Why Royal Mail should be privatised

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Nick LandonWe’ve been following both sides of the Royal Mail privatisation argument with interest. Those against have been pretty vocal in their arguments and today Nick Landon, Managing Director of Royal Mail Parcels, has kindly agreed to give us a different perspective and argues in favour of privatisation:

The recent announcement by the Government that it will soon be offering shares to both investors and our employees is truly an important step for us. It is also important for our customers, both individuals and businesses.

We have made significant strides in becoming a successful commercial company in recent years. Last year, in contrast to three years ago, we reported profits in our core UK business rather than losses and we generated cash rather than having to borrow. The transformation of Royal Mail is underway; but it’s by no means complete.

To understand why now is the right time for Royal Mail to move into private ownership, it is important to understand the way the postal market has changed. While letter volumes are in decline, Britain’s online retailing boom is driving strong growth in the parcels market. Around half of Royal Mail’s revenues now come from our expanding UK and international parcels businesses. Alongside this, many of our competitors are successful, privately-owned global players who have been able to invest to modernise their operations and capture growth in high-growth markets such as parcels.

The Government has acknowledged it has not been a good owner of large businesses. Private ownership will enable Royal Mail to become more flexible and fleet of foot in the fiercely competitive markets in which we operate and seize the opportunities available to us. We will have access to long-term capital to invest in our business when we need it. The Government has made clear it doesn’t have the money to allocate to Royal Mail ahead of schools and hospitals.

I have heard some people say that the service we provide small businesses will reduce. Royal Mail is very proud to provide the Universal Service and of the role we play in the economy. We make commerce happen by connecting companies, customers and communities across the UK. I want to assure our customers that the six-day-a-week, one-price-goes-anywhere, affordable universal postal service will remain unchanged. The Universal Service is protected by law – enshrined in the Postal Services Act 2011. Any change would have to be passed through an affirmative vote in both Houses of Parliament.

We believe we can combine the best of the public and private sectors. Our customer service will be a competitive advantage in the private sector. The Quality of Service regime that applies to Royal Mail under public ownership will continue to apply under private ownership. Ofcom has already specified the minimum standards under regulation.

Royal Mail will continue to offer good value for money. UK stamp prices are among the best value in the EU. Affordable prices are protected in legislation and regulation.

Our people are at the heart of Royal Mail. The current position is that all terms and conditions that apply to Royal Mail employees now would remain in place, on the same basis, were the company sold. To provide further reassurance, we will create a legally-binding and enforceable contract with the Communication Workers Union. Pay and protections could not be changed for the period of the contract without CWU agreement.

In addition, approximately 150,000 eligible UK employees will receive free shares giving them a combined 10 per cent stake in the business. This is the largest free stake of any major UK privatisation for nearly 30 years.

Many previously Government-owned companies have flourished under private ownership. We believe privatisation will equip Royal Mail for similar success.

12 Responses

  1. I wonder what sort of tickle Mr Landon will be trousering after a successful sale. I imagine it will be worth his while. 😉

  2. “UK stamp prices are among the best value in the EU.” How did our prices compare with France?

  3. “UK stamp prices are among the best value in the EU.”

    A futile comparison, the resort of a monopoly.

    I want cheaper stamp prices, not in the EU but here and now in the UK.

  4. Sadly this is not a personal article by Mr Landan, its a corporate right of reply letter that is appearing in most local papers across the country with few local amendments to make it appear topical.


    Whilst I support the right of people to hold different opinions, and I commend TameBay for allowing the other side of the argument to be aired. However, its sad that this isn’t what we have here; Its a basic “Cut and Paste”

  5. Some valid points, however I would disagree with the service it provides businesses, this has fallen sharply over the past two years for us anyway.

    Perhaps Mr Landon would like to come and spend a few days working at our business to see the impact Royal Mail have on it!

  6. I would be ashamed to head up Royal Mail Parcels, especially with the woeful ISF and Recored delivery tracking. That is borderline fraud in my opinion. Royal Mail prices are amongst the highest in the EU, discounting the failing ecomonies such as France Italy, Greece and Spain. Have you ever tried to make a claim for loss or damage? It needs something, thats for sure, privitisation may help to rid it of poor performance at Board level, for instance

  7. It’s pretty obvious to me that if Royal Mail is privatised, prices will rise and the service will get worse as investors will want to make a good return on their investment.

    Look what’s happened with the utility companies that were privatised – they make massive profits whilst consumers bills just keep on rising.

    Royal Mail is an essential public service that shouldn’t be about making profit, but instead offering a vital postal service to the citizens and businesses of the UK.

    Royal Mail is doing okay as it is; £403m profit in the last year, up from £152m the previous year. Privatisation is not at all necessary!

    Stop selling off our country’s family silver. Once it’s gone, it’s gone forever!


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