Brian Wilson: Royal Mail must dodge attack

On a clear day, I can see St Kilda. I can also walk a hundred yards to my local postbox and, if I reach it before 8:30am, my letter will probably be delivered the next day to any part of the country. Six days a week our house echoes to the cry of, “Post”. In other words, I am well placed to observe the benefits of a Royal Mail service which is founded on two pillars – the sheer scale of operation, serving 29 million addresses across the UK, and the Universal Service Obligation, dating back to the Penny Post of 1837 which no private company would willingly replicate. This happy state of affairs now faces the two biggest threats in its history – privatisation and the possible break-up of the UK. Those who attack the former while advocating the latter should not be given a free ride to pose as defenders of what we currently value. They are not. The idea of Royal Mail privatisation has been around for the past quarter century. Mrs Thatcher is said to have regarded it as a step too far because it would involve selling off the Queen’s head. Neither David Cameron nor Nick Clegg is burdened with any such inhibition, while Saint Vincent Cable is an enthusiastic advocate. In the 1990s, I was Labour’s spokesman on the Post Office for a while, and collaborated with Alan Johnston, then General Secretary of the Communication Workers Union, in a campaign which frightened the Tories into dropping the plan. Yet there was a basic problem – the need for vast capital investment which would allow the Royal Mail to compete with the expansionist postal services of Germany and Netherlands. Labour faced the same challenge and came up with a scheme which the unions should maybe have swallowed as the best they were likely to get, particularly with the prospect of a Tory government careering down the tracks. The plan was to sell a minority stake to the Dutch while also replenishing Royal Mail’s massive pension deficit, which still exists. Meanwhile, something remarkable happened. Royal Mail has become healthily profitable while maintaining its core obligations. In part, this was achieved by the straightforward device of increasing prices to current levels. Even though handicapped by Ofcom in pursuing bulk mail contracts, the Royal Mail is making £400 million a year, a juicy tit-bit for investors. So privatisation can no longer be dressed up as bailing out a basket case – it is straightforwardly ideological, with the bonus of offering a nice little earner for the Treasury. By pushing it through quickly, the Tories and their little helpers intend to avoid the kind of campaign that derailed it in the past. It might not be that simple, with a majority of Tory voters and the Women’s Institute lined up against it, not to mention Liberal Democrats in rural seats for whom the chalice looks particularly toxic. To be fair, I don’t doubt that my Mangersta postbox will be there for a while or that the Universal Service Obligation will be preserved in the short-term. The Lib Dems, who represent both Unst and Penzance, are not suicidal enough to surrender on that score. But it would not be long before the argument against cross-subsidy surfaced while the salami slicer quietly gets to work on loss-making bits of the business. The Royal Mail won’t say how much it costs to deliver mail to homes like mine on the grounds that they have never felt the need to break down the arithmetic within an integrated service. We should be grateful to them for this obfuscation since the answers are well worth avoiding. I doubt if a privatised company would be so reticent. Then we come to the other threat. Alex Salmond wants privatisation delayed until after the referendum so that, if he wins, Scotland’s 8 per cent share of the Royal Mail can stay in public hands. It is a debating point rather than a practical proposal, which could have been addressed by having a referendum campaign lasting one year rather than two. But it also raises the pertinent question – do we want a Royal Mail, under any ownership, which represents only 8 per cent of what we are currently part of? Scotland, we are told, would renationalise its postal service. But it could not instruct the postal service or government of a foreign state, as the UK would then be, to subsidise deliveries to Scotland. At present, the Royal Mail (even in Northern Ireland) treats the Republic of Ireland as a European destination just like France or Greece. There is no equivalent of a domestic first-class service between the two countries and the price differences are significant. For example, a letter guaranteed for delivery in Ireland the next day costs £21.98 against £7.15 within the UK and a second-class small parcel costs £15.42 against £2.60. The Royal Mail of the remaining UK, irrespective of ownership, would treat Scotland in exactly the same way. Why wouldn’t they? For every piece of mail we send out of Scotland, three come in. Increasingly, these are parcels sent by mail order firms. At present, they are priced according to the standard UK tariff because the international border which the nationalists are seeking to create does not exist. Once that changed we would be just the same as Ireland. We could, of course, have our own USO but it would stop at Coldstream. Less than a quarter of mail posted in Scotland goes to Scottish destinations. So the universe would be somewhat constrained. For gut nationalists, I’m sure the price of a stamp has the same contemptible ring as a mess of pottage. I understand that. But for the rest of us, it is just another reason to wonder – why on earth would you want to create something smaller, more introverted and pay more for the privilege? That is at least as incomprehensible as the case for privatisation. It is also something of a metaphor.