Coalition’s post office privatisation plans won’t provide value for money

This week’s Queen’s Speech confirmed what has already been reported - the government will push ahead with part-privatisation of Royal Mail.

This week’s Queen’s Speech confirmed what has already been reportedthe government will push ahead with part-privatisation of Royal Mail.

As Her Majesty said:

“My Government will modernise the Royal Mail, in partnership with employees, and will ensure it benefits from private sector capital and disciplines.”

This quickly confirms the criticisms that many have levelled against the so called new politics of the coalition government – it’s not very new at all. Faced with challenges around the future of Royal Mail the coalition has reverted to the discredited orthodoxy of privatisation.

It will inevitably fail as a method to modernise, provide value for money and ensure positive engagement with the workforce. The use of private capital in public services such as through Private Finance Initiatives has been shown to raise costs, undermine the public service ethos and lead to two-tier workforces.

The reality is that the Royal Mail has turned itself around. Operating profit is £404 million this year despite a drop in mail volumes. The group has also paid £867m into the pension fund so far this year in an attempt to close the £8 billion pension gap.

Royal Mail and its workforce have already gone through a painful and thorough period of modernisation to get back to profitability. Vast efficiencies have been squeezed from the workforce . There simply isn’t much more to be squeezed from postal workers without undermining their terms and conditions as well as the role of their trade union, the Communication Workers Union.

The government says it will be inflicting “private sector capital and disciplines” on Royal Mail; this sounds particularly ominous. TNT, who wanted to buy a stake in Royal Mail last year, threatened to sack 10,000 of its staff if they didn’t accept a 10 per cent pay cut. Is this the kind of discipline the government envisages?

Any moves towards privatisation will be opposed by the workforce and the public, like they have been every time a government tries to privatise Royal Mail. The idea that privatisation can take place with the blessing of the workforce is fanciful. A genuine lasting solution can only be made if it starts with the workforce’s and the CWU’s input.

Modernisation, in particular the use of new technology, can be provided without privatisation. Compass has provided some ideas around ownership models such as Network Rail and the BBC. We outline in Modernisation by Consent – how allowing private sector investment and management but ownership remaining within the public sector would be a better model.

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