The Royal Mail privatisation has been a hot topic in the past few weeks. We’ve written about the Royal Mail sell off on Tamebay and Royal Mail themselves have put their points across. Today it’s the turn of Mario Dunn, Campaign Director of Save Our Royal Mail to set out his thoughts on the potential sale and what he foresees to be the long term effects of such a sale.
Royal Mail provides an absolutely vital part of the on-line fulfillment process for a significant majority of internet small retailers. Yet this community is extremely sensitive to postage price increases, as was witnessed this year when new pricing rules came in for small packets and parcels. Indeed significant increases in postage costs can wipe out at a stroke the already thin margins many in the on-line small business community make.
So it comes as no surprise when Tamebay recently reported that small e-commerce businesses are very worried about the prospect of Royal Mail being privatised. Despite the increase in competition in the carrier sector, privatising Royal Mail will not result in lower prices – quite the opposite. In his Tamebay blog, Nick Landon MD of Royal Mail Parcels claimed that “affordable prices are protected in legislation”. That only applies to second class stamps. Parcel and packet prices are not covered by price regulation.
Royal Mail’s dominant position in the public sector has held down postage prices for private carriers. The new owners of Royal Mail will not be impressed with its current margin rate of around 5%. Increasing revenue from its biggest growth stream – parcels and packets – will be inevitable. Once that happens other carriers will happily follow suit.
Another issue of major concern is the future of what is called the universal postal service. To you and me that is the six day a week delivery to every address in the country. It is of immense value to British business but in some parts of the country very expensive to operate. The government claims that these deliveries are protected by law. It is a weak protection. The economic regulator Ofcom is obliged to ensure the universal service is self financing. Inevitably in time it – and Ministers will come under pressure to allow Royal Mail to reduce its costs by reducing its commitments. Of course when that happens Michael Fallon an advocate of the current universal service will not be the Minister responsible.
Ministers are quick to reject this argument, but many analysts and postal service experts have said that this privatisation heralds the end of the current universal postal service.
It’s an era when we know the cost of everything but the value of nothing, and that applies precisely to Royal Mail. For hundreds of years it has been there to serve Britain’s people and businesses, acting as oil in the engine of the economy. It served us not for its own sake but for our sake.
That is all changing now and of course those who most need Royal Mail’s services are the users who will be most harmed by this privatisation. Small businesses, people in rural areas and the elderly are the most vulnerable to what is inevitably going to happen over the next few years.
It is a pity that groups such as the Federation of Small Businesses have been so quiet on an issue that is so vital to their membership. But it is not too late to let you local MP know what you think about the sale. Please visit our website SaveOurRoyalMail.org to do that and sign our petition.