UK Postal Deregulation - Three Years And Counting
07 April 2009 by Steve Lawson - Editors Comment - © Hellmail.co.uk
Those outside the UK and even some at home, may not fully understand the timetable of events concerning European postal deregulation and just how it has resulted in the sale of a third of the Royal Mail but with much of Europe watching the UK model fairly closely, it might be time for a recap.
Firstly, I don’t offer much in the way of opinion as to whether a sell-off should be celebrated or mourned. I’ll leave you to decide that one, but the events of the last three years have certainly reshaped the industry and highlighted the difficulty of pushing a public-sector company hard, into the dog-eat-dog world of the private sector and enforced competition, to comply with a European directive that at times has lacked focus and based, as it transpires, on a completely miscalulated business model.
I honestly don’t think the benefits of postal liberalisation have benefitted customers at all. In fact its almost certainly the case that any benefits have been outweighed by the huge disadvantages including fewer deliveries and collections, late deliveries, a perception at least, that postal crime is getting worse, and that no one cares about domestic postal deliveries any more. Those sentiments may well be echoed by postal customers across Europe, I have no way of knowing, but unless you’re a bulk mailer, you will have witnessed decline rather than improvement or even stability.
I accept that this is perhaps a harsh appraisal of where we are, but the UK is so far down this road now, it would cost substantially more to go back and even undo it. No one would have imagined surely that it would ultimately have resulted in having to sell off a large chunk of Royal Mail just to make ends meet. I wouldn’t describe that as a success by any means.
Royal Mail has had little freedom to flex it’s muscles over the years with so much interference from government and tight regulation. Even with the painful introduction of deregulation it has said very little except to emphasise the losses on domestic post. Its public-ownership status precludes any opportunity for it to fight back or voice it’s opinion. Trying to stuff a public company into a commercial mould has just resulted in a cost-cutting exercise on an unprecedented scale, driven, like so many of these things, by targets that all too frequently don’t match the experience or expectations of customers - business or domestic.
Certainly postal services are having to fight hard against other forms of media but the entire thinking behind deregulating European postal services was that this was a growing market. As it turned out, the opposite has been true and even knowing that, there seems to be an unstoppable dedication to a plan that is already running into big problems. Now we have a global recession and still we stick to a deregulation plan that was based on growth, not decline and continue to pile one solution on top of another.
Royal Mail is really struggling on domestic deliveries. It simply can’t make a profit on it and where at one time business mail would have helped offset any losses, much of that business has now gone to other operators with no responsibility to the Universal Service whatsoever, leaving the Royal Mail to continue losing money on mail delivery and yet it still provides almost the entire infrastructure in this country. Even three years into deregulation, the future stability of the Universal Service has not been fully addressed or properly discussed.
When chairman Allan Leighton first started with Royal Mail, he immediately dumped a series of investments that were costing the company a great deal of money. He turned Royal Mail from a loss-making enterprise to one that made a healthy profit. He also wanted to give the workforce a genuine stake in the business but the government failed to support him on this and suggested phantom shares which Leighton knew lacked the incentive measure that a genuine share would have had. Unsurprisingly therefore, as Royal Mail began urgently cutting the dead-wood, the gap between management and the postal union widened almost to the point of no-return. Trying to modernise a business with a workforce that has no stake in its future can only create resentment and conflict, not to mention an impact on productivity.
This next phase, the partial sale of Royal Mail, which Lord Peter Mandelson insists will leave the service ‘wholly publicly owned’ is the most controversial of all. Surely, if you’re selling 30%, it cannot possibly be ‘wholly publicly owned’, no matter how many times you repeat the statement. Either my introduction to percentages at Junior school was fundamentally flawed or Mandelson is using a branch of calculus unknown even to the Open University, but 30% sold is 30% gone, however you look at it.
