Mail to be private?

A major review of Royal Mail has suggested that 20% of the company should be given to employees, as more jobs losses and rural office closures are announced and amid condemnation of plans to remove the public service's monopoly.

A three-month Royal Commission led by Sir George Bain is due to report next Friday 21st October with recommendations for the future of the postal service.
The 20% plan, which gives workers no effective control over the business and little prospect in the future of extra money unless they later sell their shares, is being touted as a 'morale booster' as more shop floor job losses are announced in the cash-handling section of the business.

The commission's report, which has been brought out on an extremely short timeline, reinforces fears that Royal Mail is being prepared for privatisation. The government will also be pressured to take on the service's pension liabilities, which are considered a major stumbling block in any prospective sale.

It is suspected that the report, rushed through by the government, is designed to further weaken the case for continued public ownership. The news backs previous evidence, which includes the planned withdrawal of monopoly status from the most profitable part of Royal Mail's operations in January 2006.

Alan Leighton, chairman of the Post Office, has led a series of restructuring moves which are backed by the commission in the last few years, including massive layoffs and changes to working practice designed to slim down the company's margins and prepare it for competition with private companies being admitted from overseas.

The loss would see bulk contracts with business post up for competition while forcing the company to keep running its unprofitable universal service. The company has fallen behind its potential competitors on the continent due to underinvestment in front line spending and senior sources have admitted that the company is less efficient.

It is estimated that £2.26bn would have to be invested to bring the service up to scratch. But due to increasingly strict service controls and changes to profit calculations, along with new competition practice, the company is soon to lose most of its hard-won profitability, making investment unlikely.

Postal union the CWU, who clashed with New Labour at the party conference last month, said: "Postcomm is rigging the market against Royal Mail. Though the regulator may not be campaigning for privatisation, Postcomm clearly has no affinity to the needs of a state-owned postal industry. There are also imposing no quality of service standards on competitors. Yet they have imposed big fines upon Royal Mail for breach of such standards."

Alan Leighton has already vocally supported privatisation and believes that Labour's manifesto pledge not to do so could be overturned.