Northern Rock – use it to set up a Post Bank, or sell it to Tesco?

The government nationalised the ailing bank, formerly a building society, but only after many months of foot-dragging. And only on a temporary basis, natch.

Word is, Northern Rock could be sold to Tesco, handing the supermarket even greater power in the economy. Given that a majority of shareholders voted against plans to improve workers’ rights at the company, we know that Tesco isn’t very socially-responsible – so why give them a stake in the banking sector?

There’s a better alternative, as Louise Nousratpour reports:

A coalition of unions and businesses will step up their campaign for a “post bank” tomorrow with proposals that government-owned Northern Rock be used to offer services via post offices.

The group will publish plans arguing that their proposal would give a boost to the Post Office network and provide a vital community service.

A Post Bank would “revive and protect” post offices, support local communities and help smaller firms, especially as the banking system was still in “disarray,” they argue.

The report Delivering the post bank outlines four options the government could follow to establish the post bank. These range from using Northern Rock as a foundation for a mutually structured people’s bank to buying out the current relationship between the Post Office and Bank of Ireland.

Support for the idea of a post bank is growing within all three main political parties as well as among a range of campaign groups.

Postal workers union CWU leader Billy Hayes urged Business Secretary Lord Mandelson, who has been pushing for the part-privatisation of Royal Mail, to endorse this “vote-winning” initiative.

“We have met the challenge to create a workable model for the creation of a post bank,” he said.

“Our new report builds upon the conceptual idea and provides practical blueprints that will appeal to the general public who are disillusioned with the old, tired banking model.”

Federation of Small Businesses chairman John Wright said: “Northern Rock presents the government with a considerable opportunity and it should not consider selling it off privately, but instead should use it to establish a post bank and invest in the long-term future of the Post Office.”

Finance union Unite national officer Paul Reuter argued that the ambition should be to “secure the future of the workers in Northern Rock as well as securing the Post Office network while, at the same time, resolving the problem of financial exclusion and meeting the needs of small businesses.”

Dot Gibson of the National Pensioners Convention added: “Ministers need to rise to the challenge and secure a future for the post office network that serves local communities rather than pander to those who want to run it down and sell it off.”

Millionaire Mandelson picks Tory banker to oversee Royal Mail sell-off

Solomon Hughes reports in the Morning Star:

PETER Mandelson has picked a new post boss. His choice of Donald Brydon as new chairman of Royal Mail shows that, when in doubt, Labour reaches for a banker.

Brydon will get £200,000 a year for his two days a week at Royal Mail. This might seem like a lot to you or me, but he has become used to big money from his long banking career.

Brydon started off with a 14-year stint at Barclays, followed by a job as chief executive of Axa Investment. He still sits on Axa’s board, although he stepped down as CEO in 2002.

He has always been an outspoken banker, but unfortunately spent a lot of time getting it wrong in a loud voice.

In 2003, leading investor Warren Buffet was predicting that complex financial derivatives were “financial weapons of mass destruction.” Buffet is not a radical – he is one of the world’s richest men, equally happy helping Arnold Schwarzenegger or Barack Obama.

But when Brydon heard Buffet’s warnings, he felt the urge to speak out. He seems to have been particularly worried that criticism of the financial system had come from within, from a businessman like Buffet.

Brydon chose to respond at a joint conference of British and US bankers. “We all need to be on guard lest regulations stifle initiatives in the retail application of derivatives,” he warned.

With his help, the meeting turned out to be something of an anti-Buffet rally, with other speakers denouncing Buffet as “frustrated.” As it turned out, Buffet was right and Brydon was wrong.

Brydon also felt the need to stand with then US Federal Reserve chairman Alan Greenspan against the critics of derivatives.

In 2003, Brydon claimed that, “as investor confidence has been rocked so the importance of risk mitigation instruments such as derivatives has increased.”

But derivatives actually added to the instability of the system – had they been properly regulated in 2003, we might not be in the mess we are in now.

Brydon’s worries that derivatives might be reined in stemmed from his general broad dislike of regulation.

He was also head of the Financial Services Authority “practitioner panel,” a group of bankers brought in to advise Britain’s financial regulator.

