LibLink: Christine Jardine: Privatised Royal Mail might prosper

Former special adviser and Liberal Democrat candidate Christine Jardine writes in today’s Scotsman about the prospects fora privatised Royal Mail.

She first talks about her shock when she heard that our government was going to take this step:

Were they really going where Peter Mandelson had failed and Margaret Thatcher had not dared?

But gradually as I researched beyond the tabloid headlines and thought about it in detail it began to make sense.

After all, when was the last time I ordered a delivery and expected it to arrive in the daily post?

That same daily post that arrives after I’ve left for the day, and on the odd occasion that it does have a parcel, leaves an infuriating little red card demanding that I go at an inconvenient hour to an inconvenient place to collect it.

And she remembers another organisation which used to be in public hands but whose customers have benefited from greater choice as a result of its privatisation:

Discussing the news reports with younger colleagues, I found myself asking if, given the choice, they would reverse the privatisation of British Telecom.

Met with blank stares, I explained there was a time when households only had a landline, that they could only get from British Telecom with only their model of phone and paying the tariff they set. There was no alternative if you did not like it.

The BT we know today is very different. Freed from the constraints placed on a nationalised utility, it has been hugely successful. It has grown and diversified. First mobile phones, then broadband, now even a platform for football.

But what about rural areas?

Critics claimed that the Royal Mail would go the way of so many other carriers and charge those outwith our biggest cities more for deliveries.

As someone who lives a great deal of their life either in the Highlands or Aberdeenshire, I know the impact that can have.

If you have any AB postcode – even one for the centre of Aberdeen – you can often find that once you have ordered something over the internet you find it is going to cost you more. Because of that post code.

On occasion you can even get a phone call from the carrier a few days before you expect delivery to tell you there is an extra charge. Perhaps even as much as the original purchase itself.

It’s a problem that the private members bill introduced at Westminster by Sir Bob Smith MP currently aims to tackle. And it’s a problem that cannot be extended to the Royal Mail.

The universal service provision, with six-day deliveries to every area of the country at the same price, is guaranteed by legislation. In the free market, who is to say that will not give the Royal Mail the edge on competitors – or force competitors to offer the same?

And Alex Salmond has some major explaining to do:

let him put his money where his mouth is and explain how taxpayers here would fund a renationalisation

You can read the whole article here.

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20 Comments

  • I dont have a problem with a privatised Royal Mail. Its a no brainer as long as the price and service is uniform across the UK. I am in rural West Wales, myself.
    There are other means of sending mail and it needs to change for the 21st Century.
    Price rises over the last 3 years have been horrendous. I use it a lot for my work. Every April I curse their huge increases in the postal charges.
    Just because its been in public hands since time immemorial is no reason to leave it there. Times change.
    I hope it becomes even more successful in private hands and I remember BT in the olden days, as detailed in the article above. Its now far better a service, especially as it has developed since privatisation.

  • A privatised Royal Mail would have a de facto monopoly on deliveries, either through partnership with the Post Office, unless they are going to offer a range of ways of sending a parcel, or through geography outside of urban areas.

    It could charge what it liked, and offer a terrible service and there would be no alternative.

  • Graham Martin-Royle 26th Sep '13 - 11:27am

    “That same daily post that arrives after I’ve left for the day, and on the odd occasion that it does have a parcel, leaves an infuriating little red card demanding that I go at an inconvenient hour to an inconvenient place to collect it.”

    I have always found that it’s the private companies that insist that I have to go somewhere inconvenient to collect a parcel. The RM has many more pick up points and is much more accommodating in my view.

  • A Social Liberal 26th Sep '13 - 12:34pm

    Tell me – are uniform charges and universality of delivery going remain mandatary for the privatised company, or is the government going to make them time limited?

    As for your claim of the little red card – not only can you arrange for your parcel to be delivered to most post offices but you can also organise a time (within reason) for re-delivery to your home – even on a Saturday ! !

  • Simon Bamonte 26th Sep '13 - 1:10pm

    Like the NHS reforms, the government are pushing this privatisation against the wishes of the electorate. I get the feeling that, like the Tories, the LibDems don’t really care about public opinion or the wishes of the British public when there’s money to be made. And when the minimum amount of shares you can buy is £750, we all know who this will benefit. Lest we forget Royal Mail has been making good profits lately. But, sadly, I guess this is what we can expect from a party who is so disconnected from how people live their lives that they publish articles here saying “let energy prices go where they will.” This party now seems almost as much a party for the comfortable and well-off as the Tories are, but without the traditional Tory racism and homophobia. I despair.

  • Hove Howard 26th Sep '13 - 1:21pm

    Where was the commitment to do this in the 2010 Lib Dem manifesto? Or the Tory one, even?

    If the Royal Mail is privatised, the primary, if not the only, motivator of the service will be profit. Unversality will mitigate against profit – therefore, eventually, one can be absolutely certain that universality will go. The bosses of the private company will be able to run rings around whatever useless watchdog is put in place, just as the energy companies have.

    @Andrew Lye – I don’t think it is too far fetched to suggest that the ‘horrendous’ price rises of the last three years are all about softening up the consumer for this unnecessary and unmandated privatisation,

  • Martin Lowe 26th Sep '13 - 1:39pm

    Privatised Royal Mail might prosper?
    It may well do – but at what cost elsewhere? The Netherlands model doesn’t offer much solace:

    http://www.theguardian.com/uk/2011/apr/29/mail-privatisation-second-class-delivery

    The need for a reliable and universal postal service has become a necessary part of our economic infrastructure. It’s particularly vital for small businesses, start-ups and entrepreneurs. Privatising it merely for the sake of it is the mark of those who substitute ideology for common sense.

