In a classic case of applying fuel to a fire, Conservative shadow business secretary Kenneth Clarke said on Wednesday that his party would not protect Royal Mail’s market — which is the answer to the problem — but rather dilute it further through privatisation.
Mr Clarke’s announcement was made on BBC Radio 4’s Today programme. He said that the Royal Mail was “broke” and its future had to involve a change of culture to stop business “draining away.”
In reality, as discussed earlier on this site, the cause of the current problems inside Royal Mail is directly linked to the liberalisation of the postal market.
This in turn has caused Royal Mail’s market to be eroded by cream skimming competitors such as DHL and TNT. Both those organisations are, ironically, owned by the German and Dutch post offices respectively.
Royal Mail’s Universal Service Obligation (USO) — which is a legislative order to deliver mail to every address in Britain at a uniform price — means that the service can never be profitable.
In other words, the delivery of mail to all houses in Britain cannot be “made viable” and then sold off. Royal Mail simply cannot be privatised because no businessperson in their right mind would buy it.
It is significant that even in the United States of America, the post office remains a branch of government. The United States Postal Service (USPS) is wholly owned by the American government and controlled by Presidential appointees and the Postmaster General. If the Americans cannot privatise their post office, what chance does Britain have?
The only way that Royal Mail could ever be made profitable would be if its services were slashed and no deliveries took place outside of the major urban areas.
This would result in the loss of a mail service to millions of people, unless they were prepared to pay delivery costs outside of these major areas of around £20 per letter.
In spite of this USO and its implications, successive Tory and Labour governments have allowed Royal Mail to lose entire segments of its most profitable routes to private market competitors who have cherry picked certain areas without the obligation of having to deliver to all parts of the country.
The result has been an uneven playing field which has been disastrous for Royal Mail. It has been forced into bizarre compromises to keep up mail flows such as the mind-boggling “Downstream Access” service.
This allows private contractors such as TNT to win large mail contracts and feed the mail back into the Royal Mail delivery system at less than 40 percent of the normal delivery price.
Thousands of post offices have been closed in this austerity drive, and many more are threatened with closure.
In the midst of all this madness, the Tories have now announced that they will totally privatise Royal Mail as way of supposedly getting rid of the problem — which they created in the first place.
British people can therefore look forward to a Conservative administration which will finally destroy the proud tradition of Royal Mail and its universal delivery service which goes all the way back to 1840.
The British National Party, on the other hand, argues that Royal Mail is a much needed social service which can pay for itself, as it used to — provided that its market is protected.
A BNP government would protect Royal Mail’s market by preventing foreign competitors from ‘cherry picking’ its most viable routes.
Once that is done, the underlying reasons for the current unpleasant and disruptive strikes would largely vanish.