Unfortunately, their voices were heard all too well. The FSA remained deferential to the bankers and failed to stop the financial recklessness that caused the current crisis.

Brydon used his place on the panel as a pulpit from which to attack the “regulatory burden” and argue for the “need to remain vigilant that, in developing regulation, a point of no return is avoided where innovation, flexibility and competition are threatened.”

His own firm Axa showed why tighter regulation should have been imposed. In 2003, Axa Investment boss Brydon argued for less FSA regulation. In 2004, the FSA hit sister firm Axa Sun Life with a record £500,000 fine for misleading customers.

Mandelson described Brydon as “a proven business leader and successful chairman.”

Brydon’s experience certainly extends beyond banking. Unfortunately, he seems to have brought a banker’s mind to his industrial jobs.

He became chairman of high-tech medical firm Amersham and sold the company to US giant GE. He then became chairman of engineering firm Smiths Industries and promptly sold off its aerospace arm, again to GE.

The Independent was driven to say: “The former fund manager seems to be developing something of a knack for selling British publicly quoted assets at supercharged prices to overseas concerns.”

Subpostmasters and posties will not be reassured by a new boss who loves to flog things off.

Like many new Labour appointments, Brydon is also a longstanding Tory. As a student, he was president of the Edinburgh University Conservatives, befriending fellow Tories such as Malcolm Rifkind.

In 2001, he signed a letter to the press describing Ken Clarke as “the best hope to lead the Conservative Party back to government and create the social and economic climate necessary for business to flourish.”

Obviously this is handy, because Ken Clarke is likely to be his boss after the next election.

Unless of course the plans to sell-off our postal service, and other unpopular ideas, are dumped along with slimeballs like Mandelson.

What more evidence do you need? Does this sound like a Labour man to you… the man is a millionaire who helps out his fellow millionaires – to hell with the rest of us. Get this:

The Business Secretary has refused to reveal detailed information about his financial affairs despite the possibility that they could directly influence his ministerial decisions.

Instead, he has declared only that his “financial interests have been transferred into a blind trust”. The contents of the blind trust – which may include shares, properties and other investments – remain secret.

The existence of Lord Mandelson’s blind trust came after the Cabinet Office released a list of minister’s financial interests. The interests are those declared by ministers to Whitehall officials.

It is the first time that the list has been released and only interests “which are, or could reasonably be perceived to be, directly relevant to Ministers’ public duties” have been publicly disclosed.

The Business Secretary is one of five Government ministers to have set up blind trusts. The others are Ben Bradshaw, a health minister; Lord Myners, the City minister; Lord Davies, the trade minister; and Lord Darzi, a health minister.

A further nine ministers, including five members of the Cabinet, also disclosed that their spouses or close relatives are “consultants”. Few details about who they work for are revealed, raising questions about potential conflicts of interests.

Blind trusts have traditionally been set up to allow ministers to put their financial interests at arm’s length. Trustees are appointed to manage the trust and ministers are not supposed to have any role in deciding whether and when investments are bought and sold.

However, the arrangements have been criticised in the past. Tony Blair set up a blind trust after becoming Prime Minister. However, it later emerged that Mr Blair’s wife, Cherie, had directed the trustees to use the trust to buy two flats in Bristol.

Lord Sainsbury, the former science minister, also set up a trust to hold his multi-billion pound stake in Sainsbury’s supermarkets. The shares were not sold while he was a minister.

Officials have conceded that ministers will be aware of the investments held in the trust and that such an arrangement may present a “conflict of interest”.

Last night, it emerged that Gordon Brown revised the ministerial code to remove specific guidance to ministers on blind trusts. The official code of conduct previously warned that ministers with trusts may have to step aside from decisions related to their financial affairs.

The previous code stated: “It should also be remembered that even with a trust the minister could be assumed to know the contents of the portfolio for at least a period after its creation, so the protection a trust offers against a conflict of interest is not complete…In some cases, it may not be possible to devise such a mechanism to avoid actual or perceived conflict of interest.”

All references to blind trusts have been removed from the revised code of conduct drawn up by Mr Brown after becoming Prime Minister.

Westminster insiders have expressed surprise that the Business Secretary, a career politician, is wealthy enough to justify establishing a trust.

