This week, after the announcement of the privatisation of the Royal Mail, BBC Question Time featured Justine Greening where she announced that the Royal Mail “needs to get more investment if it’s going to be able to compete”. Although said with what seemed like total belief, there appears to be literally no evidence to support these claims. The Royal Mail is competitive; I’ve yet to hear of a company that struggles to compete yet still makes £400 million profit in one year, more than double on the year before. Of course the Conservatives understand how business works, so they know that if the Mail needs investment, it should be taken from their increasing profits and reinvested back into the business – not by selling the company against the will of 96% of the employees – this leads us to believe there is a clear ulterior motive.
If we are to compare this with private companies, such as Deutsche Post and TNT, we can see that the Royal Mail is actually an extremely strong and reliable service. TNT has seen huge decreases in profits of 26% during the recession, and Deutsche Post’s profits have dropped by 37%. When taking into consideration that these companies both operate from countries that have been economically stronger than Britain recently, the Royal Mail is doing well. If you also consider the fact that an average delivery with the Royal Mail costs half of what it does with TNT, and user satisfaction is at a record high for the state owned company, it seems inconceivable that anyone would buy into the idea that it needs to be sold off.
If we take a look at the other former state owned companies that now operate privately, we can see that the clear losers have been the general public – paying massive price increases every year with dropping customer service. British Gas and British Telecom are turning over healthy profits for their shareholders, but at what cost to the public? With rising profits and an average 9% rise in cost to users every year, there is very little for these ex-state owned companies to boast about in terms of value for money. Competitiveness in big business is a myth. Energy firms work in a cohort to organise the exact same price rises at the exact same time – there is no choice or cheaper alternative for people who have to choose between buying food and heating their homes.
On the other hand, two other former state owned companies; British Airways and British Railways, are making huge losses each year with low customer satisfaction rates. The renowned railway service has terrible consumer satisfaction scores, consistently late trains coupled with the highest rail fares in Europe have led to a widespread call for renationalisation. If these examples are anything to go by, our current complaints about the cost of a first class stamp will be laughable within a few years. Still, at least the rich shareholders and directors will have a nice cheque and bonus at the end of the year.
The other main theme to consider is what exactly will be different if the Royal Mail is privatised? First, loyalty will be with shareholders, not with the public. Efficiency will be key – why would a company choose to lose money by delivering to rural areas every day? The obvious move for any private company will be to reduce the number of delivery days to remote parts of the country – effectively cutting a vital lifeline for people who will struggle to get their mail delivered on time. It is important to remember, however, that the Tories are only able to bulldoze through their plans of privatising the Royal Mail with the help of the easily forgotten Liberal Democrats, propping up Tory plans every step of the way, and unconvincingly saying it is for the good of the country.
Is this a sign that the Tories know they will likely be in the political wilderness again, come 2015? Polls consistently show just under 50% of their own members are greatly opposed to the sell-off, as is just over 70% of the country. Even Thatcher, that great proponent of privatisation refused to “have the Queen’s head privatised”. Some Tory MPs have shown concern that the move could lose them their seats, as rural constituents see the Royal Mail as a vital lifeline in their communities. Reliable deliveries are likely to be threatened, causing upheaval for many people in remote parts of the country. However, the move could be a desperate act by the government to try and boost the economic figures in the run up to the election. The short term profits made from the sell off will be badly needed by the government to plug a hole in the figures of ever rising debt, and failed deficit reduction programs.
Was the sell-off in either the Conservative or Liberal Democrat manifesto? No.
Privatisation against public will is theft.
We nationalised the debt, now we’re privatising the profits.