Privatisation looms over Royal Mail this autumn

Photo Credit: didbygraham

Photo Credit: didbygraham

An Imperial Bus roamed the long streets of London early last week, working its way through the City in a protest against the privatisation of Royal Mail. The protest signals a move of defiance by the Communication Workers Union (CWU), with general secretary Billy Hayes promising to not “stand idly by and let it happen”.

Planned for before 2014, the privatisation that was officially initiated last Wednesday by the government will be the most important since the Thatcher’s era. However it will also be one of the most controversial yet, with 96% of the Royal Mail labour force shown to be against the idea. Vince Cable, the Business Secretary, defended it still, arguing that the move “will give Royal Mail the true commercial liberty that it has needed for a long time.”

The privatisation will take the form of a capital flotation on the stock market, rather than the direct sale of the company, and firms TNT and DHL are reported to have already shown interest. Any move from these firms will see their value increase by £2-3 billion, with 10% of their capital to be distributed as free shares to the 150,000 employees, who describe it as an “offer for imbeciles”. In a move to placate an expected public backlash, all 11,500 Post Offices (settled within each distinct local society since 2012) will not be affected by the sale, with just the delivery operation of the Royal Mail being privatized.

Moreover, the sale has long roots; with government interest in the privatisation of Royal Mail dating back to 1994. In 2000, the public service became an enterprise and was renamed ‘Consignia’; however a consumer backlash against the change led to the return of the Royal Mail brand after two years. The Labour government brought back the idea of privatisation in 2008, once again aborted by the Chamber of Common’s hostilities. After two parliamentary reports, the coalition finally adapted this as a principle in 2010, with civil servant Richard Hooper appointed to lead an independent review into the Royal Mail. He described the situation as “intangible” for an organisation that is “not efficient enough against its European homologues” and said the institution was scared by a “culture of conflict with the syndicates of the CWU” and needing a “radical modernisation”.

Recruited in 2010 by the Canadian post services to prepare a privatisation, the general director Moya Greene has already accomplished a good part of this mission. The number of letters distributed every day has changed in 5 years from 80 to 58 million, with heavier packages now representing half of the £9.2 billion turnover last year, an increase of 5%. Operational profit has also risen to £440 million. The directors have been congratulated for ruling “a commercial enterprise turned towards its consumers and a sustainable growth”.

For the CWU and its syndicates, this is a proof that privatisation is not necessary. However, it is now that the long-planned privatisation finally seems to be going ahead, ironically because of these changes; the modernisation has been seen as preparing the business for privatisation by making it now attractive to private investors, despite a long history of losses. This fact, if nothing else, is testament and proof that the sale, and the controversy surrounding it, may finally be coming to an end.

One comment

  1. Conservatives privatizing to try and hide their enormous budget deficit which they promised public sector cuts would fix (and not make worse)? What a surprise.

    I regret ever voting liberal democrat as well. What good have the lib dems been in this coalition? Lapdogs of the right. One and all.

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