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Royal Mail: The rescue is in the post

Robert Peston | 10:10 UK time, Monday, 29 June 2009

The full transcript of George Parker's interview with Peter Mandelson begins like this...


"Do you want to start by paying tribute to Michael Jackson, Peter? Everyone else seems to be doing that."

Peter Mandelson:

"I'm not absolutely sure who Michael Jackson is. Is he the...he's called Jacko, isn't he?"

No comment required on any of that. So let's move straight to what the first secretary told the FT's political editor about his cherished and controversial plans to sell a stake in Royal Mail to the private sector.

Peter Mandelson

Here's what Mandelson said:

"I'm being jostled by other bids for the remaining legislative days in the Commons before the summer."

What he's saying here is that his plan to legislate before the summer recess for the partial privatisation of Royal Mail is being put in jeopardy by the alleged demands for parliamentary time for other bills.

Hmmm. Many would feel that a minister with Mandelson's conspicuous authority would have been able capture a bit of parliamentary capacity were it urgent to do so.

Which is probably why he elaborates:

"[T]he main the unfavourable market conditions for an equity sale".

And he puts it more starkly a little further on:

"[W]e have not had the successful bidding process that we envisaged accompanying the passage of the legislation through Parliament".

In other words, the auction of a stake in Royal Mail has been a flop. There's been just one bidder, CVC Capital Partners, whose initial offer is seen by the government as undervaluing Royal Mail's long term prospects.

Now it's something of a mystery why Mandelson - who's savvier about markets than most ministers - was ever persuaded that it was a cracking idea to auction such a substantial asset when the availability of credit has rather dried up (not a great secret this) and when the global economy is suffering its worst recession since the 1930s.

Something of a longshot-kicked-the-bucket wager that one.

So those who oppose bringing the private sector into Royal Mail have acquired a few more months (at least) to persuade Mandelson and Gordon Brown to drop the partial privatisation in a definitive sense (which the first secretary insists he hasn't done).

None of which really matters to Royal Mail's directors, who are agnostic about whether the likes of the private-equity firm CVC should be brought in as a so-called partner.

What will have horrified them was something else uttered by the first minister:

"The government remains of the view that implementing all three main recommendations of the Hooper review is the right way to go for Royal Mail, and these are a package: reform of regulation, bale [sic] out of the pension fund deficit and...introducing the minority strategic partner. We will not do one of these without the others."

In other words, the things that Royal Mail's management really wants - regulation that takes more account of the competitive pressures its faces from e-mails and the internet, and removal from its balance sheet of its crippling pension-fund deficit - will not happen till market and parliamentary conditions allow a partial privatisation.

Grown men will be weeping in Royal Mail's boardroom, because it's now highly likely that two life-or-death uncertainties about its future will not be resolved till after the election.

Which will damage its ability to make basic business decisions.

And, in respect of the pension problem, there may have to be a last-minute scramble to avoid financial disaster.

Having launched a formal revaluation of the fund in April, Royal Mail has till the summer of 2010 to agree a formal repayment plan for a deficit that's expected to emerge at a company-crushing £10bn. The 15-month timetable is apparently a legal requirement.

So the way it looks today, the victor in next year's general election will have just a few weeks to negotiate how to protect the retirement savings of tens of thousands of Royal Mail employees and also lift a pensions liability from the business that would by now have bankrupted any private-sector company.

Call it Mandelson's gift to his successor (which could, in theory, be himself).


  • Comment number 1.

  • Comment number 2.

    This is yet more dishonesty from the Labour Government. They are just clinging on til the next election when all the hard decisions will have to be made by the tories, who Peter and his friends will then blame for the mess.
    These decisions are being made in the interest of the Labour party and not the country.
    Together with Gordon's Big Lie about public spending, this government have lost all credibilty. We really need an election, these decisions cannot be put on hold for 11 months. It will be really hard to grow anything in such scorched earth once GB is finished with the country.

  • Comment number 3.

    A state institution in trouble? Let's knee jerk in the private sector again. If the government would stop and think of how much trouble is caused politically by past and proposed privatisations one would think they would be more cautious. Transport (rail mainly) energy (stupefying tariffs) PFI in schools and NHS, absurdly expensive consultants, NHS IT even exam marking etc.
    There is a need to develop a long term strategy of downsizing the Royal Mail and bringing in 21st technology but why have a contract in the way. Obviously the Govt do not think much of the current management so why not buy in those who are willing to reform and improve this vital public service and earn the bonuses paid.

