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”
tangentreality
Again, you’ve missed the point. Privatisation works when you privatise the supply, not the infrastructure. And why would private companies automatically increase prices? If they’re competing in an open market, they wouldn’t, because they’d be risking pricing themselves out of it!
Mohsin
I think Privatization will benefit for all at the end result. Read this article http://stamppricehq.com/privatization-of-britain-royal-mail/
me
If royal mail is privatised, it will have to compete with
other carriers. It is the competition of the free market that will reduce
prices. We are starting to see this with myHermes and CollectPlus. If a 1st class stamp goes up to a £1,
then the competing carriers will offer a cheaper service.
Neil
“The first question they asked was, ‘who is in charge of the bread supply in London?’ The answer, of course, was ‘no one’.”
Yes, because supermarkets don’t have distribution managers and computer systems to work this out, do they? It all just happens by wavy-hand magic.
Matthew Beevor
It’s interesting that you use buses as your comparison against trains: buses were privatised as well and – on the whole – services have reduced or been cancelled and prices have increased. You’re also very wrong about varying postal prices: the fundamental principle of the universal service is that it is one price wherever the item is delivered and that every household is guaranteed delivery.