It is almost incredible that a Government that is 12-20 points down in the polls and facing an election in a year’s time should want to semi-privatise the Royal Mail. When that is combined with pushing through the so-called Welfare Reform Bill and the third runway at Heathrow, it might seem as if the Government had a death wish – or a desire to placate business even at the ultimate price of electoral defeat. But even leaving aside the stark politics of starting down the road to full privatisation of Royal Mail (for nobody doubts that is the real objective), it’s not as though any of the arguments adduced in support for this misadventure actually stand up.

First, Mandelson argues that Royal Mail will remain in public ownership in accordance with Labour’s manifesto commitment. But what the Party agreed at its 2008 conference was that “we have set out a vision of a wholly publicly owned, integrated Royal Mail Group”. But if a private postal partner owns a minority stake, 30% or whatever, it is not wholly publicly owned.
Then it is said that Royal Mail is unprofitable and inefficient. In fact, it has shifted from losing £350m a year in 2002 to achieving a profit last year of £255m. That, it is said, still leaves Royal Mail insolvent because the pension deficit, which has trebled to nearly £6bn in the last 3 years, has to be serviced at a cost to the business of £280m a year. But that does not reflect on the profitability or efficiency of the enterprise whatsoever, since much of this deficit derives from Government taking a 13-year pension contribution holiday.
Disregarding this, Mandelson then claims that Royal Mail is “less efficient and less profitable by comparison with its European counterparts”. But again that is to ignore the ways that the postal market in the UK has been grossly rigged. No less than £2.5bn was taken out of the industry by the Government under its external financing limit. Also, an additional £2.6bn was lost because of price control errors made by the regulator Postcomm. In addition, very large revenues have been lost to Royal Mail from the unfair competition regulations under which it operates.
Third, it is not true, as Mandelson maintains, that the three main Hooper recommendations have to be accepted all of a piece. Intervention to shore up the pension fund and to recast the failed regulatory system are both desirable and necessary, but they do not depend on and do not require the sale of a substantial stake of Royal Mail. They are entirely separate issues. To make the former depend on the latter is purely blackmain to force through an unwanted part-privatisation.
No-one doubts, least of all the CWU, that modernisation of the postal business is needed, though a level playing field with Europe would go a long way (the cost of a letter in Germany for example is about twice what it costs in the UK). One option, now gaining a lot of traction, is that a Royal Mail post office could become a people’s bank with a full range of financial services that people can trust – and there couldn’t be a better time to introduce than in the present banking crisis. It might even persuade the CWU not to disaffiliate from the Party!

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