  • Comment number 4.

    "Grown men will be weeping" ?

    Surely, grown men will be counting their money and not giving a ****.

    I believe that's how it works.

    It's the rest of us who should be weeping. Some of us are.

  • Comment number 5.

    The Post Office pension deficit is like watching a car crash in slow motion. Put simply it is too big and a bail-out awaits, the only query is over the mechanism/the terms of the 'deal'.

    It would be a shame to see part/whole privatisation merely on the basis of our having to offset the cost to the tax payer of the pension deficit, particularly at a time when the sale price will be limited to say the least. But then the reason for the deficit is that there has been a chronic lack of investment over such a long period- so really its the governments fault. This hasn't just suddenly happened, though the market conditions will have made everthing worse.

    Unfortunately asset prices, market conditions and cost;benefit analysis all seem a step too far for our unelected leader- just look at the complete slash and burn policy regarding sale of the national gold. Unbelievable incompetence.

    So lets not assume that an undervalued sale won't go through, it isn't about economics, its about it just might.

  • Comment number 6.

    Lord Mandelson is now the second Minister (during his interview on Today) who has admitted that Labour are "re-prioritising" spending. So we now know for definate that the "department of the enviorment" has a reduced in real terms budget (but is spending more on flood defences, and there fore a lot less else where within its budget) and as of this morning that funds are being taken from the "Home Office" and the "department of transport" budgets to pay for social housing....

    So for 3 major departments Labour has now admitted they will be cutting budgets in 2010 onwards.

    Looks abit like Aprils budget document has actually been read by two Ministers. Brown must be spitting tacks about the reverlations as he is still saying there are no real term cuts!

    Also given that Lord Mandelson stated today that forcasting behond 2010 would be like picking numbers out of a hat, can you ask him, Brown or Darling how many years ahead Darling will be forcasting in Novembers pre-budget statement and if its after 2010 why he/they can not do the next spending round till after the election.

  • Comment number 7.

    So much for Gordon Brown's boast about needing to remain in power to take the right actions etc etc in the interests of the people.

    Please let's have a general election and the opportunity to change the Government.

  • Comment number 8.

    It's a serious problem. They are delaying important decisions which are needed right now so as to blame the next government. They are causing more problems for the UK to give themselves a strong hand after they lose the election.
    Will we let them? They have no idea how upset we are. We need an election now. Or at the very least a government who will try to get the problems they created sorted.
    I am amazed these people still have jobs. In any other industry they would be booted out immediately.

  • Comment number 9.

    I don't think that this debate about the Royal Mail is particularly about the political will, or not, to find a business and financial solution. Yes, I agree that there are financial considerations, however this has more to do with how the British people, i.e. the electorate, will respond to the privatisation of the Royal Mail.
    The Royal Mail has a special place in the hearts of the British people. They are somewhat strangely nostalgic when it comes to some of the more well-known companies. We saw an expression of this nostalgia with the closure of Woolworths, the rebranding of Bradford and Bingley etc.
    From a business point-of-view it appears clear that the Royal Mail, as it exists, is simply no-longer viable. People have to accept this. The disappearance of local post-offices, particularly in rural areas, show that generally their services are not being used. If they are not used then, as a company, it can no-longer continue to be profitable.
    So what is the alternative?
    There are a number of private, commercial, parcel distributors who have for many years provided a letter service for businesses. I have no doubt that given the right financial incentives they would be prepared to take over parts of the Royal Mail. However from a logistics point-of-view maintaining the daily, home delivery service may be difficult, especially in rural areas.
    Hopefully the Royal Mail will survive in some form, but given the current political and economic situation, it is unlikely.

  • Comment number 10.

    Pretty standard policy by Labour - the priority is to make things as bad as possible for the new government rather than do what is right now.

  • Comment number 11.

