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Royal Mail: never has a privatisation been so unjustifiable

Royal Mail stamps, pic by 123rf.comHas there ever been a privatisation so threadbare in justification? The government has three excuses that are so easily demolished:

Claim 1: it needs more investment which at a time of austerity can only come from the private sector. But Network Rail, which is in essence a public body, has borrowed sums on the private market far greater than Royal Mail requires, so privatisation is not necessary to get the funding needed.

Claim 2: Royal Mail is not a profitable enterprise, so it needs the discipline of the private market. Hardly, when the government itself has admitted that ‘Royal Mail’s results for 2012-3 were strong’, and indeed they could say little else when its operating profit nearly trebled from £152m in 2011-2 to no less than £403m the next year.

Claim 3: It’s so borne down by financial burdens that it cannot operate sufficiently. But its current operating margin is 4.4% even though it has to deliver post at one uniform price to any location anywhere in Britain. The Tories liked to point to Royal Mail’s £40bn pension liabilities, but the government has now taken these over – not of course for reasons of supportiveness, but simply to fatten up the prize for privatisation – even though it left taxpayers with a deficit of £12bn (amazing how austerity is irrelevant when the government wants it to be). But the key point is that if the government can do that when it’s eyeing up privatisation, it could obviously do the same with Royal Mail in public ownership.

The arguments against privatisation however are rather more formidable. It is an aggressive sell-off forced through at a knockdown price which may not even reach the government’s expected price of £3bn. The Tories have always been a party, at least from Thatcher times, inured to flogging off national assets (the ‘family silver’ as the patrician Tory PM Macmillan called it) for a pittance. Experience of privatisation of the post in EU countries like the Netherlands shows the result is a demoralised workforce afflicted by lay- offs and a lowering of terms and conditions at work designed at the expense of workers, as capitalism does, to drive up margins for the new private equity owners – in addition of course to the bankers like Goldman Sachs and Barclays raking off huge fees for managing the flotation.

And how long, after profit becomes the only game in town, do we expect that the universal service obligation (6 days a week delivery to any part of Britain at a single price) to survive? If the Tories were to win the next election, that asset won’t last long – it won’t be 6 days and it certainly won’t be anywhere in Britain. This is a privatisation too far – it will be profoundly disliked by the British public, and as with the railways Labour should now give an unambiguous commitment to return them to public ownership, as the public overwhelmingly wants.

3 Comments

  1. Robert says:

    No matter what we think it will happen and I do think the public have accepted it.

  2. Jiff says:

    terms & conditions are only guaranteed for 3 yrs.

  3. John says:

    Will Labour renationalise it, if we win, also what if there’s a lib/Lab pact

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