Tuesday, May 06, 2008

Royal Mail, royal mess up.

I had the enjoyable task of trawling through the Post Office review today and, as I have been saying for over a year now, the dramatic changes in the postal market have been brought about because of EU legislation.

In 2006 the UK's postal market was fully open to competition and in 2006/07 Royal Mail reported their first losses of £29 million in 350 years.

The report said that small businesses and domestic consumers haven't benefited but they weren't likely to as those areas of the market are costly. Businesses come in and cream off the profitable business post, leaving Royal Mail to fulfill the Universal Service Obligation of post box collection and door to door delivery a minimum of six days a week.

Of course, Post Office Limited is part of the Royal Mail Group who used to help subsidise the POL with the profits they made from their business post. But since they don't have those profits anymore, they are taking every last penny they can from renting out the sub post office buildings etc. and the government have to help keep POL alive with state aid, which of course they have to ask EU permission to do.

So 2,500 post offices close because the UK government cannot possibly keep subsidising the post office under the Common Market rules without substantial changes being promised. And don't forget the former article 308 which says

If action by the Community should prove necessary to attain, in the course of the operation of the common market, one of the objectives of the Community, and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, take the appropriate measures

Essentially, if you can say that something is 'in the course of the Common Market' then the Commission can do what they like, irrespective of opposition. Nice, eh? Good old democracy.

You see, post offices as such aren't a Service of General and Economic Interest which would allow them to have state aid under article 88(3) of the EC Treaty and it's only the facility which provides cash to people which is considered as such. Ergo, if these services can be performed in another way or location then subsidy is not required and the post office closes. The difference is about £50 million a year. The government has permission from Neelie Kroes in the European Commission for roughly £150 million for the next three years but since maintaining the post office network costs £4 million a week according to Alastair Darling, that leaves a £58 million shortfall.

As the former South East chairman of postwatch said to me:
It says the obvious: that the whole change and downturn in Royal Mail's fortunes is driven by the EU and there is no prospect of EU policy changing.

The other huge problem for Royal Mail is the backward looking Communication Workers Union who, in order to keep jobs for the boys, like to sort mail three times. Other countries have automatic sorting for upwards of 75% of their deliveries but in the UK it's only about 50%. For the others, the mail is collected, sorted and then thrown into sacks and then sent to another sorting office where it's once again sorted and then thrown into sacks and then driven somewhere else. Clearly, this is not a good use of money or labour.

But what really irritates me about this whole situation is that people simply aren't being told the truth. Take the comments of that rodent lookalike, Sarah Teather:
"The Government really should have seen this coming. Asking the Royal Mail to compete on the open market, without first making sure it had the resources to do so, was always bound to compromise the company.

Successive Conservative and Labour Governments have starved Royal Mail of investment. Royal Mail urgently needs a cash injection to allow it to modernise and compete with the private sector. Selling 49% of the Royal Mail shares would allow major investment without breaking the public purse.

Liberalisation appears to have had little impact on choice for the consumer and small businesses. Investment in the Royal Mail would allow it to innovate and compete properly, without one hand tied behind its back.

The Liberal Democrats who voted for Postal Market liberalisation way back in the 1990s despite these cautions being made at the time, and repeatedly since as we're now on the third postal services directive. See, fucking liars. The Tories are no better, of course, since they like to parade around their towns and villages talking about saving the local post offices when their MEPs also voted for the liberalisation and they also want to stay in the EU which has hamstrung successive governments over so many issues.

And Labour, well. For cabinet ministers to parade around trying to 'save' their local post offices when it's their lot who have overseen this huge fiasco is, admittedly what we expect of them but disgraceful none the less.

And the media? Well, they're none too keen on even mentioning the EU angle. A journalist at the BBC told me that the EU directive wasn't mentioned in the report. How they can possibly say that when I had the report in front of me and it repeatedly mentioned it is quite astonishing. I suspect they just don't like to admit that the Parliament they are monitoring and the politicians they know don't have the power they think they have. It's easier to ignore it than find out how laws in this country are really made. Just think if they had to monitor the work of the European Parliament, or if they covered the number of new laws the European Commission makes every week!

Much easier to just pretend it isn't there. So we don't get to find out the real reason behind so many decisions made in this country. And it makes me sick, it really does.


Vindico said...


Do you have a nice simple guide to this issue you can mail me? I know the directive that forces liberlisation and the bar on state aid, but is there a simple doc which outlines what is EU related and what is still within the UK government's powers, or how they have exacerbated the problem?

I want to be able to grasp tthe full picture in order to argue coherently. Tx

Anonymous said...

Last year the BBC received £300m direct from the kommissars.
Why would al-beeb mention the kommissars and ruin their gravy train?

Anonymous said...

Look at the Railway 'privatisation' to see where the Post Offcie is headed.