Five reasons the privatisation of Royal Mail is bad policy

Public Services

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.

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51 Responses to “Five reasons the privatisation of Royal Mail is bad policy”

  1. OldLb

    You can’t wiggle out of blame that easy. 🙂

  2. OldLb

    Because Labour pushed the we’re investing line of argument. Brown stated his reason for raiding the private pensions was to encourage investment.

    So given you’ve spent billions of other people’s money on investments, shouldn’t we be told how well the investments are going?

    What income are they generating?

    What savings are they generating?

    It’s current Labour’s mantra. Lets invest more. So tell us how good you are at past investments.

    Now I know what they answer is. You’ve lost the lot.

  3. blarg1987

    Just correcting your statement after all your the one who cries for evidence and factual accurcay 🙂

  4. blarg1987

    Pleae explain how I have spent billions of pounds I am not the guy in the exchequer dictating spending policy or what is spent on what.But lets see you have had hospital building programmes, school rebulding programmes, more police and nurses recruited aince 1997.

    I accept the whole PFI idea was nuts (origionally concieved by the conservative goverment pre 97).

    Now overall this has helped reduce crime, aloowed people to live longer and better educational standards.

    This is something that can not be easily qunatified on cash returns as it is impossible otherwise I could easily say to you have you quantified everything in your life on finncial terms? If the answer is yes then I know it is a porkie.

  5. OldLb

    So come up with the facts.

    The billions invested by Balls etc, how much profit is being generated or how big are the savings (cuts) as a result?

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