The Hooper Report has focused attention on three key issues for Royal Mail – a pension fund deficit rising to some £7bn, the performance of its specific regulator Postcomm, and a part-sale of the service to a private sector operator. The direction of Mandelson’s response is clearly towards bringing in a foreign company such as the Dutch TNT or the German DHL arm of Deutsche Post to provide a ‘strategic partner’ to inject private capital and private management expertise. But that is not necessarily the logic towards which Hooper’s analysis leads at all. If the State is used to lift the main financial burden on Royal Mail, the huge pension fund deficit, as the Government clearly seems to intend, there are several steps which can and should be taken which would almost certainly make a public sector reform more beneficial, economically as well as socially, as any privatisation.

Hooper recognises that Royal Mail has been held back, not only by the electronic alternatives of email, texting and other digital technologies, but also by restrictions on the prices it could charge (Government-imposed), by an inappropriate system of regulation (it is proposed to replace Postcomm by Ofcom), and by a lower level of automation (compared with European rivals). Government should have intervened long before to rectify these deficiencies – indeed Royal Mail’s financial probelms have been largely caused by the need to top up the annual £500m contribution to the pension fund with a further £280m. None of these factors is a reason for privatisation.
Second, Royal Mail still delivers, 6 days a week from one end of the country to the other, 99% of all items posted in the UK, and no ther company has an equivalent national network, nor is likely to for the foreseeable future. TNT, for example, which seems the preferred private bidder, may be able to handle limited business contract, but it has no record in providing a national service. And its performance last year in losing official computer discs does not exactly inspire confidence.
Third, what the New Labour privatisers led by Mandelson neglect is the potential for developing the national network of 12,000 post offices if only the blinkers of privatisation could be lifted. In particular, the precedent of the Girobank, which was highly successful until closed down by Thatcher, should be revived. It would offer the full services of a retail bank to the great majority of the population who at present have no account with the commercial banks, as well as offering loans at fair rates ( a very valuable resource in the current recession) and services for local businesses.
Fourth, post offices have a unique and distinctive role in the life of communities everywhere. Selling off a large minority part of this strategic social asset to the highest foreign bidder (with no doubt further sales tipping the balance to majority foreign control in due course) simply shows how damaging it is to exalt the worship of market forces above the enhancement of the social and cultural fabric of the nation.
Fifth, modernisation is entirely compatible with a wholly public service. As Hooper himself acknowledges, there are new technologies which could build on the switch to electronic alternatives. For example, there could be more ‘hybrid’ delivery companies using the internet to cut the cost of transporting information in physical form. Thus senders could email letters so they are printed as close to recipients as possible before transfer to Royal Mail for delivery.
Clinging to privatisation as the one-size-fits-all solution for all public service problems is myopic and unenterprising. It is also ironic that it is still being trundled out when the neo-liberal approach to market economics has now become such a discredited has-been.

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