This is a personal view by Andrew Paterson following the announcement that the Royal Mail would be sold by the Government
Why would anyone buy a company and invest money when the costs, the service levels, including frequency, timescales and geographical coverage, and the prices that can be charged, are all determined by someone else?
Well, they probably would not unless they had a clear view that changes were likely to become possible very soon after assuming ownership. That is exactly what we should expect as soon as the Royall Mail is sold. The owners will immediately prevail upon the Government to make the necessary changes in the law.
Within ten years we will see the following:
- The Postal Service Act 2011 will be rescinded,
There will be one class of service (no Second Class),
Different price zones with rural deliveries at least trebling in price,
No deliveries in some areas (about 20% of the country),
Deliveries only three times a week (50% of country)
No Saturday deliveries,
No door to door service in some zones,
- Delivery to road end boxes in country areas,
- Collection from depots/POs in some areas
There will be fewer postmen, and significant numbers will be on zero-hour contracts.
All employee terms (salaries, pensions, and benefits) will be eroded.
In particular pensions will be significantly reduced going forward. The taxpayer is picking up current commitments.
Assets/property will be sold off.
Note the following:
The Royal Mail is now in profit. At current profit/surplus levels the Royal Mail will return to its new owners the entire purchase price within three years or less, assuming continuing growth in online purchasing.Although the politicians have quoted “a drop in letters”, the reality is that the number of letters handled by the Royal Mail nearly trebled from 1950 to 2010, the actual figures rising from 8 billion in 1950 to 22 billion in 2010 (RM figures). Of course volumes have been recently dented as the Government opened the market on unfair terms allowing private carriers to use the Royal Mail on the cheap. This had the effect of subsidising the operations and profits of the likes of UKMail from the taxpayer’s pocket.
The swift development of on-line purchasing has resulted in lots of parcels, big (toasters) and small (DVDs) being despatched in ever-increasing volumes. This business will grow five times over in the next twenty years. The Royal Mail business is set to boom.
Having spent taxpayer’s money turning round the Royal Mail, the Government is now giving it away. This reverses the usual commercial sense where you keep profitable businesses and sell the unprofitable. This is to take the plan on the terms set out by the Government, that is, to treat the Royal Mail as merely another business, when it is a service and a pretty wonderful one at that.
If the Royal Mail were a place it would be a UN World Heritage Site.