The Royal Mail is quintessentially British, the red pillar boxes, the liveried and distinctive vans, the friendly postmen and women, immortalised in the children’s fiction of Postman Pat. It is surprising that there has been so little fuss caused by news this week that, as announced by Vince Cable, this Great British Institution is to be privatised. I am still not clear why this age-old household-name is being sold off at all. It will be floated on the London Stock Exchange rather than selling it to a private buyer.Members of the public will be able to buy shares, alongside larger institutional investors and postal workers are set to receive millions of pounds’ worth of shares. Royal Mail is a successful company so why privatise it? The government’s own document stated : “Royal Mail’s results for the financial year ending 31 March 2013 were strong.” They certainly were; operating profit grew from £152 million the year before to £403 million. An article in The Guardian wryly makes the point in explaining possible motivation: “Is the company broken-backed with financial obligations that should be passed on to suckers in the private sector? Not since the government took over the £40 billion pension liabilities, lumbering taxpayers with a £12 billion deficit but letting investors off the hook. Mr Cable trotted out the line about how privatisation would bring in more capital to the business: but the sovereign state can get credit more cheaply than any private borrower.
So, having nationalised the organisation’s debts by taking on its pension liabilities, the government are now intent on privatising the profit at the very time it is finally making money; this makes no sense at all but is just symptomatic of what the Tories do, it is just a shame that Liberal Democrat Vince Cable has sold out so much that he was happy to announce the privatisation. One only has to look at the railways or the Utilities to know that selling off” the family silver” is not done in the name of improving services to customers, or of increased efficiency or of a chance for the common man to get rich quick (despite the British Gas “Don’t tell Sid” campaign which hinted otherwise). No, this unsurprisingly is about corporations getting rich, you know, the ones who fund the government. One commentator predicted that “ministers will take a price multiples lower than the one they could have got, even while Goldman Sachs, Barclay’s and all the other banks involved in the flotation will walk away with fat fees.” It is now well documented that when the state sells cheap, the public takes a loss. It has been calculated that a result of the Thatcher-era privatisations, when the deliberately low price at which long-standing public assets were marketed to the private sector, was a a net transfer of £14 billion from the taxpaying public to shareholders and other investors. And if one is not bothered by the economics of privatisation, a diminshed servive will inevitably result. One postal worker writes, ” After nearly 25 years service I can tell you we are now fearing for our jobs. Every company that has been privatised has cut jobs, pay, terms and conditions. Don’t believe the hype. There is no way that the universal service of six day deliveries will be maintained. (Three day weeks in the Netherlands) As a result thousands of jobs WILL go. Prices WILL rise, hastening the decline in mail volumes.” We have been warned.