  • Matthew Huntbach 26th Sep '13 - 1:58pm

    British Telecom is always the example to use to support the idea of privatisation, but it’s not clear what of the changes since then were due just to privatisation rather than to general technological development. I suspect since the days of privatisation enough of us have had major rows with various service providing companies to realise that privatisation isn’t the instant route to high quality service it used to be portrayed as. Rather than falling for this “it’s magic fairy dust, just sprinkle it and it solves all your problems” can we have more on exactly HOW placing control in private hands improves things. The line “They can borrow money to make investment” doesn’t answer that question, because it only leads to the next question which is how come borrowing is considered so bad when the government does it, but fine when private companies do it.

  • I once delivered two Focus walks. One had 240 houses, well over half with doors right on the street and the other just 17 houses scattered randomly (or so it seemed) through a large area of woodland on a hillside. The two walks took almost exactly the same time to deliver illustrating perfectly the scale of the cost penalty for rural as opposed to urban (and even more city centre) deliveries.

    With that in mind think back to the days before there were private sector rivals to RM. Via the universal service obligation, profitable bulk business in cities cross subsidised loss-making rural deliveries. When private entrants arrived on the scene they naturally cherry-picked only the best business leaving RM to handle the high cost bits and setting the stage for yet another publically owned business to ‘fail’. Was this intentional? I think so.

    RM had no option but to try, where it could, to create a better match between prices and costs – hence the different charges for different sizes of letters introduced a few years ago. But with much of their profit being cherry-picked that still left RM with higher average costs – hence the recent big increases in prices.

    This is a story that doesn’t end well. Improved automation can help in the short term but eventually RM will have no option but to bear down hard on its biggest cost – people as in the Dutch case linked by Martin Lowe above. Privatisation will make that much easier as the Government will be able to claim that they have no part in the exploitative working conditions that will emerge. That will, of course, be quite untrue.

    The inevitable result of the way we are going with RM is yet more inequality, declining services for rural folk, poorer and less secure jobs for workers without even – per the Dutch example – the offsetting advantage of a better service.
    As for the universal service obligation expect that to be let slip eventually on the basis that “you can’t buck the markets” and/or “it’s simply unaffordable in the modern world” and/or “it’s not necessary any more”.

    Welcome to the wonderful world of neoliberal thinking. As long as this remains the ruling paradigm those working for improved social justice might as well spend their time shovelling water with a fork.

  • Morwen Millson 26th Sep '13 - 5:42pm

    I have always found that it’s the private companies that insist that I have to go somewhere inconvenient to collect a parcel. The RM has many more pick up points and is much more accommodating in my view.
    The last time a private company delivered when I was out, I had to pick it up from the main post office in my town – a great deal more convenient than an out of town centre sorting office.

  • Peter Hayes 26th Sep '13 - 6:09pm

    We have already seen what RM are doing to prepare for privatization. They called it stopping second delivery, for homes it was actually abolition of the first delivery which was only retained for commercial premises.

  • Graham Martin-Royle 26th Sep '13 - 9:01pm

    Let’s create a true level playing field, all the private companies have to obey a universal service obligation.

  • Shaun Young 27th Sep '13 - 9:29am

    @ Simon Bamonte
    I agree, setting a £750 minimum investment threshold, precludes the vast majority of the public – I’d love to have that sort of money just laying around, with nothing to do with it! I also find the timeframe quite extraordinary: Prospectus issued today, and all interested applications to be received ONLINE by 8th October, if the information is correct as stated on the BBC site: http://www.bbc.co.uk/news/business-24294745 – Again, a short window, AND what of those with no access or ability to use a computer! Obviously, this IPO is only being aimed at the ‘affluent’ – So much for a ‘Public’ privatisation!

  • As Royal Mail prospers now it would be very surprising if it didn’t continue to do so if privatised.
    The real threat if Royal Mail is privatised is to the network of post offices. Since Royal Mail was separated from Post Office Ltd (POL) it has become clear to those of us who work within POL that a privatised Royal Mail would not feel obliged to keep the present services with the post office network. Currently, the Post Office receives millions of pounds a year from Royal Mail to deliver key services.
    And by the way Royal Mail will leave parcels with a neighbour if you are out, instead of posting a ‘sorry you were out’ note.
    The concerns about the effect of the proposed privatisation of the post office network have been dismissed by ministers and its not surprising if they are relying on advisors who have such blinkered vision.

  • Martin Lowe 27th Sep '13 - 8:27pm

    I’ve just seen the list of the brokers who can sell the shares.

    It’s mainly comprised of smaller cosy brokers who work with affluent clients, and astonishingly omits HSBC.

    In conjunction with @Shaun Young’s comment about the minimum £750 purchase, it looks increasingly like these shares aren’t really supposed to be for the lower orders.

  • Privatised Royal Mail might prosper?
    I think that is probably a certainty, the real question is how long before it is taken over by La Poste or the Bundespost …

  • Ed Shepherd 29th Sep '13 - 7:29am

    Parcel delivery by Royal Mail is very good round here. They are always happy to leave a parcel with a neighbour if requested and if my neighbours aren’t in then I just pick the parcel up from the sorting office in my town. Private delivery companies request that I drive to another town to pick it up from their depot. British Telecom? How many of the improvements in telephone services are due to technological advances?

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