretell what the picture will be post the 2015 UK General Election.
The CWU along with a coalition of other organisations is continuing to campaign against this proposed flotation under the banner of Save Our Royal Mail (www.saveourroyalmail.org).
We have proposed a different ownership model to refute the Coalition Government argument that Royal Mail needs to be privatised so that it can access capital to continue in its modernisation programme without affecting the Public Service Borrowing Requirements (PSBR).
Royal Mail made a profit of £430m this year and have projected similar profits over the near future. CWU have asked why this cannot be used for the modernisation and we have further proposed that RM be restructured as a ‘not for dividend’ company similar to Network Rail which ensures that any borrowing made by the company is not attributed to the PSBR.
We accept that the postal market has greatly changed over the last few years with a drop in letter mail traffic. However, the growth in small packet and parcel traffic alongside the massive development in online shopping shows that there is a fantastic new market in the UK and worldwide for postal services provided to and for the public on the basis that Royal Mail has provided these services for the last 500 years.
The proposal that employees of Royal Mail be issued with ‘free shares’ in the privatised company is just yet another ‘smoke screen’ as 10 per cent of shares dispersed amongst 150,000 employees is not going to prove much of a counterbalance to the other 90 per cent owned by institutions or other rapacious investors who only want a ‘return’ on their investment.
Additionally it would not help to prevent the usual spectre of ‘Remuneration Committees’ in privatised companies from awarding themselves massive pay rises and bonuses since any shareholder rebellion on this subject is, under current company law, merely advisory to the Board and is not enforceable in any shape or form.
The real story of that must be told is that once again the Tories, joined by their willing partners in the Lib-Dems, are truly ‘Thatcher’s children’ and are no different from their predecessors in knowing the price of everything and the value of nothing.