Accountants believe that Lord Mandelson must have assets worth at least £500,000 and probably more than £1 million to make it worthwhile setting up a complicated trust. Annual fees must be paid to accountants and lawyers running the trusts.

Mike Warburton, an accountant who runs trusts at Grant Thornton, said: “I suspect the trust is going to be in excess of £1 million or why bother. The concept of a blind trust has always struck me as a bit dubious as you are only going to appoint a trustee who is someone you know pretty well and trust.”

Mandelson moans at mass opposition to mail sell-off

Apparently it’s making the sale that much harder that so many people don’t want Royal Mail to be sold. Good. It’s not for sale, it belongs to the people.

Socialist Worker outlines the opposition:

Anger grows at postal sell-off
by Yuri Prasad

Business secretary Lord Mandelson’s plan to privatise Royal Mail has created a storm of protest. This is raging through sections of New Labour that were once cringingly loyal to the leadership.

Delegates to the party’s Scottish conference last week applauded wildly as Dave Watson attacked the proposal as a breach of Labour’s manifesto commitment to keep Royal Mail publicly owned.

Watson is the chair of the Scottish Labour Party.

Welsh MP Siân James this week resigned as a parliamentary private secretary and signed an Early Day Motion against privatisation. Around 150 Labour MPs have now signed this motion.

James is the second member of the government to quit over the issue, and some commentators expect that another 15 could follow her.

The rebellion in Labour has grown as public opposition to the plans has become clear.

Now even the Liberal Democrats, who have been committed to Royal Mail’s privatisation for years, are deserting the cause and refusing to vote with the government.

There was further embarrassment for the government this week after an email from Royal Mail boss Adam Crozier attacking rival firm TNT, a likely bidder for a stake in Royal Mail, was leaked to the Guardian newspaper.

Crozier said that TNT had been lying to Royal Mail customers in Europe, telling them that it had already acquired the state-owned company.

Disarray

TNT has told its workers in the Netherlands that it will sack 10,000 of them if they do not accept a 5 percent pay cut.

Despite the disarray, Mandelson is determined to proceed with the privatisation.

His political future now depends on getting the sell-off through.

He knows that the government can win the final vote in parliament in a few weeks’ time with the backing of the Tories.

Many activists in the postal workers’ CWU union are aware that that any campaign that concentrates solely on winning Labour MPs will be doomed to failure, and that the union leadership’s strategy is flawed.

“If we’re going to win this, we’re going to need a strategy that involves industrial action,” says Alan Walsh, branch secretary of the union’s Watford branch.

“But I don’t think that postal workers should have to fight this battle alone. I’ve been at rallies where the leaders of other public sector unions have stood alongside the TUC saying, ‘Your fight is our fight.’

“Well, I’d like to see them put their money where their mouth is.

“I want postal workers to strike against privatisation – and I want to be joined by thousands of other public sector workers.

“That’s what workers do in France when they are under attack. We need to need to learn some lessons from across the Channel.”

Massive

The need for this kind of response is becoming clear as Royal Mail attempts to prepare the ground for a sell-off.

Postal workers in different parts of the country have told Socialist Worker that the company is attempting to ram through massive cuts between now and the end of the financial year in April.

Labour’s privatisation plan is also putting an enormous strain on the relationship between the CWU and the party that it has loyally supported for generations.

The union has committed to balloting its members on whether to fund the party at the next election, and many branches are now seeking a more fundamental review of the union’s affiliation to Labour.

“Labour says that it is the only game in town, and for a long time we in the CWU have believed them,” says Alan.

“But now many of us are telling our local MPs that if they refuse to vote against privatisation, not only will we cut our donations, but we’ll stand against you in the next election and cut your votes too.”

Northamptonshire CWU branch has called a march and rally in Corby against post privatisation.

The protest takes place on Friday 20 March – assemble 1.15pm at the Civic Centre, George Street, Corby.

Protesters will march to local MP Phil Hope’s surgery.

Northamptonshire CWU says, “Putting the people of Corby before career ambitions and blinkered loyalty to a Labour government is all we ask of Phil Hope.

“Who is he representing when he pledges support for the part-privatisation of Royal Mail? There is no support in Corby.”

