Yes, Royal Mail should be privatised.

12 September 2013

12:36 PM

12 September 2013

12:36 PM

In this morning’s post: enticing offers from McDonald’s, Domino’s pizza, Sainsbury’s a local clothes shop and a children’s charity. Arriving later today: a couriered parcel from Amazon.  That’s often the reality of the modern British postal service. The Royal Mail delivers things you don’t want; private companies deliver the things you do.

Which is one reason why all the arguments citing the fact that Margaret Thatcher – sorry, even Margaret Thatcher – thought privatising the Royal Mail a step too far are cute but utterly irrelevant. It’s a different world now. One in which if things are to stay the same they must change.

And so, on balance, the partial privatisation of Royal Mail is a better idea than not partially privatising it. The choice is between taxpayers funding the reforms and investment Royal Mail requires to compete and secure its future or allowing the market and private investment to do so. The latter seems the better bargain.

Opponents of privatisation may have emotion on their side but that’s about it. True, Royal Mail made an operating profit last year of £400m. But that’s not enough to finance the investment the organisation needs. Moreover, Royal Mail is only in a relatively healthy state because the state – ie, the taxpayer – has bailed the company out to the tune of assuming responsibility for Royal Mail’s £10bn pension deficit. That works out at something close to £400 a head.


But, but, but, they splutter, what about price increases? What about the universal service? Well, postage rates in Britain are already relatively high. The volume of privately-posted mail fell by 8% last year but revenue increased by 3% thanks to a 33% increase in the cost of stamps. In other words, the very things opponents fear privatisation will bring have happened without privatisation. You cannot sensibly boast that the organisation turns a profit and complain about the increased prices that have helped produce that profit.

And it is not as though privatisation is some eccentric, far-out, policy. Postal services across the globe are changing and Britain’s service is much less innovative than those found in many other european countries. And if Germany and the Netherlands can privatise their postal services  – and make them work – there’s little reason to suppose that doing so in Britain is simply a question of crazy free market ideologues running amok. (And if that were the case then you’d have to include a number of former Labour ministers in their number.)

As for the universal service? Well this too is a shibboleth of dubious merit. That is, there’s little reason – in 2013 – for a six day service. New Zealand Post is preparing to move to delivery just three days a week, for instance. On the other hand Germany and the Netherlands still, I believe, have six day deliveries which suggests that privatisation need not necessarily result in a reduced level of service. (Royal Mail will still be regulated, you know.)

It is not so much a question of private good versus public bad (or vice versa) as finding a way for Royal Mail to make the changes it needs to make in order to have a viable stand-alone future. And that requires making it easier for the company to compete with its rivals. Which in turn is most likely to happen with fresh injections of capital that allow it to diversify and, essentially, subsidise the parts of the service to which customers are most keenly emotionally attached.



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Show comments
  • Flintshire Ian

    There are two post delivery rounds in our village. Both are worked by reliable, helpful post men who have done the same round for many years. The villages on either side will be similar. Privatisation will probably mean that the three villages join together to form one larger round and the universal service obligation will still be met, but not everything will get onto the van on the first day it could be delivered and may wait for several days at the sorting office (probably a bigger hub office).
    None of this really matters though. As the article points out, the stuff you actually want is delivered by private sector van drivers or you pay a hefty premium for first class guaranteed delivery, otherwise the postman mainly delivers admail.

  • terregles2

    The Netherlands was the first country in the world to privatise their postal services. Since privatisation they have lost 90% of their Post Offices
    The Dutch now have their letters delivered by four different companies all in different uniforms and all delivering at different times of the day. They rarely see the same postman twice and some describe the service now as shambolic. In Austria the price of a stamp rocketed after privatisation.
    It does not seem to be the general public who benefit after privatisation of postal services. I think I have more faith in the experience of other countries than I do in people in this country telling me it is a great idea. Especially when they do not have any experience of managing postal services.

    • Jambo25

      You’re right about Austria. Postal rates are extortionate.

      • Fergus Pickering

        I do not know any European country where they are lower than ours. Perhaps someone else does.

    • Fergus Pickering

      And at whattime of day does your postman deliver the post?

      • terregles2

        It is delivered around 1pm each day. More importantly though we rarely have anything posted through the wrong door and if something is not properly addressed we still have it delivered.