    Internet fulfilment is a huge growth opportunity for the Royal Mail brand that would bring with it the opportunity to expand the Royal Mail through European partners across our continent. There are few brands as valuable as Royal Mail.
    With its many properties scattered across the UK, Royal Mail could enable local pick-up points for large items - a much needed service - and maybe use spare capacity in 'returning' supermarket distribution vehicles for local parcel pick-ups. Realising those opportunities will require great entrepreneurship and investment in the up-turn that's coming across Europe.
    These and other business development opportunites must remain on hold until banks and others are fully lending again. As they will be fully lending this year. And as securities markets recover their values, Royal Mail's pension fund values will rise strongly too. Which will reduce the investment needed and go a long way towards restoring their sufficient value.
    These are opportunities for Royal Mail growth that will make much more sense of the re-structuring plan when it's time to re-consider that. As with lots of businesses, Royal Mail's investment opportunites are on hold whilst bigger issues are secured. For Government there are some greater social priorities, such as getting employment growth back on track . That's the correct order of priorities isn't it?

  • Comment number 12.

    But privatisation would not have solved the problem of the pension deficit. AIUI, the proposal was that the government would add the Post Office pension liabilities to the other unfunded public sector pension liabilities and sell the resulting liability-free operation as a private monopoly. So the only people who have lost out by this postponment are Mandelson's friends and the GPO management who hoped to make a fast buck at the public's expense. The rest of us are undoubtedly better off with the existing arrangements.

    Taxpayers, GPO empolyees, and post customers will eventually have to share in the pain of reducing the pension deficit. The only difference between that and the black holes of other public sector pension schemes is that we actually have a figure for the GPO pension defecit.

  • Comment number 13.

    I see David Cameron Has offered up Opposition Debate time in Parliament to help PM (no not the Prime Minister) get the Royal Mail Bill through the commons.

    No excuse now Peter?

  • Comment number 14.

    Really, I sometimes wonder if Labour politicians genuinely believe that they are serving the people of the UK and not just themselves.

  • Comment number 15.

    Isn't the only commercial partner mentioned as bidding for the Post Office (CVC), the same company that bought the commercial rights to Formula 1 motor racing and now takes 50% of money out of the sport whilst giving nothing back except a push to more and more exotic venues with lower and lower ticket sales. Look where it has taken them!

  • Comment number 16.

    Ah, just what we need - STRONG leadership and MORE visions!!!!!!!!!!!

    Get OUT NOW - think of the UK for once - not yourself or the Liebour Party. We, the UK taxpayer have really had enough of lies, sleaze, and cheating, and that is just Mandelson.

  • Comment number 17.

    Dear Mr Pesto,
    Your comment about 'Whacko jacko' was not necessary was it??
    Surely a more appropriate reference would be Karen Carpenter and her moving song 'Mr Postman' which was allegedly written to bemoan the demise of the Postal Service.
    Anyway this will offer some guidance
    All the best and please please please do keep on inventing new types of Pesto. I am getting tired of the simple basil / pine nuts formula.

  • Comment number 18.

    If you substitute British Government for Royal Mail the whole article makes perfect sense and sums up the serial incompetence of this incapable gang of shysters.

    This must be the only political party in British history that is hoping and praying that it isn't re elected, they haven't managed during a period of growth and they haven't the faintest idea how to get themselves and the country out of this huge hole they have dug.

  • Comment number 19.

    Mandelson is completely correct in not trying to implement a half-baked solution of the Royal Mail's problems. They can only be solved simultaneously.

    Indeed the Royal Mail needs to confront the legacy of its past and redefine its future together. They should consider a completely new business model - there are examples already out in the marketplace which make the solution obvious:

  • Comment number 20.

    I will translate Mandelson's comment for those not au fait with the lingo used.

    1) "I'm being jostled by other bids... ". You think I'm all powerful but I'm merely one of many ministers. He is trying to appear all "umble" like Uriah Heap but really he has woken up and smelled the coffee abut just how unpopular this is. This is a weak attempt at defecting attention away from a u turn.

    2) "The main issue is the unfavourable market conditions....." We thought we could sell it off to use the money as an electoral bribe but no one wants to buy it.

    3) "We have not had the successful bidding process". See point 2 immediately above. To Mandelson's apparent surprise no one wants to touch Royal mail with a barge pole.

    4) "The government remains of the view...." What he is really saying is "This isn't a u turn. Honest! We need to do all three things at once. It's better not to do things half heartedly."

