Royal Mail boss Alan Leighton has been mooting privatisation of the Post Office. Postal worker Pete Keenlyside reviews a recent report by the telecom and postal workers’ union CWU, which analyses the state of the service and the threats it faces.
The CWU’s view of the future of the Post Office is quite clear. What we want is a publicly owned and accountable postal service delivering a quality service that the public wants, staffed by well paid, well trained and motivated staff.
Unfortunately, the gap between our view and the reality on the ground is huge. We have an industry starved of funds over decades, providing a service that has been ravaged by successive cost-cutting exercises; a programme of Post Office closures; the introduction of the single daily delivery (SDD); a service staffed by a poorly paid, barely trained and demoralised workforce. Bridging that gap is the main task of the postal side of our union and it is as part of that process that the union’s document Delivering Quality was recently published.
The document covers everything from regulation, privatisation and the cost of competition through the introduction of SDD and the Post Office closure programme to the pensions crisis. The policy of commercial freedom, foisted on us by would-be Prime Minister Alan Johnson (newly-appointed Secretary of State, DTI) and would-be Lord Derek Hodgson (Deputy General Secretary CWU) is firmly nailed into its coffin.
The Postal Services Act 2001, brought in supposedly to achieve commercial freedom, has only succeeded in setting up a whole new range of barriers for Royal Mail in the shape of regulation and price controls whilst at the same time giving open encouragement to competitors to come in and cherry pick the best bits. In the report Postcomm, the regulatory body, is condemned as a bunch of free-marketeers, interested more in creating openings for their chums in the City than defending the universal service obligation (USO) — the pledge to deliver once a day to every address for the same price.
Postwatch, the body supposed to look after the interests of the consumer, is accused of spending all its time attacking Royal Mail and drawing up plans to break it up.
The Labour Government is accused of hiding behind the legislation and failing to involve itself in an industry in which it is, after all, the sole shareholder.
The CWU’s document calls for a root and branch review of the Postal Services Act to ensure the Regulator meets its legal duty to defend the USO and the Government delivers its manifesto commitment to develop a successful publicly owned postal service.
The fight to keep the postal service in public hands is central to the document. Despite pledges from the Government to the contrary, the threat of privatisation is still hanging over us. Articles in the financial sections of various papers continue to appear, claiming to reveal Royal Mail Chairman Alan Leighton’s plans for part-privatisation, usually involving some form of share issue to employees. Should this happen, he would of course pocket the lion’s share of shares, and make a tidy sum out of it. The belief that this will eventually happen is surely the only motive he has for signing up for another three years as Chairman.
The various cost-cutting programmes, in Royal Mail, Post Office Counters and Parcelforce, point to part-privatisation as well. As a policy for developing a modern, efficient service that meets the public’s needs, it makes little sense. As a policy for driving up profits on a short term basis and therefore making any potential share offer attractive to buyers, it is spot-on.
However, contrary to what most Labour back-benchers and many in our own union believe, however, the threat of privatisation is not the greatest threat we face at the moment. It is, in fact, the speed at which liberalisation is being brought in. With the Government gazing on in seeming disinterest, Postcomm is bringing in full-blown competition from the beginning of next year, having already opened up large parts of the market already. This is three years in advance of the EU timetable and will take place without the review of existing experiences due to take place in other countries.
Potential competitors are being given huge advantages. They will have fewer obligations and constraints placed on them than Royal Mail. The Dutch and German Post Offices, potential big players in the British market, will even have the advantage of not having to face competition for their own work for a full three years after they are allowed to begin operating here.
Royal Mail, on the other hand, will still be subject to stringent price controls, be expected to provide a full range of services and to continue to provide the USO. At the moment USO can only be done provided by subsidising the loss-making stamped letter deliveries with the vastly more profitable business mail. It is difficult to see how Royal Mail can continue with USO when its profit gets eaten away by competition. The model being put forward by Postcomm, with support from the Government, seems to be designed to destroy Royal Mail. This seems to be backed up by the fact that all these changes are coming in on the back of the major upheaval in the delivery service, which severely dented the Royal Mail’s public reputation. It is the classic method previously used by the Tories to prepare state industries for sell-off or destruction.