  • Trinculo

    This is Tory dogma based on little more than a wing and a prayer? Have the other privatisations been a success? Only telecommunications stands up to scrutiny: all the others have resulted in zero real competition and increased charges, continued subsidies with the profits being creamed mainly by foreigners. If the Labour Party had any guts it would re-nationalise the lot!

    • Charles

      Rolls Royce?
      British Aerospace?
      British Airways?

      All seem pretty good companies to me.

  • Daniel Maris

    Once again, as with his cheerleading for mass immigration, Massie has the full and unrelenting support of A Massie.

    • Wessex Man

      He manges to get just about everything wrong except Cricket, perhaps he should become the Spectator’s part-time Cricket Correpondent.

  • leoinlisbon

    Since Alex Massie has little knowledge of, or understanding of, Royal Mail it would have been more sensible of him not to comment.

    Royal Mail was profitable for decades but the profit was seized annually by the Treasury.

    ‘Postage rates in Britain are relatively high.’ This is because of recent huge increases in price to make privatization attractive.

    Universal service is a ‘shibboleth of dubious merit.’ More to the point, it will remain a requirement of RM post-privatization. There are no ‘rivals’, to compete with, in delivering to 27 million addresses six days a week.

    Fresh injections of capital will allow it to ‘subsidize the parts of the service to which customers are most …attached.’ This is almost impossible to achieve due to the introduction of DSA.
    I suspect that Alex Massie does not even know what DSA is and how it cripples RM.

    • Daniel Maris

      Be fair, Mr. Massie must have a posted a birthday card…to himself…at some stage.

    • Fergus Pickering

      Postal costs in Britain are lower than any other country in Europe that I know of.. Where are they low?

  • Baron

    Alex is spot on.

    When the predecessor of the British Telecom was run as a fiefdom of those the company employed, Baron had to wait for months to get a black plastic box installed, and still had to share a line with others. And look what we have today.

    If the privatised Royal Mail gets anywhere near such an improvement in service, why shouldn’t we go for it, ha?

    • Simon Delancey

      When the predecessor of the British Telecom was run “as a fiefdom of those the company employed” one could at least get some assistance from an English-speaking native of this country as opposed to an incoherent wage slave in Bangalore.

      • Baron

        Good point, Simon, good point, it’s an irritant and not only in the case of BT, others are equally guilty, banks for inst. But overall, in telephony, there has been a noticeable shift towards the customer.

        • Wessex Man

          Agree entirely Baron, when my disabled mother fell down the stairs of the house she moved into she wasn’t found by us for four hours because she was on the waiting list for her phone. I think if I could ask her now if she minded chatting to someone from Bangalore and getting help rather than ending up in hospital, she would have been quite happy to have a chat!

  • allymax bruce

    Upon Scottish independence, Scotland must re-install Royal Mail in Scotland. Penalty of treason must be re-introduced to protect the only non-electronic way to communicate in absolute privacy, for all Scots in Scotland.

    • Baron

      So what do you do then for the Scots who aren’t in Scotland but here and elsewhere?

      Btw, allymax, did you know that the kilt is an ‘unrivalled garment for fornication and diarrhoea’, but not much else?

      • Wessex Man

        how’s he going to re-install Royal Mail in an independent Scotland when they will have no Royalty?

        • Baron

          Excellent point, Wessex Man, the man of the haggis and the Scottish Highlands will have to do some thinking here, but can he? Is his cranium up to it?

          Where is this brute of a Scot anyway? Normally, he would have unleashed a barrage of invectives by now.

          • terregles2

            The Union of the Crowns of Scotland and England took place in 1603. The Union of Parliaments took place in 1707.
            If there is a YES vote in 2014 then the Queen remains Queen in Scotland. Many unionists and also Scottish republicans do not like that but unfortunately for them it is a fact.

            • Wessex Man


              The Scotsman 12th September 2013

              Scottish Independence: Scots could ditch Queen, according to Aileen Campbell SNP Minister for Children and young people!

              Another wishy washy wish list from the Yes Campaign along with the continued Scottish membership of the Eurpean Union and NATO, from the school of make it up as you go along.

