The Point
Last updated:
27 June 2022.
Last updated:
27 June 2022.
...red sky thinking for an open and diverse left
Visit our Facebook page
Follow us on TwitterStop Royal Mail Privatisation
Tam Dewar is the CWU Area Delivery Rep for Ayrshire, Dumfries and Galloway. In this article for The Point, Tam argues that Government plans to privatise the Post Office will be met by a furious response from the public and his trade union.
A Winter of Postal Discontent
The New Labour Project was based on the premise that the Class War was over, by the end of the Blair years it was clear that the working class had not been on the winning side. Nothing demonstrates that the class war continues than the current state of play within Royal Mail. Even at this stage proposals for the sell off are driving a dividing line between senior managers and ordinary staff. Senior managers plan a further plunder of the pension fund to reward potential investors with a quick return while hoarding another £90m into their own pension pots. Investors and Board members are assured of mega millions while the workforce are threatened with job losses, poorer pension provision, a loss of sick and annual leave pay and zero hour contracts.
In early September Westminster Hall will witness the biggest postal workers rally in a generation. Communication Workers Union reps from all over the UK will gather to listen and respond to this wretched Governments plans to break up and sell off Royal Mail. It could spark a national postal strike over the coming winter months.
For customers and postal workers the stakes are high. The end of a 400 year old universal service vital to business and domestic customers and a drive to the bottom in terms and conditions for postal workers. Judging by past privatisations the only winners will be the big banks advising on the sale who will bleed the public purse, senior executives who will pocket millions in bonuses and shares and private postal operators who will have a license to print money.
Lets us be clear that Royal Mail is not a lame duck company in crisis surviving only on public subsidy. In cooperation with the workforce profits have increased by 60% in the last year to over £400m with automation leading to thousand of negotiated job losses. Government arguments that Royal Mail competes with heath and education for investment are mendacious. On the contrary the profits generated by Royal Mail are returned to the Treasury as sole shareholder and are available to protect public services. Privatisation will see these profits filtered into the pockets of the already rich.
The threat of privatisation is not new, Michael Heseltine tried in 1994 and was defeated by backbench Tory MP's, Peter Mandelson tried in 2008 and was defeated by backbench Labour MP's, hopefully this latest attempt will suffer the same fate. MP's did not oppose the sell off for altruistic reasons, they recognised the impact private ownership would have on small town and rural services throughout the UK. On this they were speaking for their local communities. We know from past privatisations that the consumer gets a worse service for higher prices whether it be rail travel or energy supplies. For the postal service it will mean fewer deliveries at higher stamp prices and an end to the one price goes anywhere service.
As a lead in to privatisation the Blair Government established a regulator, now Ofcom, to oversee the demise of Royal Mail and the encouragement of private postal operators. They have done this through two main planks of policy, issuing licenses to allow competition on collection of mail and on a delivery service. This has allowed us a glimpse of how postal services will work under the private sector.
By law Royal Mail alone is bound to deliver a universal service obligation (USO) meaning that we are legally obligated to deliver to every address in the UK six days a week no matter the cost. Prior to The Postal Services Act 2006 we achieved this through cross subsidy, income from profitable bulk posting offset the costs of delivering to far flung places.
Regular collections of mail are vital to small businesses and others who rely on the postal service yet profitable bulk posting has been creamed off by private operators who perform this work at the expense of Royal Mail. Now half of all letters traffic is collected in this way but is fed into the public pipeline and still has to be delivered by Royal Mail under the USO, even if this is at a loss. Termed 'Down Stream Access' mail this resulted in a financial crisis for the public postal service and has endangered the ability of Royal Mail to meet the USO. None of the savings were passed on to consumers, domestic and small business customers paid the price through a massive hike in stamp prices in 2012. Private operators have no obligation under the USO and under the latest proposals the USO is only guaranteed until 2015. The creaming off of profitable services must be stopped.
On Delivery it is anticipated that delivery rounds will be franchised to the lowest bidder. Areas outside the main cities will see a reduction in deliveries to perhaps three days a week. We know this from the experience of customers in West London where TNT have established a licensed private delivery service. Private postal workers on part time or casual 'zero hours' contracts at minimum wage levels have been accused of taking little care or responsibility for customers valuable mail as exposed by a recent Channel 4 Dispatches programme. It may be the case that outlying customers will be required to collect their mail to reduce costs. Services currently free of charge for the registered blind and for British Services Overseas will be abandoned. Under private ownership the bottom line is always profit.
So who will benefit from a sell off?. Well the big banks, legal and accountancy firms are already queueing up to handle the share issue. Royal Mail is being advised by Barclays, Merrill Lynch and Goldman Sachs at a conservative estimate of £30m in fees. Accountancy firm Price Waterhouse Cooper are currently working with the company to determine costs. Private equity firms are rubbing their hands at the big bucks on offer, in summary those responsible for the current economic crises can't wait to get their hands on the honey pot of property assets built with taxpayers money in key sites in all major towns and cities with a license to print money at the expense of the consumer and the service. Private equity firms look for a short term return on investment, best achieved by stripping assets, reducing services and scrapping terms, conditions and pensions for workers. We do not need a crystal ball when we can read past history.
The response from the CWU has been unequivocal, consistent and relentless. A joint political/industrial strategy has put the Government and Royal Mail Board on the backfoot. An insulting attempt to buy support through a £2000 share offer to workers has been laughed out of court by staff at all levels of the company. Small business, the Countryside Alliance and others have been drawn into a Save Our Royal Mail campaign http://saveourroyalmail.org/ which has focussed pressure on Liberal/Tory MP's. Political pressure has been put on the Labour leadership to oppose the sell off and commit to re nationalisation if the sale goes ahead. Alternatives to outdated models of private ownership have been drafted and are winning support amongst respected economists and academics.
If all this gentle persuasion fails the CWU is committed to using its industrial strength to it full extent. The union has a tradition of solidarity with other workers in respecting picket lines most notably during the Grunwick dispute. The TUC should recognise this and take the lead in calling a General Strike as the Tories proceed. It sticks in the gut of postal workers that all our efforts to make Royal Mail profitable while maintaining a public service is being jeopardised by free market dogma. All public opinion polls reveal that customers want Royal Mail to remain public. My union will not let this happen without a fight. If we don't hear some compromise from the Government it is likely that a ballot for industrial action will go ahead in September.
Tam Dewar
CWU Area Delivery Rep Ayrshire Dumfries and Galloway
(In a personal capacity)