Royal Mail’s Managed Decline

Conrad Landin

When the business secretary Vince Cable announced the sale of Royal Mail shares last autumn, his Labour counterpart Chuka Umunna, rather than focusing on the principle of a publicly owned postal service, complained that taxpayers were being ripped off. Royal Mail shares soared by 38 per cent in 24 hours. A parliamentary select committee said the group had been undervalued by £1 billion, in part because ministers had failed to account for the expanding parcels trade. They also appeared to have forgotten the company owned three major development sites in inner London, including Mount Pleasant, where several Christmases ago I sorted parcels – mainly Amazon deliveries.

Cable batted off the MPs’ criticism (though he may have taken it to heart, as he vetoed the privatisation of the Land Registry earlier this year), saying share prices were ‘very, very volatile’. This week, Royal Mail shares have lost more than 8 per cent of their value (down more than 21 per cent on a year ago) since the group announced a 21 per cent drop in first-half operating profits. Amazon’s new parcel delivery service has grabbed 3 per cent of the UK market. The steady growth in demand for Royal Mail’s parcel deliveries doesn’t seem so steady after all.

Management and unions both attacked the Royal Mail’s competitors for ‘cherry-picking’ lucrative delivery routes while leaving the far-flung rural corners of Britain to the Royal Mail and its universal service obligation. Umunna joined in: ‘The Tory-led government’s fire sale of Royal Mail has put the essential services which consumers and small businesses rely on at risk.’ The SNP’s post spokesman Mike Weir said the privatisation had been ‘a shambles since day one’.

But for all the fiery rhetoric about protecting the Royal Mail, politicians seem to have resigned themselves to managed decline. I saw the same attitude on the sorting floor at Mount Pleasant: worker after worker told me they’d joined the service when it was something to be proud of, but now it was understaffed and inefficient. They accepted privatisation as inevitable and beyond their control.

Umunna could have halted the privatisation in its tracks: Cable would have found it hard to shift shares if Labour had pledged to renationalise the service. The Labour Party Conference voted to endorse such a plan, but the shadow business secretary immediately briefed the press that it wasn’t to be.

The SNP pledged to renationalise the post service if Scotland voted for independence. But where it has the power, it has done little to mitigate the creeping profit agenda: Scottish government departments send much of their mail via the Dutch privateer Whistl (formerly TNT).

Politicians may blame EU competition law for allowing private competitors to cherry-pick services, as they often do when looking to pass the buck. But it was Britain’s Labour government that kicked it off. ‘If we hadn’t disarmed first, it would have taken Western Europe much longer to do it,’ according to Martin Stanley, the civil servant Labour put in charge of post liberalisation.

Next week, at a business select committee hearing, the Communication Workers Union will make the case for tougher regulation to address the fixed market against Royal Mail. It remains to be seen whether any politicians will support this moderate aim next May.


  • 28 November 2014 at 11:10am
    Alan Benfield says:
    Here in the Netherlands, the mail has been fully privatised for some time. In 1994, KPN (post and telecoms) was largely privatised. In 1998, post was spun off as TPG (TNT Post Group)and fell into the hands of TNT, where it remains. Later, post offices were spun off as a daughter company, Postkantoren BV. At this point, post offices started to close. There is now ONE real post office in the whole of the greater Hague area: apart from that, postal services are handled in tobacconists, supermarkets, bookshops,etc. on a franchise basis. This leads to some peculiar effects: I once went to a local shop which holds a PostNl franchise on a Saturday to pick up a registered letter. It was 1 PM. The lady apologised that I couldn't have my letter, as PostNL only paid her on Saturdays up to mid-day. I came back the following Monday.

    TPG eventually redefined itself as TNT Express (parcels) and TNT Post. In 2011, TNT Post became PostNL. Last year, PostNL started whining about there being no point to deliveries on Mondays, as there was so little post to deliver after the weekend. The government obligingly allowed them to stop delivering on Mondays, previously an obligation under the Postwet (Post Law).

    At the same time, of course, PostNL and TNT have both been increasingly casualising or outsourcing the workforce. My post is usually delivered by the same person, but that could be a pensioner, student or stay-at-home mum. Full-time posties are now a rarity. In the past, the cover of the printed tariff booklet showed a picture of a cheerful postie in PostNL uniform. Tellingly, last year it showed a woman in her own clothes, no PostNL uniform in eveidence, women being a significant part of the casualised workforce. Even parcel deliveries are often carried out by third-party contractors with their own van.

    I am fond of saying that when the Dutch are looking for a bad idea, they usually look West for inspiration. With Royal Mail, it appears the boot is now on the other foot. Expect TNT-Royal Mail sometime soon.