let's take back our Royal Mail
Royal Mail runs our universal postal service, meaning it has the responsibility to deliver to everyone across the UK for the same price and standard. Posties are at the heart of our communities, sorting and delivering the letters and parcels that keep us connected. But in the last decade, our postal service has been sold off and run for private profit. It’s time to take our post back.
The public has been sending letters through Royal Mail since 1635. Nearly 400 years later, the Conservative-Liberal Democrat coalition government passed the Postal Services Act of 2011, allowing for 90% of Royal Mail to be privatised (with 10% of shares offered to staff).
In 2013, Vince Cable announced that Royal Mail shares would be floated on the London Stock Exchange, despite 96% of Royal Mail staff opposing the sale. The last public shares were flogged off in 2015, and since then our postal service has been run for the profit of private shareholders.
Who owns Royal Mail?
Now that it’s privatised, Royal Mail is owned by private investors. Daniel Křetínský, a Czech billionaire, has the biggest share - 25% of the company is controlled by his Vesa Equity Investment group. In the last year alone, investors have been paid £400 million in dividends.
Why we should renationalise Royal Mail
Our universal postal service is clearly a public service, ensuring that we’re able to reach one another through the post from John O’Groats to Land’s End - and the islands beyond!
This universal service is at risk as long as it’s in private hands. Long term pressure from shareholders wanting to make more for their investments is seeing delivery offices, routes and capacity cut, resulting in huge backlogs and delays. At the same time, stamp prices are hiked up year on year.
Our postal workers deserve dignity in their working conditions and a fair wage. With Royal Mail run for the profit of a few, ‘efficiency’ savings have been introduced to maximise profit - and its posties and the public paying the price. This includes introducing tracking devices (PDAs), piling pressure on posties to deliver more per day for less money. Read our blog for a postal worker’s testimony, explaining how ‘they have degraded me and degraded my job in order to squeeze out more profits for their shareholders’.
During the pandemic, posties kept going as key workers. For many of us, they were the only person we saw daily, delivering covid tests as well as our online orders. For isolated, vulnerable, and elderly people, a friendly face on the doorstep can be a lifeline. That’s why the government has funded a trial for Royal Mail postal workers to check in on lonely older people. If Royal Mail were run for people not profit again, postal workers wouldn’t be squeezed for every last second of their round, and could be properly resourced to provide this vital community service.
By bringing Royal Mail into public ownership, we'd save £171 million a year, enough to open 342 new Crown Post Offices with post banks.
Our research, in collaboration with the New Economics Foundation, shows that by just 2025 – only 10 years after the sale – we’ll be worse off than if Royal Mail had remained public.
Meanwhile, postage costs for senders have more than doubled in the last decade. In 2019, following the biggest price rise in 5 years, Royal Mail was forced to apologise after hiking stamp prices up by an amount that breached Ofcom’s price cap.
- Royal Mail has paid out over £884 million to shareholders in the last three years. In the last year alone, three of the top bosses were paid nearly £4 million between them, with company profits of more than £750m. Meanwhile in work poverty is rising, with workers paid an average of £11.89 per hour.
How much would it cost to nationalise Royal Mail?
Buying back Royal Mail would cost £4.6 billion, which would be paid in compensation to shareholders, returning their original investment. With this refinancing, the public would save £171 million per year, which could be reinvested back into our postal service.
Is Royal Mail a monopoly?
Effectively, yes. In 2006, under Tony Blair’s Labour government, the postal service market was opened up to competition for the first time in history. This means that other companies are allowed to collect, transport and deliver letters and charge customers for the service. However, since running an efficient 6 day a week, universal postal service requires a UK wide network, hundreds of thousands of workers, and running logistics on a huge scale, no other company can do the job of Royal Mail - and none are able to come close to competing. The idea that opening up a market to give customers a choice, and that this will drive up standards, has proven impossible.
However, Royal Mail’s rivals (companies such as DHL, UK Mail, Citipost) are able to make a profit through ‘downstream access’: collecting and distributing mail themselves, but then handing it over to Royal Mail staff to process and deliver.
What makes Royal Mail different to other companies?
Courier companies such as Hermes and DPD deliver parcels, but are unable to provide a postal service. The difference is that a courier service is used to deliver packages at speed for a greater expense. They are not able to provide an affordable, universal service, and so could refuse to deliver to an address, or charge more for greater distances. Amazon is able to deliver by using these courier services and Royal Mail, and does not run its own delivery service.
Why are postal workers striking?
CWU members voted with a record-breaking majority of 97.6% to take industrial action after Royal Mail bosses threatened to impose a 2% pay rise, which amounts to a significant pay cut due to inflation. More than 100,000 postal workers are going on strike this Autumn, calling for a ‘dignified, proper pay rise’ in response to the cost of living crisis.
Why was Royal Mail privatised?
Politicians justified the sale by saying it was failing, but it wasn’t - privatising was an ideological decision. Just before being sold off, Royal Mail’s annual profits had risen to £324 million, with a high level of public satisfaction with the service.
Who sold off the Royal Mail?
The process of privatisation was started by Liberal Democrat Vince Cable, the Business Secretary in the Coalition government of 2010. He pushed the changes to the law required to allow the sale, and oversaw the initial sale in 2013. George Osbourne, Conservative Chancellor of the Exchequer, announced the sale of the government’s final 30% stake in 2015.
How much was Royal Mail sold for when it ‘went private’?
The government rushed through the sale, undervaluing the public asset and flogging it off at a price that cost the public billions. Investment bank JP Morgan valued Royal Mail at £10 billion in 2013, but the government valued it at just £3.3 billion - though shares increased to a total value of £5 billion when released on the stock market.
What’s the difference between Royal Mail and the post office? Does Royal Mail own the post office?
The Post Office is owned by the government, and operates the 11,500 post offices around the UK. Royal Mail is owned by private shareholders, and runs the collection, sorting and delivery of post.
It is difficult for Post Offices to make a profit - so with Royal Mail in public hands, it was able to reinvest profits into making sure the places you go to buy stamps are well staffed and equipped. The decision to separate the two in 1986 has now resulted in huge pressure on Post Offices, meaning longer queues for us all at Christmas, while Royal Mail profits are syphoned out in dividends to private individuals.