A rally after the march will hear speeches from Lord Tony Clarke, CWU vice president Jane Loftus, TUC regional secretary Roger McKenzie, Unite regional secretary Adrian Axtell, CWU regional secretary Lee Barron and others.

Royal Mail sell-off could cost New Labour a fortune

I think it’s a given that privatising Royal Mail will be a disaster for its workers and customers.

Now it’s clear that it will cost New Labour financial and political support from the Communication Workers Union – who last disaffiliated from Labour in 1927 after the general strike!

No doubt, other unions would be minded to follow the CWU like those in dispute with employers – and the government! – over social dumping in the construction industry.

Leaked plans reveal that Royal Mail’s millionaire bosses want to sack 10% of the workforce.

The Morning Star comments:

Wrecking Royal Mail
(Friday 06 February 2009)

WHOEVER invented the word “modernisation” has some serious explaining to do.

For starters, isn’t progress supposed to make things better? If so, why does modernisation, an idea so beloved of new Labour drones and incompetent businessmen, always seem to involve taking something that works and smashing it to pieces?

Royal Mail is far from the only example of such modernisation – tried taking a train recently? – but it’s one of the worst.

A public service that was among the finest in the world has been reduced to a pale shadow of its former self by a stream of “modernising” cuts. Two reliable and punctual deliveries a day have become one deeply unreliable delivery. Some 2,500 post offices are closing and thousands more could follow, with devastating effects on communities across Britain.

Staff are being burdened with ridiculous workloads as a result of 50,000 job losses in recent years.

And now Royal Mail bosses are planning another round of cutbacks, aiming to slash 10 per cent off costs despite the firm’s soaring profits.

The Communication Workers Union, whose members are working flat out to maintain standards at Royal Mail, calls the cuts “panic measures that will hit the quality of service.”

The union is right, but the cuts are not just about boosting profits in the current crisis.

They are part of plans to fatten up Royal Mail for private-sector consumption, doling out the profitable slices to big business while leaving the taxpayer to subsidise the loss-making parts such as the post office network.

This has long been a goal of new Labour and the privatisation-obsessed regulator Postcomm, starting when postal services were opened to private competition in 2006 – a measure which has benefited only big business at the expense of smaller firms and the public.

Lord Mandelson’s plan to privatise part of Royal Mail is a shove that will send the postal service tumbling down a very slippery slope.

Along that slope lies more and more cost-cutting and more and more “modernisation,” until Royal Mail lies in ruins at the bottom.

It’s an extreme threat that needs extreme measures to counter. So the CWU is right to take a bold stance in defence of this vital service by threatening to break its links with Labour if privatisation is pushed through. This is not a step that any union would take lightly. But what else is it to do, after so many betrayals by what is supposed to be the party of working people?

New Labour has allowed, even encouraged Royal Mail bosses to slash jobs and standards left, right and centre. It raised no objection when Postcomm ordered the “liberalisation” of mail delivery far quicker than required by the EU postal directive.

Now, ministers are backtracking on their 2005 manifesto commitment and defying their party’s own official policy by inviting the private sector to cash in on Royal Mail at everyone else’s expense.

New Labour has proved time and time again that it will not listen to the public, will not listen to its own members, will not listen to the unions which founded the party and which provide so much of its financial and campaigning muscle.

It will not listen to the overwhelming evidence that privatisation has been an utter failure across the public services and will be a disaster for Royal Mail.

We hope the CWU’s threat to disaffiliate is the shock therapy ministers need to jolt them back into reality.

What’s Mandelson’s excuse for Royal Mail privatisation now?

Royal Mail is in the black:

All four Royal Mail businesses were profitable in the nine months to Christmas last year, for the first time in almost 20 years.

Royal Mail Letters, the Post Office, Parcelforce Worldwide and the European parcels business GLS contributed to an operating profit of £255m.

That nine-month figure compares with £162m for the whole of the previous financial year.

The union says this proves no need for privatisation:

The Communication Workers Union said that the strong financial results proved that the company was thriving while modernising in full public ownership.

But general secretary Billy Hayes stressed: “Today’s financial results must not be seen as an invitation for any part sell-off but instead prove the viability and future sustainability of a wholly publicly owned modern Royal Mail.”