    Oh and as for the Micheal Jackson comment well if that is true it just shows how detached from the real world he is. Or was it a very feeble attempt at humour?

  • Comment number 21.

    Ahh! the quickening time-bomb that sits under us all - the public sector pension deficit. When are the political parties going to start talking about the very tough decisions that have to be made on defined-benefit public sector pensions. The liabilities need to be closed down quickly, by whatever means possible - this will be Cameron's 'Thatcher moment' with the union movement. They have to be converted to defined contribution schemes as soon as possible under a new Government. I can't save for my own old age, so why should I be paying for public sector guaranteed pension benefits. And before anybody comes back with the "lower pay in the public sector" line, I don't buy it. It should be one rule for all - no pension apartheid.

  • Comment number 22.

    The idea that Lord Mandelson would allow himself to be non-consensually 'jostled' by anyone else in Government is hilarious !!

  • Comment number 23.

    The now cancelled spending review would have said two things. Firstly that the governments projections in the budget were overoptimistic (for 2010 oecd predicts 0% growth vs 1.5% in budget, and the 2011+ figures of 3.5% look at least as wayward) which most people said at the time. And therefore secondly that instead of the 7% cuts all round we were more likely to have to make 10-15% cuts. So the government thinks that it's better not to say anything and hope nobody notices.
    Isn't it time we had a little more enterprise from the BBC who's attention I can't believe this has escaped. Surely we have to start exposing this government of clowns.

  • Comment number 24.

    More proof this country needs an election now.
    It's like being diagnosed with cancer, but told the treatment which always makes the illness worse...can't start for year.

  • Comment number 25.

    Certainly no surptise then! Everyone did wonder what Mandelson was up to in the first place trying to drive through something he knew would upset labour's own backers, the unions.

    Not the best time to be doing that just before an election campaign when the coffers are already empty.

    The problems have certainly been highlighted and are now being kicked into touch for the next government to struggle with. Obviously he is now accepting that labour haven't a cat and dogs chance of winning an election.

    It would be highly beneficial too if he puts away his thesaurus and stops trying to find more complicated meanings for the word 'CUTS'.

    The simple message is always the best message as long as it's an honest one.

    Like all the other major decisions that should be made but labour bottle out of the longer the time delay in sorting these out the worse the problems eventually become.

  • Comment number 26.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 27.

    New Labours mission statement should now read:

    "Doing nothing for the country and taking no blame for what we have done wrong - decisively!"

    Everybody knows that all tax will have to rise whether directly or indirectly and spending will be cut either by stealth or under some initiative.

    So Royal Mail is yet another headache that shows they hope the Tories will take the blame and there will be a new management for Labour - New Old Labour or whatever.

    Meanwhile I still wonder what McBride will say once he surfaces and maybe the general election is not so far away - if Brown knew about the email smears he has to resign and Labour would have to go to the polls.

  • Comment number 28.

    Sigh! the words pissup and brewery spring to mind!

    I cannot believe that we are paying this shower anything for such poor planning and decision avoidance!

    Lets hope that the reprieve is put to good use by the post office to find a way of making a new role for itself in a changing market.

  • Comment number 29.


    "Now it's something of a mystery why Mandelson - who's savvier about markets than most ministers - was ever persuaded that it was a cracking idea to auction such a substantial asset when the availability of credit has rather dried up (not a great secret this) and when the global economy is suffering its worst recession since the 1930s." mystery - Mandleson is simply doing what he's been told to do and the person giving him orders is an idiot (it happens a lot in the normal world - we call it "work")

    Just this morning I was asked to do something which is completely ridiculous, but I did it anyway because "I get paid to work and not to think" - however I have made sure I can disassociate myself from any future chaos that wil befall this plan.

    I suspect Mandleson is thinking the very same...

  • Comment number 30.

    This is the shape of things to come across our economy. We need to brace ourselves for the economic shocks that will now be hammering our society for many years hence.

    Royal Mail represents the imminent zeitgeist: a forthcoming period when individuals, companies and possibly even whole states will be sinking under catastrophically high liabilities wracked up during mankind's era of cheap energy and, therefore, easy money (low-cost debt).

    Since we've now all but reached the end of the said era of cheap energy, and with it the automatic assumption of aggressive, unsustainable economic growth, year after year after year, the coming decades will be all about the great unravelling and unwinding of monstrous levels of debt. It won't be pleasant.

