What’s actually happening to Royal Mail

Today, I have read and heard a great deal about the privatisation of Royal Mail, much of it unfortunately from people who depend on the Daily Record – or, worse, the Daily Mail - for their political insights. Depending on their perspective, this is either symptomatic of a wider Lib Dem “betrayal” of its principles and the people of Scotland or evidence of weakness on our party’s part in simply backing old-fashioned Thatcherite principles of Cameron’s Conservatives.

I’m getting quite used to this line of attack and criticism. It’s predictable and unimaginative. It’s also fundamentally untrue. While being in coalition will not in itself deliver everything we want as a party (and I think people are beginning to recognise this), it is neither true that our leadership have either sold out or simply capitulate in the face of Tory pressure.

Before I explain what is and isn’t going to happen to Royal Mail, let’s take a look at our election manifesto:
“[We will give] both Royal Mail and post offices a long-term future, by separating Post Office Ltd from the Royal Mail and retaining Post Office Ltd in full public ownership. 49 per cent of Royal Mail will be sold to create funds for investment. The ownership of the other 51 per cent will be divided between an employee trust and the government.”

This is a policy I made clear my support for in a previous post: Cable plans to "privatise Royal Mail"

That is what the Liberal Democrats campaigned on, and we had sound reasons for doing so. The status quo is unsustainable and, in any case, is undesirable. Royal Mail can not survive on nostalgia and the Lib Dems have recognised this for some time, which is why the party has promoted an alternative vision for Royal Mail and the Post Office which involves certain sections being sold to private operators.

I’m not a huge supporter of privatisation as an end in itself. I lived through the 1980s and have sufficient memory of the social consequences of Thatcherism to believe that privatisation will necessarily lead to more productive and efficient services. However, it has to be realised that, in the current economic climate, there can be no scope for sentimentality and Royal Mail must become more productive and efficient to survive. This will require significant investment, new equipment and moving towards new working practices – all of which can not come from a cash-strapped public sector or Royal Mail itself whose financial position is worsening.

Labour, in its commitment to retaining Royal Mail and the Post Office network as state-run entities (or, more accurately, in lacking the nerve and courage to offend the CWU and implement the real change needed), nonetheless presided over the closure of a large percentage of Post Offices, often in rural communities. Their record is hardly unblemished and it is more than hypocritical for Labour or their supporters to criticise the coalition for taking overdue action.

To those who fail to see the need for the action being taken, I would ask a simple question: where else will the money come from?

The longer the situation went on unresolved, the worse condition the business would be in. There are reasons why the letters service is in decline and what Royal Mail should be doing is looking at imaginative means of evolving its services and maintaining its relevance, rather than hoping it will struggle on through servings of public sentiment and union militancy (a particularly nasty combination).

And, of course, there is the not insignificant issue of the £8 billion pensions deficit to deal with: something else that Labour refused to get to grips with during its thirteen years in power.

So what is actually happening to Royal Mail? Well, it’s early days yet, but the essential plan is as follows. Royal Mail (the letters delivery service) will be separated from the Post Office Ltd. The government will retain control of the Post Office Ltd, as per the Liberal Democrats’ manifesto commitment. In addition to this, the government will effectively nationalise the Royal Mail’s pension scheme. Royal Mail will be, according to Vince Cable, given over to “majority private ownership [with] a share for workers who will have a stake in the business”.

This is where Cable’s plan parts company with the Liberal Democrats’ manifesto: the commitment to retain a 51 per cent government stake in Royal Mail has disappeared. Royal Mail is to be sold off in its entirety. That is disappointing in itself, but what is more concerning is that the Grimondite notion of an employee trust appears to have been abandoned in exchange for employees receiving shares in the new company. Employee ownership is not only a good idea, but a good Liberal idea and would represent a progressive move forward.

Obviously, while I believe the plans announced by Vince Cable today are a positive step forward and are certainly preferable to the status quo, I am disappointed that our party’s well considered position on the issue has been so severely compromised. Cable has gone from advocating partial privatisation to championing 100 per cent privatisation. That’s not something I campaigned for and I have to confess to being uncomfortable about it.

However, let’s look at the positives: the Lib Dem commitment to separating the delivery part of the business from the Post Office network is now government policy. The party’s pledge to keep Post Office Ltd under state control is also official policy. The fear of involving the private sector, which paralysed previous governments into inactivity on the issue, has finally been dealt with thanks to Liberal Democrat involvement in government.

How do I feel as a Liberal Democrat? I am less than thrilled that our policy has been diluted to the point it has. Employee ownership, or partial ownership, is a key Liberal principle and must mean more than simply giving shares to employees. Total privatisation is also more than a little unpalatable. However, I’m a realist. And realists recognise that being the minority partner in a coalition government means that coalition policy will probably not bear 100 per cent resemblance to our ideas.

Instead of making claims about “betrayal” or “weakness”, critics of or colleagues in government should reflect on the political realities of coalition politics. Conservatives dislike some of our policies; we dislike many of theirs. The end result is compromise and the inevitable fusion of ideas, with neither partner winning out but a workable policy which both are willing to accept. I have no doubt that Vince Cable would have liked to have implemented the manifesto policy to the letter, but anyone who genuinely believes he could do so in the face of his Conservative counterparts in cabinet is utterly deluded.

This is not the complete victory we would have liked. But it is another example of how the government is better for Liberal Democrats being at the heart of it.