Liberal Reform comment on Royal Mail privatisation

In the wake of Vince Cable’s announcement that the Royal Mail would be privatised, we asked Liberal Reform and the Social Liberal Forum for their comments. We haven’t received anything from SLF yet, but here is what Liberal Reform co-chair Alan Muhammed had to say:

Liberal Reform welcomes the floatation of the Royal Mail, an organisation that has long required reform.  These moves will generate the biggest employee share scheme for 30 years and enables greater access to capital, crucial for sustaining the Royal Mail as a successful commercial business, delivering a vital service that the nation values.
There’s a substantial amount of evidence to suggest that employee share schemes do improve productivity and provide a greater sense of workplace empowerment.  The deal provides Royal Mail employees with a generous offer of 10% of shares.  These measures also give the public the opportunity to invest in a great British institution.  It is important to remember that this floatation excludes the Post Office, which is a separate company. In this area, there is further scope for reform: the government has plans to invest in a network of post offices and we welcome the possibility of these being set up as mutual businesses.
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  • Paul Pettinger 12th Jul '13 - 2:44pm

    It is the SLF’s annual conference tomorrow in Manchester, so I suspect they are all rather busy

  • Thanks Alan – corrected.

  • Peter Davies 12th Jul '13 - 4:18pm

    so it “enables greater access to capital”. The government currently attracts real interest rates of about 0%. I’d like to see how much better they can get for a grossly inefficient private company whose unions want it to fail and be re-nationalised.

  • A Social Liberal 12th Jul '13 - 4:36pm

    I hope to be there tomorrow and will be attending Vinces speech in the morning. I will be interested to see why he went for privatisation and not mutualism or employee ownership

  • A Social Liberal 12th Jul '13 - 4:37pm

    Sorry, should have stated that I meant the SLF conference tomorrow

  • Peter Bancroft 12th Jul '13 - 4:37pm

    Peter – the idea that public sector ownership tends to lead to under-investment is hardly a controversial idea. I also think the point is that a privatised Royal Mail would go to the markets for capital when they decide that it is appropriate. I assume that under public ownership, any additional capital would come if the government were to offer it.

  • Peter Davies 12th Jul '13 - 5:48pm

    The Idea that governments do under-invest is not controversial but the idea that they must is. For a government to say “We know that this is the right decision to make but we are too cowardly to make it” is quite difficult to justify.

  • Eddie Sammon 12th Jul '13 - 6:58pm

    Turning the Post Office into a mutual would be wrong. If the government invests taxpayers money into a business then all the proceeds should not just go to the workers in the Post Office.

    In my opinion the government have been too generous to the workers in the Royal Mail privatisation. I honestly would have kept it in the public rather than just give 10% to workers, but the privatisation ideologues were so desperate to privatise it that they couldn’t even get a good price for the taxpayer.

    As I am debating on another post, if you give 10% to the workers now, what happens when the workers leave or new workers join? Who is going to be the ones giving up more shares? Nobody, they’ll just be sold for lower wages.

  • David Blake 12th Jul '13 - 9:52pm

    Interesting poll on Political Betting . Less than 20% of Lib Dems supporting it. I think it’s a big big mistake.

  • Stephen Donnelly 13th Jul '13 - 7:57am

    Dan. “I’m sure your average Lib Dem would oppose Royal Mail privatisation.”: The average Lib Dem member would probably want to look at the terms of the privatisation and then take a view. We leave the knee jerk reaction on issues such as this to the Labour and Conservative parties.

  • If the posties are getting 10% for hundreds of thousands of man years, how much are the banks making for arranging the sale. We’re still suffering from previous privatisations gone wrong. I dont feel especially strongly either way about Royal Mail but it would be good if it seemed like Whitehall and the Government had learned from previous mistakes. The only evidence of this is the 10% sweetener, which in 10 years will be largely irrelevant. Any sign of long term thinking in this?

  • This average liberal is more for privatisation than against, and giving the workers a windfall is okay. More important is that the service improves massively and prices are kept to a reasonable level. I doubt that I’d invest in it, mind!

  • Matthew Huntbach 14th Jul '13 - 12:18am

    I did ask why is it considered bad for the government to borrow money to improve postal services but good for a private company to do so, but I received no answer.

    We are continually being told that the country has too big a deficit, we must make cuts to reduce it etc. Well, ok, so where’s the big difference when the money is still borrowed, just not by the state? What actual difference does it make, how does it affect what the Royal Mail does, how does it affect all of us? What is this great advantage that is supposed to come from the Royal Mail being in private hands? And if, as it has been put, it’s so it can borrow money, then it’s back to my first question. Why? Why does it make a difference whether the money is borrowed by the state or borrowed by a company?

    If the answer is that the service will be better if privatised, then why? What is the big difference that it will bring? There will still be posties delivering letters and managers managing them etc. If it will all be so better if privatised, then why? What is the actual mechanism whereby changing the legal status causes those posties to do their job a bit better of whatever?

    On staff getting 10% of the shares, I think the old Liberal idea of mutualism and co-operatives and the like involved the staff in effect owning ALL the shares. I feel there is a big difference between 10% and all, and so therefore to pass this 19% thing off as an example of old-style Liberal idealism is, well, to be polite, misleading

  • “What is the actual mechanism whereby changing the legal status causes those posties to do their job a bit better of whatever? ”

    Surely the point of privatisation is that it benefits investors, not that the job is done any better?

  • Eddie Sammon 14th Jul '13 - 1:42am

    Matthew, how is it ethical to give 100% of Royal Mail to workers when it is generating much needed income for the treasury or could be sold for a windfall?

    Best wishes

  • nvelope2003 16th Jul '13 - 3:11pm

    The improvement in Royal Mail’s finances springs from a huge increase in prices for letters and increased parcels traffic caused by online shopping. Why does the state need to own a parcels delivery company when there are several big and hundreds of small carriers ? Things have moved on since the 1950s let alone the 1850s as Mr Clegg often reminds us. There are emails, mobile phones and online social networks which have made posting leters in letter boxes a minority activity. Most letters are now tiresome junk mail – why does the state need to deliver this – I accept it improves Royal Mail’s finances but so what ? Not many people seem to send Christmas/ birthday cards now. Who sends letters ?

  • Peter Watson 16th Jul '13 - 4:06pm

    @nvelope2003 “Not many people seem to send Christmas/ birthday cards now.”
    I still get lots of birthday and christmas cards. Maybe it’s just you! 😉

  • nvelope2003 18th Jul '13 - 4:25pm

    Peter Watson – well I do still get them from people of my age but not many younger people still send them – so I am informed. They send texts, emails and e cards which are free of charge. I sometimes receive them and send them where it is appropriate. I still like cards but it is very expensive if you have to send a lot of them. There must be a reason why so many card shops have closed down..
    I do not know if the Government has sounded out any prospective buyers for the Royal Mail but it is possible that they will not get a good price for it because of its relatively poor prospects and Union intransigence but if RM workers did engage in a prolonged strike the other postal operators are now in a strong enough position to take on the work. TNT already deliver is some areas and no doubt they and other groups have plans for any eventuality and then they could pick up the remains of Royal Mail for next to nothing.

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