    It's surprising just how few people have yet to grasp fully the looming and potentially catastrophic socio-economic consequences of the mind-numbing levels of debt and future liabilities that now exist in households, companies and nation states, and without any realistic prospect for servicing them or paying them down. What is more, we shall discover that without cheap energy we shall no longer be able to steal money from our children and grandchildren to live, by definition, unsustainably today. Perhaps this is why the Government and our political elite generally are so coy about their future spending plans these days? Any organisation facing bankruptcy can tend to exist in a state of denial until the eventual reality of having no cash hits home; whereupon, all hell can break lose.

    Royal Mail, with its "pensions liability ... that would by now have bankrupted any private-sector company" is indeed the shape of things to come for all of us. Pity the politicians have yet to grasp this, still less are they able/prepared to do anything about it.

  • Comment number 31.

    The Royal Mail has been a victim of this government's belief that market economics are the solution to everything. The Royal Mail by definition is a state institution and needs to be treated as such. However, the government has allowed its profitable parts to be sold off leaving it with the loss-making bits and then we are left puzzled as to why it has no money. The entire business is a clear statement of utter and total incompetence.

    With regard to public sector pensions St Vincent of the Cable has proposed that the entire liability of around GBP 1 trillion be subject to re-evaluation as it is just not fundable as it stands. This is yet another unpleasant reality that this government has failed to grasp.

  • Comment number 32.

    PENSIONS says it all really why limit it to Royal Mail and would have effectively bankrupted a private company.

    PENSIONS whom was it that destroyed them then ?

    Like the rest of the public services PENSION level are at an unsustainable level for the company of UK PLC.

    whatever the lefty luvvies say , you can only have what you are prepared to work hard for as an individual or as a country.

    It reminds me of a barry white(???) song

    When the going gets tough

    This is going to be a 3 term parliament to sort this out. it going to
    need a party that can do basc maths for a start, Mr Mickorber

    For 12 years Nulabour have sovietist large tracks of the country dependant on first line direct governement spending.

  • Comment number 33.

    Royal Mail has needed a kick in the bottom for many years now. But it doesn't need privatisation or a change of management, it needs a radical change in the way it operates.

    1) Increase the cost of postage. They make losses on ordinary items of post, and it seems the only way they earn money is off Recorded/Special Delivery. So I propose a price freeze on Recorded/Special and raise the cost of ordinary postage by c. 25%. First class postage for an everyday letter would cost only 50p, Second Class 38p.

    2) Decrease the volumes of junk mail. This would happen because of the higher prices of postage. Companies in general would find other, greener ways of communicating with customers.

    3) Make redundancies in line with performance. With lower post volumes, less staff are needed. There is less to go wrong. Royal Mail can at least hold onto the better staff, to create a better work ethos going forward - this is one of the problems they seemed to have had in the past with the attitude some employees have had to working at Royal Mail.

    4) Look for other ways to do business. There will come a time when post will become more or less obsolete, becoming a shrunken niche market. Its heyday has passed. They need to get involved with other markets to make money.

    The unions, naturally, will be outraged, as is the case with any type of change. But companies, private or public, must be aware that they have to evolve or die.

    (rant over)

  • Comment number 34.

    bluemorbius you are spot on, in 5 years time public sector pensions need to be on the same basis as private sector - i.e non existent in terms of liabilities to companies or govt for final salary based schems. Brown is largely to blame for the state of private sector pensions with his ACT raid back in 97, but of course mortality rates would in the long term made final salary schemes unsustainable anyway. The inequality between private and public sector cannot continue, the cost is prohibitive and thanks to Brown's irresponsible "investment" (er, that will be spending then) we now need a very drastic (10-15%) cut in public spending to avoid bankruptcy

  • Comment number 35.

    Why not "outsource"/hive off the pension funds/liabilities of the Royal Mail and other public businesses eg civil service etc? Give them to a business which runs pension schemes and let the Royal Mail run its postal business. HR functions are often run by other companies who specialise in this area and many private companies similarly outsource various other functions to specialists.

    I'm sure the Royal Mail bosses would be able to function better in managing the postal services if this mill-stone were removed from around their necks.

  • Comment number 36.

    So why Privatise the Royal Mail?

