Royal Mail Liberalisation - What a Debacle

In one of my reference dictionaries, it states that a debacle is “Something that ends in a disastrous failure, esp. because it has not been properly planned.”

The liberalisation of the Royal Mail monopoly in 2006 is certainly that: motivated by political dogma, rather than planned with the long-term future of Royal Mail in mind.

It allowed private operators to do the all of the processes involved in the collection, sorting and delivery of mail - with the option of still using Royal Mail to do the final walk-up-the-path delivery (for a fee).

Sounds great, but in practice has meant that all the mass mailings from businesses (and more and more government departments) where Royal Mail used to derive a significant element of their profits, have been taken over by the likes of TNT, Business Post etc. YET, Royal Mail is still required to maintain the universal postal service.

In addition, I understand that the bean counters who worked out the commission earned by Royal Mail for providing the last walk-up-the-path bit was flawed - Royal Mail just about breaks even for providing this bit.

So, we have private companies processing profitable bulk mail and using Royal Mail when it suites them for the last bit.  And what has been the result for us, the general public:

• Royal Mail having to increase the cost of first and second class postage that you and I have to pay at a rate well beyond the rate of inflation (In only two years there has been a 30% increase: second class has risen from 23p to 30p; second, from 30p to 39p).
• Government Ministers harangue us nearly every week that Royal Mail is insolvent, that its operations hardly covers its running costs.
• A huge pension deficit exists that needs private money to make it solvent.

Seems to me that the simplest solution to Royal Mail’s predicament will be to re-impose the monopoly it had - thus it’s turnover will increase significantly, thus contributing greatly to its profits (as most of its fixed costs are already met) and it will then be able to make decent inroads into the pension deficit by making contributions out of the extra revenue generated.

This entry was posted on 05/05/2009 at 01:47 pm and is filed under Business, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.