The document also places severe doubt on the so-called financial crisis that was the justification for the job-cuts programme. The union has never had access the to the figures, but the assumption is that management front-loaded all the losses into the first year that Leighton took over. These included a £500 million loss on an unnecessary computer system for the post office network that the Government forced them to put in.
The document challenges the myth of poor productivity of the workforce. In the past ten years staff costs as a percentage of the total costs have fallen from 65% to 57% whilst the number of letters handled per full-time equivalent increased by 30% between 1997-2002.
The document points out the lack of investment over these years, despite the large profits made. This was due to the huge sums the Post Office had to pay back to the Government — some 80-90% of post-tax profits. Many delivery staff are still forced to work in conditions that would have been familiar to the founders of our union. Rather than running down the business, the demand is made for a large infusion of funds for investment.
As a comprehensive review of the problems facing the Post Office, and as a critique of current government thinking, Delivering Quality is an impressive document. As a guide to action by the union and its members, it is, however, less impressive. It states “We support a publicly-owned, publicly-accountable, fully-integrated national postal service run in the interests of users...”
Yet at the same time it fails to call for the scrapping of all liberalisation measures, including those already taken, which have caused so much damage. It merely opposes further measures. If, as the document states, the postal service is a natural monopoly, what is wrong with coming out and saying that it should be one.
As a union, we have never developed our thinking on what nationalisation should look like. The view still prevails that nationalisation means government control. But even in the past, government-controlled industries always operated in the interests of big business. Even when there was 100% monopoly, a firm sending out one million letters always paid far less per letter than an individual sending one, even though the firm had nowhere else to go.
Yet a form of nationalisation that gives the public and the workforce a measure of democratic control would be immensely popular. Because this is never argued for, the assumption that competition is always better than monopoly is never challenged, even when in this case that is obviously not so. The failure inevitably puts us on the back foot in any argument.
The greatest weakness of the document lies in its failure to answer the crucial question, “Who is going to deliver our demands?” The assumption seems to be that mere lobbying of those well placed in government and publishing our arguments will win the day.
Yet that’s not how we defeated the Tories when they tried to privatise us. Then, the campaign involved our members leafleting and petitioning in shopping centres and outside football grounds. It involved marches and rallies in the big cities. It went beyond even our members and sought to involve the public as well.
So far, none of this has been done and at the moment there don’t seem to be any plans to do so. Could it be that our leadership have bought into the idea that we are no longer as popular with the public as we were?
Discreet lobbying is not going to work. The forces against us are far too powerful for that. We need a campaign that goes way beyond that to force those making the decisions to accede to our demands. We need to ram home the idea that the very postal service itself is under threat and mobilise all those who want to save it to our side. We also need to involve those working for potential competitors. They are our allies, not our enemies. The threat of competition will undoubtedly be used to drive down terms and conditions, not to mention jobs, in all areas of the industry. Maximising resistance to this will not only blunt the edge of those who seek to gain from privatisation, but will strengthen the hand of those opposing it. Where the workforce in other companies are already unionised, we need to develop joint strategies with those unions. Where they are not unionised, we need to recruit them.
The return of a Labour Government with a reduced majority gives us a greater advantage than before. The Labour leadership will be more reluctant than before to plough on with policies that are shown to be unpopular and risk defeat. Those MPs with small majorities will be less likely to risk losing them in the face of a determined campaign. But none of this will happen on its own just because we have the right arguments. As a Union, we have to make it happen.
Come clean, Alan Johnson!
When asked in the House of Commons to rule out privatisation of the Post Office, newly appointed Secretary of State for the DTI, and former CWU leader, Alan Johnson, gave this clever but evasive reply:
“I trudged the streets as a postman for 13 years and I found out yesterday that I now own 59,999 shares in Royal Mail. The other one is owned by my right honourable friend, the Chancellor. We would both be very reluctant to give them up.”
(But he might be persuaded.)