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Can a private Royal Mail deliver? | Can a private Royal Mail deliver? |
(about 17 hours later) | |
After years of debate and controversy, the Royal Mail's privatisation has been announced. | After years of debate and controversy, the Royal Mail's privatisation has been announced. |
Some shares will go to staff, and the public will be able to buy some too. Unions are unhappy, while proponents argue it is long overdue. | Some shares will go to staff, and the public will be able to buy some too. Unions are unhappy, while proponents argue it is long overdue. |
So what does the future hold for the 500-year old postal delivery service? | So what does the future hold for the 500-year old postal delivery service? |
In the past five years the volume of letters being delivered has declined 25%, and is expected to keep falling by 7-8% per year. | In the past five years the volume of letters being delivered has declined 25%, and is expected to keep falling by 7-8% per year. |
Stephen Gibson used to be chief economist at Postcomm, the old industry regulator. Now at SLG Economics, he says the market has transformed over the post-war period. | Stephen Gibson used to be chief economist at Postcomm, the old industry regulator. Now at SLG Economics, he says the market has transformed over the post-war period. |
"For decades after World War II, economic activity and letter volumes increased roughly in line. As GDP grew, so did the number of letters sent," he says. | "For decades after World War II, economic activity and letter volumes increased roughly in line. As GDP grew, so did the number of letters sent," he says. |
"Now, work inbox trays in offices lie empty, while email servers carry the bulk of daily messages." | "Now, work inbox trays in offices lie empty, while email servers carry the bulk of daily messages." |
Online shopping is still growing at a robust pace, and that is where delivery companies are making money. | Online shopping is still growing at a robust pace, and that is where delivery companies are making money. |
Ian Senior, a postal economist, says that a privatised Royal Mail will face competition, and will have to prove itself in the parcel market to remain profitable. | Ian Senior, a postal economist, says that a privatised Royal Mail will face competition, and will have to prove itself in the parcel market to remain profitable. |
"Parcels are a competitive market - and the Royal Mail has no monopoly over parcels, as it does over letters," he points out. | "Parcels are a competitive market - and the Royal Mail has no monopoly over parcels, as it does over letters," he points out. |
Mr Senior says other countries' privatisations have worked well. | Mr Senior says other countries' privatisations have worked well. |
"In the Netherlands, with TNT, and Deutsche Post in Germany, these services have become very profitable, and very successful. | "In the Netherlands, with TNT, and Deutsche Post in Germany, these services have become very profitable, and very successful. |
"They had light-touch regulation, were privatised, and have been able to sustain a profit." | "They had light-touch regulation, were privatised, and have been able to sustain a profit." |
He argues that there is no reason why that model should not work here. | He argues that there is no reason why that model should not work here. |
Flexible? | Flexible? |
But, not everyone agrees. Royal Mail as it stands, led by Moya Greene, is currently making a profit. | But, not everyone agrees. Royal Mail as it stands, led by Moya Greene, is currently making a profit. |
Operating profits for the 52 weeks to the end of March this year jumped to £403m, up from £152m for 2012. | Operating profits for the 52 weeks to the end of March this year jumped to £403m, up from £152m for 2012. |
The company has already undergone massive restructuring over the past few years, and the bulk of the assets and liabilities of its pension fund, which had at one point an £8.4bn deficit, were taken on by the government to relieve the business of making huge payments. | The company has already undergone massive restructuring over the past few years, and the bulk of the assets and liabilities of its pension fund, which had at one point an £8.4bn deficit, were taken on by the government to relieve the business of making huge payments. |
That paved the way for profitability, and ultimately, for privatisation. | That paved the way for profitability, and ultimately, for privatisation. |
At the time of the results, business secretary Vince Cable told the BBC it was essential for future investment that the company was privatised. | At the time of the results, business secretary Vince Cable told the BBC it was essential for future investment that the company was privatised. |
"In practice we have to bring private capital in," he said. | "In practice we have to bring private capital in," he said. |
Royal Mail is now estimated to be worth £3bn. | Royal Mail is now estimated to be worth £3bn. |
Lindsay Mackie, formerly of the New Economics Foundation and a campaigner on the postal service believes Royal Mail should stay in the public sector. | Lindsay Mackie, formerly of the New Economics Foundation and a campaigner on the postal service believes Royal Mail should stay in the public sector. |
"It's a business in profit. It's well run. Yes, letters are dying but it's proved itself flexible and responsive to change," she says. | "It's a business in profit. It's well run. Yes, letters are dying but it's proved itself flexible and responsive to change," she says. |
"We have a really brilliant postal service, and there is no comparison that shows a privatised system is doing better. The European examples are not good. Services have deteriorated. The key thing is that it's an efficiently run company - and despite what many say about the unionised workforce, there's not been a strike for decades." | "We have a really brilliant postal service, and there is no comparison that shows a privatised system is doing better. The European examples are not good. Services have deteriorated. The key thing is that it's an efficiently run company - and despite what many say about the unionised workforce, there's not been a strike for decades." |
That may be about to change, however. | That may be about to change, however. |
The CWU union is now balloting its 125,000 Royal Mail members on national strike action. | The CWU union is now balloting its 125,000 Royal Mail members on national strike action. |
A strike over pay, pensions, and fears over future post-privatisation problems could be on the way as soon as 10 October. | |
Fears over working conditions have been emphasised by the experience of the TNT workforce in the Netherlands pre and post-sale. | Fears over working conditions have been emphasised by the experience of the TNT workforce in the Netherlands pre and post-sale. |
"The situation in the Netherlands has been bad in terms of wages and conditions. It has deteriorated," Ms Mackie says. | "The situation in the Netherlands has been bad in terms of wages and conditions. It has deteriorated," Ms Mackie says. |
SLG's Stephen Gibson agrees that ongoing industrial relations issues would be problematic for a future, privatised Royal Mail, something that could cause investors to pause for thought. | SLG's Stephen Gibson agrees that ongoing industrial relations issues would be problematic for a future, privatised Royal Mail, something that could cause investors to pause for thought. |
"If there were strikes all the time, and service disruption, that would be a problem," he says. | "If there were strikes all the time, and service disruption, that would be a problem," he says. |
What service? | What service? |
One thing all agree on is that the future of Royal Mail, and the six-day-week home delivery service, is an emotive topic. | One thing all agree on is that the future of Royal Mail, and the six-day-week home delivery service, is an emotive topic. |
Mr Gibson says: "There is something about a universal service. But does it need to be six days a week? If people want that, should they be paying more? It's an expensive social service." | Mr Gibson says: "There is something about a universal service. But does it need to be six days a week? If people want that, should they be paying more? It's an expensive social service." |
Mr Senior says that progress must take precedence over nostalgia: "I sometimes say to people, 'when did you last see anyone under the age of 30 sending a letter or going to the Post Office to buy stamps?' The answer usually tells you what you need to know." | Mr Senior says that progress must take precedence over nostalgia: "I sometimes say to people, 'when did you last see anyone under the age of 30 sending a letter or going to the Post Office to buy stamps?' The answer usually tells you what you need to know." |
But Ms Mackie disagrees: "It's not just another company. It's a public service - and as such is different." | But Ms Mackie disagrees: "It's not just another company. It's a public service - and as such is different." |
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