Royal Mail privatisation – Mandelson’s gift to media baron Rupert Murdoch?

In 2005 it was reported by the Sydney Morning Herald that:

Rupert Murdoch has linked up with another giant of Australian business, TNT, in its bid to compete with Britain’s state-owned postal service Royal Mail.

Transport and delivery company TNT has entered Britain’s letter market with its TNT Premier service which guarantees delivery in 48 hours and handles one million items a week.

As its service expands and the market opens up, however, TNT and other private mail providers have complained about Royal Mail’s “dirty tricks” and uncompetitive behaviour.

Murdoch’s pay TV network BSkyB is the latest of five major customers to defect from Royal Mail to TNT […]

BSkyB’s link with TNT strengthens Murdoch’s ties with the company.

TNT trucks are used by Murdoch’s News Limited newspapers in Britain and drove through the picket lines of striking printers in London during industrial disputes in the early 1990s. [Emphasis added]

Today it was announced by Lord Mandelson that the plans set forward in the “independent” Hooper report would be implemented, despite Labour’s manifesto commitment to retain public ownership of postal services.

The only company showing any interest in a possible 25-50% stake in Royal Mail is TNT, a Dutch rival to the publicly-owned postal service.

TNT was the postal company involved in last year’s data loss scandal, in which discs containing the private details of all families claiming child benefits.

Talk about rewarding failure.

RickB points out that Adam Crozier, Royal Mail’s chief executive was given a 26% pay rise last year – which means he’s paid £1.25 million to run postal services into the ground, cut provision, lay off workers, and close sorting and post offices.

But why is an established public service like Royal Mail being forced to “compete” with foreign companies anyway? Whose idea was this?

Well, the EU has issued directives ordering the “liberalisation” of postal services and the UK government was so keen went ahead a year early.

I imagine if Royal Mail is butchered for the benefit of TNT that Rupert Murdoch will be changing his mind about the EU. Not such a threat to him after all, and his papers might become pro-EU and pro-Euro in particular. Just as it’s argued Royal Mail must be destroyed because of economics, Murdoch’s papers might trumpet we must join the Euro?

The FT reports that there will be turmoil in the Labour party as a result of Mandelson’s decision:

the announcement provoked an immediate backlash from the unions and Labour MPs, who saw it as a betrayal of the party’s manifesto commitment to keep Royal Mail publicly owned. The Communication Workers Union, which is already threatening a strike later this week, stressed its “dismay” at the prospect of a move that would “open the floodgates for full-blown, damaging privatisation”.

A string of Labour MPs in the debate on the Commons statement made by Pat McFadden, the business minister, echoed this concern, in a clear signal the prime minister will run into a rebellion over the legislation to allow the partial sale. Gordon Prentice typified the anger, warning he would vote against the measure and attacking the “scandalous” way Royal Mail had been undermined by competition from rivals.

The Conservatives, who stopped short of privatising Royal Mail when they were in power, broadly welcomed the proposals. Edward Leigh, the rightwing Conservative MP, mischievously gave a “welcome [for] new Labour to the Thatcherite wing of the Conservative party”.

The decision by both main opposition parties to back the plans will allow the prime minister to drive the part-privatisation through parliament, in the teeth of opposition from his own party. But the political sensitivities are likely to delay any bill until after a potential spring general election. Mr McFadden told MPs: “We’ll be working up proposals to do this in the weeks and months ahead.” He dismissed backbenchers’ concerns that the move marked a “slippery slope” to full privatisation, saying the party would honour its manifesto commitment. [Emphasis added.]

Note the reference to a general election. Is this a way of buying the support of the Murdoch press for Labour in a snap election next year?

If so, New Labour have possibly lost the votes of thousands of postal workers. Millions of traditional Labour voters who have abandonded the party won’t be tempted to turn out for Brown if he plans to destroy a cherished public institution – and sell it to foreigners.

So much for British jobs for British workers! “British institutions for Australian capitalists” doesn’t have the same ring to it…

The Communications Workers’ Union has responded to the Lord of Darkness:

Billy Hayes, general secretary, said: “It is incredible that the British Government which has lead the world in overhauling banks need another European postal service to rescue the Royal Mail. Especially one which has already been disgraced by losing sensitive data disks in the mail.

“This was meant to be a report about competition but Mandelson has ignored the damage done through irresponsible liberalisation and advocates more involvement by private companies.

“We welcome the move to Ofcom which recognises both changes in the communications sector and the failings of Postcomm to manage the mail market effectively, however we look forward to receiving more information on future regulation.”

Dave Ward, deputy general secretary, said: “There is no need to seek private funding from outside companies in a joint venture. This would open the floodgates for full-blown, damaging privatisation. Post is a key public and business service which must retain the protection and guidance of Government for sustainable success.

“We welcome the fact that our campaign to get the Government to secure Royal Mail workers’ pensions has been successful. The news that the USO has been safeguarded is also very welcome.

“We will be studying the detail of the report closely over the coming weeks and will respond fully in the New Year.”

5 Responses to “Royal Mail privatisation – Mandelson’s gift to media baron Rupert Murdoch?”

  1. Robert Says:

    You can count on Labour. sadly I will be voting for somebody else at the election I do not care who but it will not be Brownie

  2. charliemarks Says:

    Unless you live in his constituency, you can’t vote for him, of course – but I take your point. In Scotland and Wales there’s the nationalist parties which are often more progressive than Labour (for reasons of electoral opportunity in large part) but in England there are two opposition parties – the Tories and Labour – which are committed to doing much of the same things.