    If they want it profitable, why not undertake the changes that would make it so whilst it is in the Public Sector and then keep it and its Profits to benefit the Taxpayers.

    Shades of the GPO and British Telecom.

    Bearing in mind what an unholy mess a the Private sector has made of the British economy, why would anyone want to let it ruin the Royal mail?

    Just a thought, does Cuba have a Pension crisis ?(No?).

    Where are the policies to create high quality final salary Pensions for the Private sector workers ?

    Why should we live in a top heavy society where only the Company owners can look forward to a decent (probably early ) retirement?

    Also, where are the plans to bring Britain out of recession?

    Will Britain export it way out or Inflate its way out ? Or just spiral further downwards ?

    You know, if I won the Lottery, I would probably move (I hear Canada's very nice).

  • Comment number 37.

    #30 moraymint

    You are one of the desperately few people on this blog who can see that what lies ahead is, and can only be, disaster. Most people still think it's 'just another recession.' This one will see the end of civilization as we know it, and certainly of the socio-political and economic systems we know.

  • Comment number 38.

    "# 33 The unions, naturally, will be outraged, as is the case with any type of change. But companies, private or public, must be aware that they have to evolve or die."

    I agree with virtually everything you say but how best to deal with the unions? as an ex-Royal Mail employee i think Adam Crozier had done really well during his period. However he seems to get critisiced left right and centre (amazing given some areas which had massive losses made profits under his watch). I know that RM staff are used to a certain level of "Spanish" working practices (eg in my time people clocked off 2 hours after they actualy left work). Change does not come easy to them - indeed they will fight change all the way.

  • Comment number 39.

    29. At 12:59pm on 29 Jun 2009, writingsonthewall

    You work in IT? The same happens here every day, poor quality management who are not technical and subsequently do not understand the consequences of their decisions ;-)

  • Comment number 40.

    Hmm, interesting to see the coupon clippers are still out trying to destroy Public Pensions !

    I guess they will be able to have Tax cuts and more unearned income to live off.

    More Poverty all round !

    It makes the Servants cheaper !

  • Comment number 41.

    The Internet may have helped the fall of the Royal Mail with emails, though it might have helped it survive with the amount of people buying and selling online.
    I've seen a number of online shops deliver packages via the Royal Mail, and when i sell items on eBay I'm always met by a massive queue of fellow sellers with packages to mail. (it can be harder to deliver via courier company when your not a business)

    It's a shame an increase in package delivery hasn't saved the Royal Mail. Though I hope it failed not because of a lack of utilizing the new market, but because it didn't supply enough of an increase to counter the other problems Royal Mail faces.

  • Comment number 42.

    The pensions liability will be solved when a nasty (probably foreign) company says they will buy it but NOT with the pensions liability left in place.

    Nobody will pay a bent penny for the company sans unfundable pensions either, because as soon as it isn't run by the government one expects a fairly immediate vote-winning clamp down on junk (and other pointless) mail delivery(which is a major part of what money it's profitable parts do make).

    So the Govt will sell the Post office for less than one bent penny and keep the pension liabilities to add them in to the current public sector ones. These are about to enter the 'problem now' tray (from the 'some future problem miles ahead' tray) as the attempt to fund the retirement of the bulk of the Baby boomers has to begin any month now.

    What are the Bond yield rates on long dated Gilts doing at present??

    Presumably re-assured (or perhaps not) by Peter Mandleson's assertion that's it's impossible to forecast what growth will be and what the perfomance of the economy will be in 2011 (And all these years here's me thinking that was what economic forecasters did---with 'it being tough' and 'maybe being wrong' not really being excuses to give up on the entire process.)

    Hopefully we can now beginning culling all the economic think tanks, and Whitehall mandarins meant to be managing the country--- if their jobs are suddenly too difficult to do, then like miners in a suddenly unproductive colliery, shouldn't they be freed from their unproductive jobs and re-assigned to productive and profitable ones? Thereby also cuting Govt spending in non-front line jobs.

    This two roomed conversation between the Government on the one side, and the, Bond markets and the electorate, (though separately) on the other---is likely to end when the Bond markets give their verdict on the proposal to wait another 12 months before addressing the real problems that ought to be being addressed now.