              • terregles2

                That one small word could makes a very big difference. If there is a YES vote the Queen remains Queen in Scotland.
                If after independence enough people in Scotland wish to abolish the monarchy they could campaign for a vote on that but that is a vote they may or may not win.
                There are a lot of ifs and coulds in there. One fact remains should there be a YES vote in 2014 the Queen does remain Queen in Scotland and I don’t think she would be happy at anyone suggesting otherwise.
                An independent Scotland could indeed ditch the Queen just as the other countries in the UK could choose to ditch the monarchy at any time. Being able to do so does not mean it will happen.

      • allymax bruce

        Well, Baron, it looks like my political prowess is bang-on target with the majority of Scottish political thought; Scotland’s First Minister, soon to be Scotland’s Prime Minister, Alex’ Salmond, has agreed with me, that Scotland must ensure Royal Mail Scotland is protected from Westminster cuts & sell-out, and demanded Scotland’s Crown gets a moratorium.
        In-deed, Baron, it seems I, allymax, can hold & impress Presidents, Prime Ministers, and National leaders, but you, Baron, like yer village idiot mental case wetsox man, impress nobody !
        But most of all, I luv the irony; you’re super rich, I’m super poor, and it’s me, my political analyses, that the great & good listen to; not self-indulged slavering idiots like you, and yer mental case village idiot wetsox man.

        • Baron

          commiseration to you, allymax, from one of the village idiots. The others, the no so wild Scots, seem to think differently from the two of you.

          What will you do when the answer is a resounding ‘NO’. Burn your kilt? Climb Ben Nevis and jump? Shut-up?

          • allymax bruce

            My dear fellow, Baron, thanks for your endearment.
            There’s quite a bit of ribbing, & joking that goes on here, at The Spectator; we usually know when its not serious. Anyway, you’re obviously not an idiot, but I am more clever; I know what it is to be In Christ; it really doesn’t matter then if in poor, because I’m rich in the Lord. As for your question; here’s a deal for you. If Scotland votes Yes next year, you donate a small tithe to any Charity of your choice. If not, then I’ll let you pick my ‘wager’ from the list you mentioned.

            • Baron

              Thanks for the offer, but assisting suicide’s illegal both down here and in Scotland, and that would severely restrict the choices available to Baron. More to the point, he ain’t a betting man.

              Still, why do you want to break free anyway? It may appeal to the likes of Alec, but as for the rest of you?

              Your MPs have a say, vote on matters that have no bearing upon Scotland, many in the executive, judiciary, other top agencies of the State are Scots, the money flows north…

              It’s been like that since the English imported the first Stuart, you know, James, the king who slobbered, his tongue too big, never washed, had to be scraped, wrote pornographic letters to his chief lover, the Duke of Buckingham. The king of whom Thomas Macaulay (a son of a Highlander, born down south though) said ‘he was made up of two men, a witty, well-read scholar who disputed, wrote and harangued, and a nervous, drivelling idiot who acted’.

              Why does Alec and people like you, allymax, have to
              emulate the latter quality of James?

              • allymax bruce

                I actually share your distaste of James VI, he was also schizophrenic. He ‘created’ an alter-ego/ego, (Philomates & Epistemon), for debating with his inner self. I suppose, with hanging witches, re-writing the Bible, (with Shakespeare ‘adding’ his ‘personal touch’ to Psalm 46), and being mocked by Shakespeare, in MaB*th, I can see why our English cousins deride us. But Scots are not stupid, it’s ‘understood’ Mary, Queen of Scots, was our true Monarch. Baron, now we’re on this subject, will you please confirm Walsingham was not only a spy master, but of ‘Hebrew roots’ too? Independence for Scotland is absolutely necessary for Scotland; we won’t have the security of City of London money to fall back on, because said City of London are themselves moving to independence! Scotland has been resource-raped for hundreds of years by the Westminster elite, (class system), and these torags see how their future looks bleak without City of London, AND without Scotland’s resource-of-rape policy! It’s ‘Independence Now’; for Scotland, or, we’re ‘screwed’!

                • Baron

                  It’s the latter, or rather it will be the latter when the count’s in, allymax, sorry.

  • NorthBrit

    I bet that the “innovation” Alex trumpets the need for will not include the six to twelve deliveries a day of 19th century London or getting close to the service enjoyed a hundred years ago.

    The choice is between raising capital from gilts at 3.5% or private investors at roughly 8%. Alex thinks expensive private capital is “the better bargain”, differing in this regard from the reactionary laissez-faire Victorians who actually made the Post Office work.

