The Sunday Times has reported:
Labour whips have told the prime minister that, with his authority badly damaged, a Commons defeat over the Royal Mail would be “inevitable” if he put it to the vote.
Is common sense being seen at last?
The sheer folly of thinking that the Royal Mail could be privatised was always madness. It is a utility. These need to be in public ownership.
And yes, that does mean I think water, gas, electricity, much of public transport, basic banking and the telecoms infrastrcxutrue does also need to be publicly owned.
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And I agree with you.
Incidentally, the current Private Eye has a cracking article demolishing the myth that nationalised railways were a disaster, by showing that things are clearly considerably worse now than they were pre-privatisation.
Those who travel regularly by train have always known this. There never was any efficiency saving on the cards. It was a wholly ideologicallly driven measure. The key change was that government subsidies which used to go into the rail netwok now leak out in fees, dividends and directors’ pay. Anyone who thinks the directors’ oay is paying for the best has to be joking!
[…] argued on Sunday that: The sheer folly of thinking that the Royal Mail could be privatised was always madness. It is […]
The train thing is an interesting point, but the question is was it the fact of privatisation, or the means by which is was enabled that was the problem – or perhaps it was neither, but rather the continued political meddling. The problem with subsidies is not where they leak out to, but the fact that they are there in the first place.
The problem with the railways is – they are not an economically viable way of moving goods and people. If they are state controlled, the private sector tax payer pays the short fall in increased taxes, if they are privatised the private sector tax payer pays the subsidy in increased taxes. The private sector tax payer pays come what may. Either charge the users for their use or close the lot down.
The Jubilee Line Extension project cost £3.5bn. The increase in the land value of the affected sites increased by £13bn. So why not tax the landowners who are the main beneficiaries of public infrastructure improvements?
I don’t know whether the RM would work better under private ownership (though I suspect it would), but surely a more important issue is this:
RM has been losing millions of pounds for years now. Its core market is shrinking as snail-mail is overtaken by the internet. It is losing market share big-time to companies which are, frankly, far superior and more reliable than they are. It has an enormous pension deficit which is growing by the year. The slighest wave of the hand at modernisation is strangled by the restrictive practices of trade unions who shout “All out” at the merest whisper of the introduction of new technology.
And is the service really that great? Which self-respecting private company uses RM to send out a cheque on a Friday? I don’t know one – they all use Parcel Force, TNT, DHL and whoever the rest of the competition are.
How does this continue? I don’t think it can. Some kind of restructuring is inevitable (though not until after the election of course). What’s your solution?
Peter
I think your assertion that the Royal Mail has ‘been losing millions of pounds for years now’ is quite wrong. In fact it made a profit of £225 million in the first three quarters of of this finacail year. On that basis the rest of your case against it falls apart- does it not?
Daijohn
Daijohn. The profit to which you refer is simply operating profit. Last year RM made an operating profit of £162m but ended up with a pre-tax loss of £279m after restructuting costs and other exceptional items. The PO closure programme has continued this year so I fully expect another pre-tax loss when the figures are announced.
The trouble is this reduced loss is coming on the back of the closures to which I just referred. If the only way a supposed public utility can compete or even tread water is by slashing half the network then I think there’s a problem somewhere. As I say, I honestly don’t know the best solution but to think that the RM can continue in its current form is pure fantasy.
It is estimated that RM’s pension costs could reach £1billion per annum. This is simply unsustainable. I can send a letter from Cornwall to Scotland for 50p and it will arrive the next day. We may have an attachment to the notion of universal service but we all know in our hearts this is too cheap: it should be more like a fiver. Perhaps if it was a fiver I wouldn’t get all this junk mail either. Of course many people rely on the post offices but this doesn’t change the fact that the postal market is shrinking every year. The maths just don’t add up….