The Posties threat

Renationalise Royal Mail or lose millions in donations, CWU tells Ed Miliband
Labour must agree to renationalise Royal Mail within three years of coming to power or lose millions in donations, postal unions say.

Bit of a bugger, eh?

Billy Hayes, the CWU’s general secretary, said: “Privatisation is an old-fashioned idea. We’ve seen it fail in areas such as the rail industry where prices have soared and safety standards and services to customers were left in disarray.

“Our conference will be re-stating the CWU’s opposition to the planned privatisation of Royal Mail which we don\’t believe is in the interests of customers, the workforce or the wider industry.

“We want a modern Royal Mail in full public ownership and able to deliver the universal service six days a week to all parts of the UK. We’ve had the full support of the Labour Party in that desire in the past and have no reason to believe that will not be so again.”

Here\’s the problem with this desire: the EU won\’t let you do that.

Oh, the Mail can be publicly owned, that\’s not a problem. But it must be possible for others to compete with it on an entirely level playing field. Something which obviously precludes any form of public subsidy to the Mail.

And the Royal Mail cannot operate as is without public subsidy. Thus it must be privatised in order to be able to raise the capital to modernise.

What the CWU or the Labour Party want doesn\’t really come into it.

29 thoughts on “The Posties threat”

  1. What happened to the mail though? It was a kind of jewel in the crown as it used to be just about the only profitable state industry. And even for those of us who think privatisation is generally a good thing, it’s all too easy to imagine it being made deliberately unprofitable (during the Blair years) in order to make it a more attractive privatisation cazndidate.

  2. It was the Internet wot did it. Mail volumes have plummeted. This is particularly acute in the B2B world: nobody sends documents by mail any more. Important signed documents are more likely to go by courier than by mail; anything else can be emailed or faxed.
    On the B2C side, the rise in packages hasn’t been anywhere near enough to offset the fall in general mail volumes. Online banking, email notification, even your tax return is done online. C2C is completely dead: hardly anyone sends postcards from their holidays anymore, let alone sending personal letters.
    It’s hard to remember how we communicated 15-20 years ago before the Internet was significant, but there was a lot more time spent waiting for the mailman. Those days are long gone.

  3. So Much For Subtlety

    I am not sure that the internet is entirely to blame. A lot of parcel delivery companies seem to be doing fine. I think the rule is a simpler one – as a general rule any British industry with a Trade Union is dead or dying. Especially public sector enterprises.

  4. A lot of parcel delivery companies will be doing very well this month. The increase in postal costs at the counter for packets has shot up. By 40p for 2nd class in some cases, by

  5. Darn it.
    By £3 in some other cases.
    A 17cm x 10cm x 9cm 2nd class packet at 500g would be £5.20 to send, up from £2.20 last month. A 17cm x 10cm x8cm at 500g would be £2.60.
    Lots of ebayers caught out the hard way by turning up at the post office only to find costs up massively.
    Biggest loser is the sub post offices, lost a bunch of customers now. Hard for the public to petition to keep the local post office open if the postmaster decides its not profitable.

    Cannot see a downside for Royal Mail there.

  6. Since we’re discussing Royal Mail, something I’d be interested to know. Call it an online survey.

    I’m in the position of both receiving mail from various countries. Usually packets. But also I receive mail in various countries. It’s noticeable, mail originating in the UK seems to take much longer to arrive at its destination than from other places. For example, two packages sent a day apart. China>Spain=3 days
    UK>Spain=11 days, As I’m using a PO box here, I’m fairly certain the problem’s not at this end & I get similar results in France & other countries.
    Anyone found the same thing?

  7. This isn’t correct.

    Last-mile services must be provided at market rates, both within the organisation and externally (ie my bulk mailing company must be able to drop a truckload of pre-sorted mail at a local sorting office and get it delivered to houses at the same rate as the Royal Mail charges its own retail division).

    At the same time, competition regulations ban government subsidy to the Royal Mail’s retail division.

    But there is absolutely nothing at all banning the government from subsidising the last-mile bit, just as there would be nothing banning the government from paying BT to install fibre-to-the-home on its last-mile network.

    In both cases, legislation recognises the fact that these bits are natural monopolies, and so the focus of competition law is on equal access, not on banning subsidy.

    (subsidising the last-mile bit of the Royal Mail would still be a bloody stupid idea, but that’s another story).

  8. I used to pay my suppliers by cheque in the post. When the stamps went up a years or so back to 50p for just a second class stamp, I switched to internet banking. Never buy stamps now, especially as the Royal Mail franking machines often omit to frank stamps on letters I receive, and they can easily be recycled onto another letter 🙂

  9. “We’ve seen it fail in areas such as the rail industry where prices have soared and safety standards and services to customers were left in disarray.”

