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Keep the post public

Billy Hayes dissects the coalition's case for Royal Mail privatisation

The Coalition Government about to bring legislation before Parliament to privatise Royal Mail. This is despite every opinion poll for the last 20 years showing a large majority of the public against this move. On 1st October a YouGov poll showed 36% of Conservative voters in favour, with 42% against. 27% of Liberal voters in favour, with 56% against. Nor is the proposal warranted by the performance of Royal Mail in the recession. In the past two years Royal Mail has increased its operating profit, up to £321 million in 2008/09 and increased to £404 million in 2009/10.

Compare this to privatised rivals TNT, profits down 25.4%, and Deutsche Post, profits down by 36.5%. Both these companies also experienced smaller decreases in mail volumes and a shorter recession in their home markets than did Royal Mail in the UK. Royal Mail delivers letters at about half the price of these two companies, with a quality of service record at an historic high.

If it's not performance, then we have other reasons from the Coalition Government for privatisation. Vince Cable has said that Royal Mail cannot compete. This ignores how successfully Royal Mail has competed since liberalisation was introduced. At present Royal Mail delivers 99% of the mail which was previously reserved and is now open to competition. Which competitor in its right mind is going to try and take on Royal Mail in delivering to 28 million houses, six days a week?

Royal Mail has lost a great deal of the so called access work. This is when bulk postings are part sorted and trunked to Royal Mail delivery sorting offices for delivery by Royal Mail. This work has been lost because the Regulator rigged the market so badly that Royal Mail has not won a contested contract. On this work, Royal Mail is unable to compete – a fact recognised by all – including the LibDems before they became intoxicated with power.

This is so bad that the Regulator now accepts that change has to be made. So it is regulation rather than competition that has been the problem.

Ed Davey and others have said that privatisation is the only way that Royal Mail can access capital. The Minister says this knowing that the entire modernisation of Royal Mail for the next three years is fully funded. It is hardly reassuring that the Minister responsible hides from such obvious retorts to his arguments.

If it is an issue of investment in three years time, then there are plenty of answers. Royal Mail is profitable. That's why they want to privatise it. If Royal Mail is allowed to retain its profit in the public sector, that's one way it has of raising capital for investment. If Royal Mail is allowed to compete properly for access work – and the subsidy to the competition ended – then that's around £100 million a year for further investment in Royal Mail. Sometimes the Minister says that the pension deficit is the reason for privatisation. All the three main parties accept that the Government has an obligation to make good the deficit. After all, postal workers have paid their share, and the Government is their employer. If this obligation is honoured, then Royal Mail has in fact an extra £280 million a year for capital investment. There is no shortage of avenues to investment capital. There is a shortage of goodwill towards a successful public service.

Finally, the argument is that because of Union obstruction, the industry can only be modernised through privatisation. The National Union and management have just struck an innovative three year deal on the modernisation of Royal Mail – after a serious conflict or two. This agreement allows for the introduction of a new generation of machinery, maintains the living standard of postal workers and brings the mail network up to best practice with European postal providers.

Rather than support this agreement, the Government wants to introduce another period of instability into the industry. The truth is that it's all old Tory dogma to privatise anything that moves – and LibDems have given into this. The public will suffer the consequences of selling Royal Mail.

It is clear that there will be a reduction in the universal service offered by a privatised company. Immediately the Coalition Government has indicated that the six day delivery will go. Also under threat will be the one price goes anywhere service. Neither are protected by EU law. Doubtless when the gamblers, spivs and asset strippers get hold of Royal Mail they will want to end the support for rural and remote communities.

Privatisation will see a reduction and worsening of the service provided for domestic customers, and small and medium enterprises. The Coalition Government says it will protect the local Post Office branches by keeping them in the public sector. These offices are loss making and require a large subvention from Government – around £150 million a year. A privatised Royal Mail would not want to be associated with an unprofitable public network. Instead a privatised Royal Mail would want to use any retail network as an outlet. This will mean a massive closure programme of Post Office branches.

So this is a fight for a valued service which privatisation will not maintain. The Union has launched a national campaign to “Keep the Post Public.” We aim for a broad alliance of organisations, communities and individuals who want to give force to public opinion against privatisation. As well as the Labour Movement we involve people outside of the usual suspects. The Women's Institute has recently pledged its support.

There are 71 key marginals where the Coalition has a majority of 10% or less. Our branches are focussing on these. The parliamentary majority can be imperilled by concentrated activity. We welcome support from all Labour Movement activists, your local branch can be contacted directly, or via the Union's website. Together we will win.