The Government is wrong on Royal Mail Print E-mail
Friday, 13 March 2009 16:15
By Billy Hayes

The publication of the document "The Future of the Universal Postal Service in the UK" by Lord Mandelson represents a serious mistake by the Government.

Not only does it represent a mis-step for the postal industry. It is a terrible blow to the credibility of Labour as a distinct party of Government. Both the Tories and Lib-Dems support the privatisation of Royal Mail,

We must lend every effort to changing the Government's mind before it pulls the trigger on its own head.

The Bill proposes to privatise Royal Mail by an initial instalment of 30%. Along with this minority share will come the effective management of the company by the "partner." Lord Mandelson has already suggested that the "gene pool" of British management talent does not include the ability to manage Royal Mail successfully. With the Bill it is clear, for example in Clause 4.16, that the partner will run the company on a day to day basis.

What is deeply damaging to the Government is to link this issue to the future pensions of postal workers. The employer (ie Conservative and Labour Governments) had a holiday from pension contributions for 13 years. This was undertaken on the understanding that there would be sufficient funding from the scheme without these contributions. Postal workers, of course, continued to contribute throughout this period. The scheme now has a substantial deficit, despite those long forgotten assurances. Instead of the Government simply honouring its contract with postal workers, it has engaged in an exercise of potential extortion. Submit to the Government breaking its commitment on privatisation, or face the loss of half of your pension. Some choice - some policy - fat chance.

What is being offered is an update of "there is no alternative". Either accept privatisation or the lot collapses. This was never true, and isn't true now. Royal Mail, which just reported better results than TNT, is a perfectly viable company.

The removal of the pension deficit immediately offers Royal Mail an additional capital of 280 million per year for the next 15 years. No-one has demonstrated that this is insufficient for "modernisation". Dogma must not prevail over evidence.

In addition the Bill suggests that some of the policies of the CWU could be carried through to assist the funding of the industry, notably on access contracts and on supporting the USO.

Therefore why is privatisation integral to the success of Royal Mail? Neither Hooper nor Lord Mandelson have demonstrated this.

Of course, there is going to be a whole-hearted campaign against this Bill. This makes sense from both the point of view of the consumer, and the workforce. From the consumers point of view, TNT delivers first class mail at around twice the cost of Royal Mail. From the workforce' s point of view, TNT have refused to pay the minimum wage in Germany where they set up a Trade Union whose General Secretary was TNT's Chief Executive.

Royal Mail is a trusted brand for the public. Handing it over to asset strippers will not affect the electoral fortunes of Lord Mandelson, but it will devastate the Labour Party.

Billy Hayes is General Secretary of the Communication Workers' Union (CWU). This article first appeared on