Roy Mayall on privatisation
Privatisation is the last thing Royal Mail needs, says industry commentator Roy Mayall.
Vince Cable needs to look beyond the headline figures and develop a long-term solution to Royal Mail’s problems.
On the 13 October 2010 Vince Cable announced his plans for the privatisation of Royal Mail saying: “Royal Mail is in a difficult position – there is no hiding from the facts: mail volumes falling; a multibillion-pound pension deficit; less efficiency than its competitors and an urgent need for more capital at a time when there are huge constraints on the public purse.”
All of which sounds vaguely plausible. The problem is when you start to look more closely at the “facts” as they are being presented.
Take that one about falling mail volumes, for instance. It sounds like a given. We all know that emails and texts have taken the place of letter writing in this digital age. But, dig a little deeper, and you find that part of the explanation for the falling volumes could also lie in an alteration in the way Royal Mail has gone about assessing the volumes. They used to measure by weight. Now they measure by counting the number of boxes that pass through our system. The estimate for the number of letters each box contains was put at 208, a number agreed in consultation with the union. And then Royal Mail, arbitrarily and without consultation – and in secret – lowered the estimate to 150 letters per box. Hence “falling volumes”.
Postal workers have always known that this claim is baseless, since it is we who have to carry the mail. And what we see is more mail, not less. Think about it. How much mail lands on your mat every morning? Is there more, or less than there was 10 or 20 years ago? It’s true that there is less of the kind of mail that you are actually interested in. Most of it is advertising. But this doesn’t alter the fact that – as anyone who thinks about it knows – the weight of mail is increasing year on year and not decreasing. I can’t say that Cable is lying to you, but I can say that his assertions are based upon demonstrably false figures.
Or take that pension deficit, currently estimated at £8.4bn. That’s a huge figure. But what this bald presentation of the numbers fails to address is how the company came about acquiring the deficit in the first place. It didn’t just happen. It was the result of a “pensions holiday”, which the Royal Mail took from 1990 to 2003. That’s 13 years in which the company failed to make a contribution towards the pension fund. Thirteen years in which postal workers continued, in good faith, to pay in their share under the false impression that the company was also making its contribution.
In all this time the government clearly knew what was happening. In other words, this pension deficit is an entirely manufactured problem. It should never have been allowed to happen in the first place.
When Vince Cable talks about the privatisation of the Royal Mail, he is only referring to its assets. The pension fund will remain a public liability, thus continuing the age-old relationship between the public and the private sectors: privatisation of profit, socialisation of costs.
Or what about our lack of efficiency when compared with our competitors? This might make sense if we had any competitors, but actually we don’t. What we have is a number of private mail companies that ride on the back of the Royal Mail network in order to extract profits from it.
How many of them actually deliver any mail? The answer is, virtually none. We deliver their mail for them. The process is known as downstream access. The private companies bid for the profitable parts of the business, the bulk mail and city-to-city trade, undercutting the Royal Mail in the process. But then they drop it onto our doorstep for the actual delivery. Even their profits are generated arbitrarily and not by any kind of efficiency saving, as Postcomm, the regulatory body, actually forbids Royal Mail from undercutting its rivals. The technical term is “headroom”. We have to leave room in our pricing structure in order to allow them room to make a profit. It’s not exactly the workings of a “free market” is it?
All of this isn’t to deny that the Royal Mail is in trouble: there’s no doubt about that. Millions of items of mail went undelivered this Christmas, due to the imposition of new and fabulously unworkable working methods. It has a peculiarly short-sighted management, more interested in bonuses than the long-term future of the business. It has an exhausted and demoralised workforce, reeling under the weight of increasing volumes of mail and falling numbers of staff.
What it needs is a moratorium, a period of assessment, in order to understand what its problems are, and what the cures might be. It needs extensive consultation, with all interested parties: the government, the public, the corporations and the workforce. Experts should be drafted in to give advice. Some of those experts should be us, the postal workers – experts in delivery and public relations.
Most of all it needs a brand new management committed to its long-term future. But the last thing it needs is privatisation.