    There is probably no point in mentioning the old British ethos of public service, as that is no doubt another shibboleth of dubious merit, even if empirically it can be shown to exist.

    The banks were still regulated, you know.

    Odd that he is keen on destroying every great British institution apart from the one that has clearly outlived its usefulness – the Union.

    • Fergus Pickering

      What was a penny worth in 1840? And of course there were many deliveries. It was the ONLY way of communicating. Don’t you actually use email?

  • John

    What a load of absolute rubbish, written by someone who knows nothing at all about the business, up until 1997 the government took 90% of the profits a total of £3.2 billion at the same time taking a 13 year pension holiday, and its a £8 billion pension deficit, the bit you and government miss out is that the government took £28 billion pension assets out of our pension to pay off the countries debt, the only reason Royal Mail has been struggling is because since 1997 when Blair gave Royal Mail commercial freedom is that it has been poorly managed, Labour opened up the mail markets in 2006 two years before any other European country allowing firms like TNT to cherry pick the businesses part of the mail, without having to deliver any mail just put your business sticker at the top of the letter and give it to Royal Mail to sort distribute all over the country and deliver it, all for 13p an item, do some journalism and get facts first before writing., What I have written here is only a small part of the managerial incompetence this business has suffered, since 1997.

    • Cynical_Man

      100% spot on. We are now paying for the gold plated pension of postal workers, many of whom will retire early as a result of the privatisation, and to which [privatised] Royal Mail will pay sod all. Do you know any postman? They’re all incredibly fit and will probably out-live us all due to their active job and good working conditions. Consequently, we’ll all be paying for 100,000+ people’s salaries, at 2/3 pay, for 40 years. Is this in any way a good deal for the taxpayer?

      Royal Mail does, yes, have some semblance of competition. It competes with UK Mail, TNT and others to deliver mail. Yet it doesn’t really compete. It is forced to share its infrastructure, equipment – even posties – with these companies, in what’s called ‘downstream access’. Companies pay RM to use RM equipment so they can compete. Royal Mail does all of the leg work to deliver (and often sort) post, and these firms don’t have to invest in ‘final mile’ infrastructure. This is not competition, this is the private sector leching off of the public sector.

      Royal Mail does need some investment, but nothing like what the government claims. It’s already shed hundreds of thousands of workers in the past decade, and invested in more modern equipment. Now all this is being sold. So we’ve put money in, and shareholders, bankers and lawyers will be getting money out, making profits off the back of this privatisation. The auditors will make a killing of the work to do with the sale. Meanwhile, no incoming owner will have any incentive to invest whatsoever. How is this good value for taxpayers? Royal Mail currently makes money for the exchequer. Now it will only make money for shareholders. Its not just madness, its complete robbery. This makes the great train robbery look like petty crime.

      We didn’t vote for this privatisation, and we don’t want it. WE OWN ROYAL MAIL. Equally, this is an own goal in other ways. By destroying national firms, or those with ‘British’ in their name, you destroy a sense of national identity. Postman and women in Scotland wouldn’t vote for the SNP because their salary is paid for by the crown. Britain no longer pays the wages for them, so they’re free to vote for independence.

      All this privatisation is there to do, exactly like 75% of those under Thatcher and Major, is to compensate for the government’s failed economic crisis. And voters are wise to this. The ConDems will be flying out after the next election, if they treat their voters with contempt like this.

      • Daniel Maris

        Yes, isn’t this just one of those switch hustles…they want our eyes to follow the 3 billion receipt to the government whereas we should be following what happens to the pension liability – we are passing that on to future taxpayers and giving the private companies a free ride.

        Of course they will whittle away pay, terms and conditions, relying on immigrant labour.

    • Simon Delancey

      You’re on a hiding to nothing if you expect Alex Massie to “do some journalism” or “get facts first” 🙂

    • Irl Days

      I couldn’t agree more.
      background check

  • terregles2

    The problem is that privatisation as we have seen from the privatisation of energy and railways does not always result in a cheaper price for the consumer.
    It does not always result in a better service either. Our mail is delivered by a postman who provides a reliable and caring service. I know that not everywhere experiences that but in many areas the same postman has been there for years and they are part of the community. They will alert someone if an elderly person has not picked up their mail or their curtains are not opened as usual. Privatisation will have to raise profits by cutting wages and sometimes that results in less caring and committed staff with a high turnover of employees.
    There is also a possibility that rural areas will have to suffer real cutbacks in deliveries,
    I know that if you post to some countries with a privatised service if the address is not precisely correct they send it back as undeliverable.
    My neighbour in contrast received a letter from his 6 year old grand daughter. She had addressed the letter just to my Grandpa from Rachel without the house number she had the name of the road and the city but had left out the house number. The postman managed to deliver it. He didn’t have to but he took the time to ask a few questions and place it through the correct letter box.
    Royal Mail is far from perfect when it has gone shareholders may gain financially but many communities will lose something unique and something that is in the real sense priceless.