  3. John Postman Says:

    Well- I’ve seen nothing in the report to convince me that RM shouldn’t have
    remained a state monpoly.

    His recommendation to find a minority private stakeholder looks to me like
    he’s just paid lip-service to any notion of independence, and is carrying
    out the politicos’ wishes to get mail privatised come what may. There’s no
    vision. There’s no clarity of thought. There’s no imagination.

    In his report, Hooper acknowledges the present state of affairs is a
    disaster. I believe that had the state monopoly not been threatened with
    the advent of competition, we would be fairly contented when turning our
    minds to matters postal- the public, and we, used to be justifiably proud of
    our Post Office- it was an excellent and fair service, the envy of the
    world: only since competition was introduced has the service been run down,
    and the poorer.

    I concede that there could have been moves to make it more efficient, and
    thus cheaper/ and/or/ more profitable; I don’t think, though, that
    competition is the way to do it, and preserve the USO.

    Reading the Questions about overall objectives (which is why we’re all here,
    after all…), I am at a loss to understand why competition and privateering
    is felt to be desirable, except obvious self-interest).

    Responses to those questions tell a story. Everyone is happy with RM as an
    entity, with it’s position in the market, and it’s having sole obligation to
    the USO.

    The main concerns about RM seem to be price, q of s, reliability, and choice
    of products.

    I don’t have a problem with people setting up businesses to handle mail/bulk
    postings/letter-stuffing/etc. They can source/collect and sort and bring it
    all to the delivery offices if they wish, just as now.

    Everyone, almost, appears to want to see transparency of costs within RM: if
    RM remains a state owned company, fair enough.

    So; price, q of s, reliability, and choice of products.

    Is it really necessary to hive off part, a half, virtually, of RM- and to
    foreign investors- to achieve desirable results there?

    Commercial interests were recognised to have made criticisms without any
    evidence to back them up during the investigations made prior to the report.
    (hmmm…sounds familiar)

    It is acknowledged that DA is priced too low (which I have been saying for a
    long time), and that it should cover costs and provide a reasonable profit.

    It also understands that commercial operators were likely to cherry-pick,
    thus undermining the USO unless some remedy to this be found. Perhaps if
    DA was set at realistic levels, and RM was at least guaranteed price
    stability in real terms and was free to introduce new products and services,
    the costs of the USO could be covered.

    RM would have to stay within acceptable price limits. Even I understand
    that putting prices up willy-nilly is only likely to lose business.

    Customers want a frequent, reliable, dependable and high-quality service.
    Since the introduction of competition, we have seen a shift in quality and
    quantity of service from RM that many see as a depreciation in service
    levels- no more second delivery, only one daily collection, later, less
    predictable deliveries, PO closures, etc.

    RM has subsequently also lost a share of the bulk market (up to 40%) which
    has had “a negative impact on the company’s financial health”.

    It is “generally accepted” that only the large business users of RM have
    benefitted although it appears at least one person is complaining that we
    are not doing enough of his/her work for the money he/she is getting because
    of our presentation requirements.

    SMEs and domestic consumers have been adversely affected except on
    deadline-delivery performance, which has been successfully improved.

    Much is made of the decline in mail volumes, yet revenues are up since
    e-fulfillment yields more than has been lost to e-substitution. It is
    perverse of RM’s Board to claim that the company did not expect to recover

    If you ask certain people, and I have, about the volume of traffic going out
    on delivery this year compared to last, you’ll be told, as I was, that there
    is about 3% less this year (there is a margin of error here since methods of
    assessing volumes have changed).

    It’s significant, granted, but it generally doesn’t mean I deliver to less
    houses. And where a few years ago I may have had a few more letters, I now
    carry much more weight. This makes the job harder for me, and slows me
    down; but, weight=revenue, and size=revenue. Check out the size and weight
    of The National Trust mail, or She magazine, or Sky magazine. It is
    reasonable to assert that the value of my bags is now greater compared to
    the past, at least the recent past.

    As for my having to deliver yet more mail in less time at a speed comparable
    with the Light Infantry; this time I shall say no more except I have a
    picture in my mind’s eye of Mr. Crozier walking briskly about the Boardroom
    table, down the corridor to his brisk (but warm, like Ms Moneypenny) PA’s
    office, dictating in double-quick time, before briskly going to the loo and
    briskly back to his office for a brisk cup of coffee whilst he briskly
    catches up on his notes before briskly compiling more notes and briskly
    presenting his latest ideas to a pricked-eared, state-of-alert Allen
    Leighton for his brisk attention and brisk response before they briskly call
    for a brisk rickshaw to briskly ferry them to who knows where for a brisk
    who knows what with a brisk who knows whom in a brisk attempt at


  4. charliemarks Says:

    thanks for that comment John. You make the valid point about the impact on SMEs.

    The government was so keen on forcing RM to unfairly compete that it introduced the EU directive a year early.

    Rest assured, privatisation will be a disaster for workers and consumers – but very good news indeed for the super-rich…

  5. Homes Encinitas California Says:

    Good points in your post, you’ve got an interesting weblog here. Thanks for the thoughts.

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