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The politics of Royal Mail privatisation

Click for more information on the campaign to keep the Post publicIt’s looking like they will really do it this time. Where the blessed Margaret feared to tread, and New Labour ignominiously failed, our merry coalition of Liberal Democrats and Conservatives in the process of privatising Royal Mail.

Wheeled out to defend a policy that is conspicuously unpopular, Michael Fallon says this is about liberating Royal Mail, of giving it the freedom to invest in the future. As profits were £324m in May this year and £211m in 2012, it looks like there are funds to invest – if the government allowed the company to do so. The sell-off requires members of the public buy at least £750 worth of shares. Staff will automatically receive free ones, as well as access to a preferential buying scheme with a lower threshold of £500. 

The puzzling aspect to this is why, despite consistent opposition from the public and a major strike on the way, the government are absolutely determined to push the sale of Royal Mail through. Why are they prepared to do so when even for Thatcher it was a privatisation too far? I would suggest that while the Tories and LibDems are ideologically committed to privatisation, there are more pragmatic political calculations that have come to the fore.

Thatcher’s privatisation crusade in the 1980s was a class struggle assault on the bastions of working class power. It broke up solidarities and ground trade unions under the Tory boot, leaving a weaker, less combative labour movement and a significant diminution of class consciousness. There are sectors of the economy Thatcher and her successors were not able to take on and defeat. Royal Mail was one of them.

Privatisation, if it is not derailed by workers’ action, will inexorably lead to an erosion of the Communication Workers Union, both in terms of the apparat and workplace organisation. Conditions, pay and pensions will also be “rationalised” so the newly-privatised entity can meet its legal obligation of returning value for its new shareholders. The consequence of this from a Conservative point of view is that a well-organised, militant and disruptive group of workers are de-fanged.

Another desire of Thatcher’s programme was to create a ‘popular capitalism’. By selling off council homes and “democratising” share ownership, it is reasonable to surmise that if you have a mortgage to pay or own a clutch of shares the less likely you are to oppose further restructuring of the British economy. There was also the potential that new home owners and shareholders would follow the immediate interests associated with their acquisitions and vote for the party that would protect them. This did not lead to a resurgence of the Conservative Party as such. In fact, their decline continued unabated through the 1980s but it was perhaps just enough to stymie a collapse and convince enough people to give them 18 years of government.

This obvious and partially successful attempt to socially engineer the electorate is what lay behind New Labour’s attempt to privatise the post. At first glance, attacking the social base of one’s own party – in this case the CWU – doesn’t seem smart politics. And it wasn’t. But in the mania for triangulation beloved of Blair, Brown and Mandelson, selling off Royal Mail to a preferred bidder would demonstrate to Middle England (who our triangulators thought were mad keen on such sell offs) that Labour was on “their side”. Besides, there would be opportunities for the small shareholder too. The staff, as ‘core voters’ wouldn’t have anywhere else to go, and so Labour off the back of popular capitalism could coast home in many more marginal seats.

The Tories share this mindset. Most postal workers aren’t going to vote for them anyway, but it might be enough to convince red-in-tooth-and-claw Tory voters to eschew UKIP and return to the fold in sufficient numbers come election day. Who knows? It might be enough to allow them to squeak back in. Of course, the short-sightedness of this course of action is that it will displease another group of rural Tory voters who aren’t as vocal or reactionary as UKIP switchers. Is the trade off worth it? Perhaps. Just as New Labour calculated postal workers had nowhere else to go, so it is for these traditional Conservative supporters.

The Government are absolutely desperate for good news on the economy. Hence why the lop-sided recovery is getting talked up as if Britain is surging ahead with China-like growth stats. Despite pratting about with unnecessary cuts and hoping for the best for three wasted years, they need to thumb their nose at Labour’s correct critique of their shambles of a policy. After all, it’s on the economy that elections are won and lost, so received political wisdom goes. Hence stats, any stats, regardless of the content of those stats, are martialed to convey proof of competence. And on three indicators of economic performance, Royal Mail privatisation can make a positive splash.

On the “rebalancing” of the economy, immediately 150,000 public sector workers are transferred to the private sector. Mark my words, Dave will use these – as he has done so with other transferred workers – as proof that a private sector jobs recovery is under way. Secondly, those 150,000 workers are going to get “free” cash. As past privatisations indicate, the bulk of employee-owners tend to sell them on as quickly as possible. That will give the quarter’s GDP figures a helpful boost. Thirdly, and sticking with GDP figures, as the measure of everything that is brought and sold, the number and values of transactions arising from a £3bn privatisation will also make the economy appear more healthy than it actually is. And what does a growing economy equal? Votes.

These are the politics of the Royal Mail sell-off. As with all things about this most sectional of governments, it’s about the immediate interests of the Tories prior to 2015. I don’t believe the gambit will work in the way the Tories hope, but I’m not willing to see fellow trade unionists and a good, universal postal service trampled on in a ludicrous exercise in electoral wishful thinking.

This post first appeared at A Very Public Sociologist

3 Comments

  1. David Melvin says:

    If shadow business secretary Chuka Umunna is serious about stopping the Royal Mail sell-off he simply needs to pledge that a future Labour government would renationalise the Royal Mail at no profit to the investors.

  2. Rob the cripple says:

    Should we sell no, why not because not everything will make massive profits and once all the infrastructures have been flogged off we will lose something we should have kept in the public sector. Post office and the Royal mail should not be for sale

  3. When, if ever, has a company been floated on the London Stock Exchange while its workers were on strike? Would you buy such a company, even in very small part? Well, there you are, then.

    Michael Fallon could not guarantee that the Royal Mail would not fall into foreign hands. Nor could he guarantee the relationship with the Post Office, putting the latter at risk. Even TNT has today described this scheme as “preposterous”, and as bad for business and consumers.

    The Conservatives and the Liberal Democrats have already cut rural incomes and services with something resembling derangement or dementia. Most recently, the Agricultural Wages Board has been abolished. The disappearance of everything from libraries to bus services has been, and remains, horrific. And now, the Royal Mail is to be privatised.

    There was no need for a Commons vote on Syria, but when such a division was held, the result was electrifying, with MPs from all 10 of the parties whose MPs take their seats, as well as the one Independent, voting decisively against action, led by every Labour MP, themselves led by Ed Miliband. The alliance of Labour and the broader Left with traditional Tories, with rural and Radical Liberals, and with Unionists, is no less obvious and necessary in this case.

    If Ed Miliband were to announce that the next Labour Government would reverse this privatisation, then not only would he sweep the countryside that both Coalition parties have abandoned, but he would also stop that privatisation itself, since no potential buyer would take the risk. The priority would then be to ensure the right Labour candidates in rural seats. No section of society is more excluded from the national conversation than the rural working class. Let that wrong begin to be righted.

    Let Labour declare that in the most rural third of constituencies both in the country and in each of the 10 mainland regions outside London, unless one of its own MPs were seeking re-election, the Labour candidate would be drawn from a household in the social groups C2DE within the constituency, and at least preferably within the more rural half of wards. Labour would then undertake to spend to the limit in order to capture every such seat. What are unions for?

    When safe Labour seats first emerged in the 1920s, they were mostly in rural areas. The solid Labour vote here in County Durham, while Tyneside and Teesside were much harder nuts to crack, has always had several parallels around the country. The Conservatives and what are now the Liberal Democrats have never had their imagined ancestral right to represent the countryside in Parliament. But even if they had, then they would now have forfeited any such claim.

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