    • NorthBrit

      I agree on the social benefits of the Post Office.

      I remember as a child playing on the beach in the Scottish islands and getting a toot of the horn and a cheery wave from the Post Office Land Rover every time it went up the road. The postwoman knew everyone and brought joy into the lives of people on that island, particularly the old, who didn’t have many people to look out for them.

      I also remember the pride and professionalism of the sub-postmistress in the (now long gone) sub-post office with the picture of the Queen on the wall and her army son on the mantelpiece.

      None of these people cost much (their lifetime earnings wouldn’t have bought six months of a modern chief executive). But they were worth a damn sight more.

      Now the only surviving British institution appears to be the City and its shills in the media.

      • Daniel Maris

        Good post – just one correction: the City is no longer a “British” institution.

  • Fred Scuttle

    A few years back the letter post was opened up to private competition. Royal Mail then had to share the profitable areas like London that were previously used to subsidize the unprofitable areas out in the sticks. It was this that ultimately caused the huge price hikes in the letter post just to maintain profitability.

    Not content with destroying the buses, trains and utilities they now want to destroy Royal Mail.

    70% oppose this, according to a recent poll.

    • terregles2

      Everything Blair touched was blighted… Royal Mail is no exception.

      • Jambo25

        Trains were privatised by the Tories. Both Labour and Tories are ra ra for water privatisation in Scotland.

        • terregles2

          Scottish Water is an excellent service that everyone is happy with. My friend works for Scottish water and says they are great employers. They constantly have visitors from all over the world who visit to study the first class service and methods that are used by Scottish Water. It is respected throughout the world and would be just perfect for the greedy tories to exploit and destroy.
          You are right they are desperate to do what they do best destroy everything of value that provides a great service..

        • Fergus Pickering

          And re-privatising the trains was a great idea. Is there anybody who sticks up for British raul, filthy, late and strike ridden?

          • Rainetta

            As someone who takes 2 buses and 2 trains to and from work (4 of each a day), I have to say your description ‘filthy’ and ‘late’ well describe my journeys…the northern line is a disgrace – i got soaked more on the train this morning than outside, thanks to the leaky windows, on a train that was late, which i managed to jump onto only because my first was also late..the only pleasant journey i have is on the government owned east coast line, which is soon to be privatised! I don’t know which train service you use, but if you’re sticking up for privatisation, you must be blessed…or living in London

            • Fergus Pickering

              How old are you, Rainetta? Do you have any direct experience of British Rail? Thought not. Add to it that the staff were invariably rude and unhelpful. I live in Kent, incidentally. My journey to the wtong sie of London took more than an hour and a half. Now I can travel tost Pancras in 55 minutes.

    • Fergus Pickering

      Bt most people don’t really care. Letters are just not as important as they once were.

  • willshome

    In the Post Office/Royal Mail (the old GPO), the British Government had something with a magnificent history (founded by that terrible socialist Charles II, revolutionised by Rowland Hill, vital to survival in WWII in the Battle of Britain and at Bletchley Park). Properly handled, it could have been a flexible, adaptive, forward-thinking hub for a 21st society. So naturally successive administrations have wasted it, chopped it up, and will now sell it off with the rest of the family silver to foreign capitalists. No energy left to be surprised.

    • terregles2

      The oldest postal system in the world destroyed against the will of the majority of people. All for the benefit of greedy politicians
      I wonder what face will appear on our stamps. Doesn’t bear thinking about.

  • channel.fog

    ‘Yes, nationalise everything,’ says Lenin. Brainless ideology isn’t the monopoly of the left it seems.

    • Jambo25

      At least Lenin kept the nationalised enterprises under Soviet control. They weren’t sold off to foreigners.