You could argue that the government holds the largest share, but saying it remains ‘wholly publicly owned’ is not only misleading, its untrue. The day-to-day running and who makes what decision after part-privatisation will be crucial to the success of any so-called partnership, all issues raised not only by the Enterprise Select Committee but in the Lords and the House of Commons. It also perpetuates the scenario of one foot in the public sector and one foot in the private sector that has dogged Royal Mail in recent years, seemingly at odds with itself.
As for the sale itself, its hardly a good time to sell a second-hand car, let alone a share in a postal service. The timing is not good. Any prospective purchaser/investor has much scope to haggle and the sale could mirror sales of gold reserves and a 101 other things we all seem to complain about these days.
The other side of all this is the dumbing down of consumers and whilst the government was quick to dismiss claims that abolishing Postwatch would weaken representation for consumers, thats exactly what has happened. Consumer Focus isn’t really interested if your post is consistently late. Its role is centred on ‘larger’ issues and all the really annoying gripes have been assigned to volunteers at Citizens Advice bureaus, buried altogether, or wrapped up in the statutory complaints procedure that was meant to replace Postwatch.
Postwatch was a very determined (and from experience) committed team that did much to turn around the Royal Mail’s abominable complaints procedures. They did such a good job, the government, with support from (oddly) Postcomm, made a case for its demise and it was scrapped entirely last year to be replaced by statutory codes of practice for complaint handling. In the process, the public lost any say in things like queue times in post offices which Postwatch was the real champion of.
‘Consumer Focus’ which didn’t exactly replace Postwatch but took on some of it’s responsibilities, and that of EnergyWatch, had a honeymoon period whilst it got to grips with what had been left by Postwatch. In the meantime, post offices continued to be closed as everyone looked around for someone else to blame for Royal Mail’s downward slope.
Postcomm was next for the chop after Richard Hooper’s long-awaited report suggested that Royal Mail and Postcomm could barely agree on some things and that its role should be transferred to Offcom to enable it to look at postal services in the wider context of communications. To be honest, I always felt that Postcomm has always been stuck between a rock and a hard place with having to regulate on the one hand and encourage competition with the other. On that basis it was never likely to please a soul really, and ended up being a self-made ogre, even if it was merely doing it’s job in incredibly difficult circumstances. It does seem ironic perhaps that not long after Postcomm backed the abolition of Postwatch, it was about to suffer a similar fate. It would seem that there is no guarantees in terms of employment if you choose to work for a government watchdog department…
If at this point you’re starting to get the impression that progress has so far been the equivalent of placing catering sized sticking plasters on an open wound, you wouldn’t be too far off the mark. Consumer confidence and a listening ear when things do not get resolved is somewhat muted, although with Consumer Focus already doing battle with Energy companies over high prices even beyond the fall in wholesale fuel prices, postal services are probably not high on the agenda. It could also simply be that partial-privatisation has put the entire thing on simmer once more.
The proof of the pudding is in the eating, so they say, but I have yet to get any reply from Consumer Focus whereas Postwatch not only kept regular communications, we were able to work together on one or two issues. I just get the impression that Consumer Focus is spreading itself rather too thinly and as a way to save money, this is bad news for consumers and we’ve been sold very short indeed. I don’t doubt the committment of it’s staff, but I fear there are too few to deal with what are genuine concerns for many people and in a society that now has deep mistrust for large private sector companies, this couldn’t come at a worse time.
The other problem attached to the future of the Royal Mail is where its workforce fits into all this. There are definate moves towards a part-time way of working and unfortunately, permanence diminishes with it. You can hardly blame a postie that has given his or her life to a job that they regarded as secure and the backbone of communications. For delivery office managers too, it can’t be easy trying to push through change with force.
Full potential can never be fully realised without genuine motivation and many postal workers will tell you that they don’t feel motivated at all in the current structure. Whether Royal Mail’s new chairman Donald Brydon can patch up the strained industrial relations within the company, or even wants to, remains to be seen, but one things for sure, more sticking plaster won’t fix it. If it is to be part-privatised, it has to be in the interest of both the company and its workforce that everyone has a vested interest, not one based purely on the threat of redundancy.
