10 July 2013
James Bloodworth explains why the Royal Mail should stay in public hands.
Later today ministers will announce the final details of plans for the privatisation of Royal Mail.
The government is looking to move quickly on the sale, with shares expected to be floated by the autumn.
There are many things which this government is doing that warrant criticism, but I am convinced that in years to come the sell off of the Royal Mail will be considered one of the most execrable decisions made by the coalition.
Here are five reasons why.
1. Royal Mail is a profitable business. Far better, then, to keep the Royal Mail public and plow the profits back into the service rather than allow them to be siphoned off to shareholders. The company made £440 million last year. The fact that the Tories still want to privatise what is an increasingly successful business smacks of public bad/private good fanaticism.
2. The cost-cutting that will likely follow a sell-off will place a huge question mark over the universal service. This isn’t left-wing propaganda as some on the right will undoubtedly claim. The Bow Group, the oldest conservative think-tank in Britain, has warned that privatisation could see the price of a stamp increase and Post Offices in rural areas close.
3. Privatisation doesn’t solve all problems. It ought to cause alarm that this point even has to be made, but such is the view of public services in the conservative mind.
Privatisation has been disastrous for our railways and has resulted in even higher subsidies for the rail operator than under public ownership. In 2010/11 Network Rail was subsidised by the taxpayer to the tune of £3.96 billion. This compares with an average of £1.4 billion over the 10 years leading up to privatisation.
4. Stamp prices could hit £1. The price regulation of stamps has been scrapped to increase the attractiveness of Royal Mail to investors. This brings with it the possibility that stamp prices could hit £1 shortly after privatisation. A private business exists to maximise profits for its shareholders, after all.
Again it’s worth looking at train fares. Since privatisation ten years of above-inflation rail price increases mean that some in the south-east of England now spend 15 per cent of their salary on rail travel.
5. The Royal Mail is part of the fabric of the nation. This probably sounds a bit wet, but institutions do matter. There are certain things which have come to be associated with Britain. The NHS, cricket, red phone boxes and yes, the Royal Mail.
It is hard to overstate the respect the British public has for posties. The sight of a postie on his or her rounds early (or not so early these days) in the morning is a fundamental part of British culture (yes it does exist), and not everything can simply be reduced to its monetary value.
This article was first published on Left Foot Forward.