Later today ministers will announce the final details of plans for the privatisation of Royal Mail.
Later today ministers will announce the final details of plans for the privatisation of Royal Mail.
The government is looking to move quickly on the sale, with shares expected to be floated by the autumn.
There are many things which this government is doing that warrant criticism, but I am convinced that in years to come the sell off of the Royal Mail will be considered one of the most execrable decisions made by the coalition.
Here are five reasons why.
1. Royal Mail is a profitable business. Far better, then, to keep the Royal Mail public and plow the profits back into the service rather than allow them to be siphoned off to shareholders. The company made £440 million last year. The fact that the Tories still want to privatise what is an increasingly successful business smacks of public bad/private good fanaticism.
2. The cost-cutting that will likely follow a sell-off will place a huge question mark over the universal service. This isn’t left-wing propaganda as some on the right will undoubtedly claim. The Bow Group, the oldest conservative think-tank in Britain, has warned that privatisation could see the price of a stamp increase and Post Offices in rural areas close.
3. Privatisation doesn’t solve all problems. It ought to cause alarm that this point even has to be made, but such is the view of public services in the conservative mind.
Privatisation has been disastrous for our railways and has resulted in even higher subsidies for the rail operator than under public ownership. In 2010/11 Network Rail was subsidised by the taxpayer to the tune of £3.96 billion. This compares with an average of £1.4billion over the 10 years leading up to privatisation.
4. Stamp prices could hit £1. The price regulation of stamps has been scrapped to increase the attractiveness of Royal Mail to investors. This brings with it the possibility that stamp prices could hit £1 shortly after privatisation. A private business exists to maximise profits for its shareholders, after all.
Again it’s worth looking at train fares. Since privatisation ten years of above-inflation rail price increases mean that some in the south-east of England now spend 15 per cent of their salary on rail travel.
5. The Royal Mail is part of the fabric of the nation. This probably sounds a bit wet, but institutions do matter. There are certain things which have come to be associated with Britain. The NHS, cricket, red phone boxes and yes, the Royal Mail.
It is hard to overstate the respect the British public has for posties. The sight of a postie on his or her rounds early (or not so early these days) in the morning is a fundamental part of British culture (yes it does exist), and not everything can simply be reduced to its monetary value.
51 Responses to “Five reasons the privatisation of Royal Mail is bad policy”
Matthew Beevor
I think you’ve made my point for me: “under-used services were cancelled”. That is primarily what most people are concerned about with the privatisation of Royal Mail or any other public service.
tangentreality
And yet, their concerns are despite Acts of Parliament guaranteeing the provision of the universal service, and the price control of postage. So the privatisation will have absolutely no effect on these.
Your point remains far from clear.
Matthew Beevor
My point has been consistent: you compared the privatisation of the Royal Mail to the privatisation of buses which, you argue, was not an issue because the roads (or the Post Office) remained in public hands. My argument is that, on the contrary, many folk have lost their bus routes, particularly those in rural areas and no doubt there is a concern that a similar outcome is in line for the universal service, both in terms of price and scope. This is regardless of whether the Post Office remains public or if there are any guarantees for the universal service. I also think most people, particularly those who travel by train every day, are very wary of any talk of price control and doubt very much that the price of a stamp will only increase by inflation each year (which, by the way, would still be in an increase when real wages are decreasing).
tangentreality
You are completely missing the issue. Some people may have lost access to bus routes, but the key difference is that during that privatisation, there was no remaining guarantee of service. THERE IS with Royal Mail. So it is not an issue.
As for what people think about the price of stamps, they are controlled by statute. Royal Mail cannot increase the price beyond that statute without an Act of Parliament. So again, IT IS NOT AN ISSUE.
Your points are straw men – they are non-issues, because of the remaining statutory guarantees.
Graycat
Can add to that – that inevitably it will be sold to foreign companies which the government will have no control over in terms of pricing (which will increasingly be shaped by all companies in the sector operating side by side leaving consumers with no option – see energy) and, that it will simply add to the number of private companies with no respect for workers’ rights (low pay = low economic activity) and worst of all, from this government’s point of view, perhaps even displacing native workers with exploited and underpaid migrant workers – music to Nigel Farage’s ears even though inexplicably he supports the free market policies that encourage people to be treated this way