    Prices haven’t soared and safety standards weren’t left in disarray. Services to customers is too vague a description to be meaningful. It’s odd how anti privatisers seize on the railways as an example of the failure of the concept when the role of the state in railway operation has actually increased since the demise of BR. You’d think he would approve of that.

  10. Seeing as I’m an obvious luddite, can someone explain to me why anyone thinks fibre-to-home is a good idea? What does it give you that a copper 10/20 mbps connection doesn’t? Apart from on-demand streaming pr0n, that is?

    I can see a case for on-line distribution of movies, for example. And I personally would hate that to be at anything less than blu-ray quality. So you either set your newfangled set-top internet movie box to start downloading the night before, or you get fibre to home and stream on demand. But most people will put up with crappy picture quality already available by streaming over copper. After all, most people obviously can’t tell how bad an MP3 is since they are still selling at terribly low bit rates.

    So what is the business case?

  11. JamesV, I’ve asked various people that question and haven’t had a decent answer yet.

    A few businesses would benefit from it, but very few would get a significant benefit from it – not enough for society to benefit overall from paying to instal it.

    Which leaves a massive infrastructure subsidy for porn watchers, which is odd.

  12. The unions will be putting pressure on Miliband to commit to all sorts of things before the next election.

    So the thought occurs that if Miliband actually becomes Prime Minister he will probably try to introduce state funding of political parties in order to free himself from their control.

  13. Interesting that when businesses give money to the Tories this is corrupt even when there’s no evidence of influencing policy, but when unions give money to Labour with specific demands to benefit their members this is democracy in action.

  14. @Richard & JamesV

    This may be just be one of those peculiar aspects of the tech/meatware interface.

    There’s a lot of people I know buy very expensive kit for doing e-mail. I’ve got a 486 mid 90’s Tosh does perfectly adequate e-mail. Better, because W95 boots in about 20 seconds.

  15. James and Richard: I could run my hosting services from my house instead of paying a company in San Francisco to do it. The next increment in broadband isn’t about download speeds, it’s about upload.

  16. What’s the business case? It’s that home internet connections aren’t yet fast enough. What’s the business case for selling tvs? Everyone has a TV already, right?

    What’s perhaps less obvious is that web-pages are limited in what they can do by load-time, and as broadband speeds rise, page sizes increase (hopefully along with functionality). Something like Gmail would have been considered entirely unacceptable a few years ago when the norm was 1-2Mb/s.

    Leaving home use aside, I have no doubt that businesses are limited by broadband speed/costs at the moment in what they can do with regard to remote working, virtual networking, and that kind of thing. To get just a 10mb leased line is prohibitive in most cases – even a 1mb connection is still pretty expensive, and that won’t get you very far if you want to do stuff like remote backups.

  17. SE>

    Well, you still can’t beat a truck full of hard-disks for bandwidth. Latency can be a bit high, though.

  18. So the EU is insisting that the market must prevail. Is this then one of those instances where the EU has got it right and the UK has got it wrong?

  19. Richard @ 14,
    Actually, Amazon are competing with the Royal Mail. In 2011 they introduced their “Amazon Lockers”, which are installed in shopping centres, petrol stations, and corner shops around the country. They send their courier to the locker site, fill it up with goods, and drive off. Much more efficient (for Amazon) than doing multi-drop. It’s handy for buyers if they know they won’t be at home during the delivery times.

    This gives Amazon a serious competitive advantage against other internet retailers; and they are under no obligation to provide either universal service or indeed to open their locker network to competing retailers.

  20. I hadn’t heard of the Amazon Lockers; would have been useful back when I had a proper job.

    Although perhaps not; my nearest one is only open 9-6, which seems to miss the point.

  21. Philip Scott Thomas

    …strapping a memory stick to a pigeon’s leg

    Ah, but what is the airspeed velocity of an unladen swallow in flight?

  22. FTTH is the only sensible option for three reasons:

    1) because literally everyone who has ever said “this will be enough [x] to meet future technology needs” has been horribly wrong. “There is a world market for five computers”, “Nobody could ever need over 640kB RAM”, etc. So you’d have to be very very unwise in that context to bet on 20MB/s ADSL being “good enough” for another generation.

    2) in this context, “to do well in the OECD rankings” is a highly worthwhile objective. Because, as Dave notes, applications are built around the available bandwidth (primarily functionality, although admittedly also including some bloat) – so if everyone else is doing it, then you need to do it too or you won’t be able to run the latest generation of applications.

    3) because the copper is falling apart and needs replacing in the medium term anyway. So why bugger about with thousands of big green boxes containing billions’ worth of expensive switchgear for a solution that will be obsolete *even if demand, for the first time ever, doesn’t grow*, never mind if it does?

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