    I suppose the only question pre-occuping Mr Mandelson is whether that verdict arrives before or, preferably, after the election

  • Comment number 43.

    41, I know exactly what you mean, I spent 40 minutes in a sub post office last Wednesday afternoon waiting behind the likes of you with your Chinese laundry bags full of small packages!!!

  • Comment number 44.

    Is this story the end of the end of the financial Instrument known as a 'Pension'?

  • Comment number 45.

    This is the problem, the government have run out or ideas or cannot action them while waiting for next election. We need more imagination around how to raise more money to pay of the massive debt and no doubt that means more selling off government assets to private funds. That's the ultimate price of running big government debt even before the mega bust. The other action the government should admit to is raising pension age to 70 - and again they need to be honest with the public this is the only way to make the books balance.

  • Comment number 46.

    Royal Mail willnever be fully profiterble as long as Royal Mail as to let it's compeditors use it's delivery service at less than full cost of that service

    most of the Royal Mail compeditors could not make a penny if the had to employ there own staff to deliver the mail themselves

  • Comment number 47.

    42 "Hopefully we can now beginning culling all the economic think tanks, and Whitehall mandarins meant to be managing the country--- if their jobs are suddenly too difficult to do, then like miners in a suddenly unproductive colliery, shouldn't they be freed from their unproductive jobs and re-assigned to productive and profitable ones? Thereby also cutting Govt spending in non-front line jobs."

    Could start off with that waste of time the vacuous and fatuous Peter Mandelson. His "Interview" with Evan Davis this morning was a complete waste of airtime.

  • Comment number 48.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 49.

    Royal Mail made a profit of a quarter of a billion pounds during a recession, and the only thing it needs rescuing from is unfair competition where we have to process and deliver competitors' mail at a loss, which is what we are currecntly forced to do.

  • Comment number 50.

    It is interesting how over the last thirty years the British Public has been divided and conquered !

    First the Free Market worshippers break the Unions, remove import restrictions and enable the undermining of British manufacturing.

    Next they win round part of the Public with Share ownership and House ownership.

    Then as the Free Market disaster continues we have a series of crashes and economic re alignments which leaves the general populace that bit poorer each time.

    And now the ordinary working people are to be deprived of any chance to accumulate a worthwhile pension.

    Next will be the NHS.

    No more free healthcare.

    In fact every benefit brought in after the Second World War is going to be taken away. Thats some ones plan anyway..........

    Whatever happened to rule Britannia ?

    Let me guess, it sank ?

  • Comment number 51.

    48: Shurely you mean new model Thatcherite ?

    Labour has not been Labour since it had TB.

  • Comment number 52.

    Dishonest regimes are always found out in the end, it is just a question of whether people are able and willing to replace them with something better.
    The gods always back an underdog if the cause is just.........

  • Comment number 53.

    I'm sorry why is everyone bleating about the Royal Mail now! If you don't use something then it cannot pay for itself and for the things it is responsible for-so whose fault is that the public-simple economics the product has been there but not used so why continue with it?
    For the Conservatives and David Cameron coming out with the line about the dishonest govt-lets get real this clearly means that they have no real opinions to put into place apart from name calling and God help us if that lot get into power they sold everything else off!

  • Comment number 54.

    I agree with with the combimation of EuroSider and moraymint comments above. In summary we British are hypocrites. We want our cake ... and all that. All government departments should be run with an underlying subtext of efficiency, economy and effectiveness ... the equivalent of profit in the private sector. Unfortunatley the unthinking public remain with some romantic notion that the post office, the NHS, etc. at some point in history provided the 3 Es or when not 'great service'. Never has. Never will do. Too much political intereference at both national and local level. We British must accept that in all business there is collateral damage. We either accept it in a planned form or reap worse benefits when we ignore it. I don't care what political hue you are these are basic realities in this age of unreason.

  • Comment number 55.

    Well I for one won't shed any tears if the plan to bring in a "partner" for Royal Mail comes to nought. I fully accept that the organisation has something of a problem both with its pension fund and its "current account", but the simple solution to that is to increase postal charges to figures closer to some of our EU partners (and probably others as well) whose postal services are in a stronger financial position.

    Now many may throw up their hands in horror at the thought of such an increase, but consider the impact of bringing in a partner organisation. They bring in capital (where that goes is unclear) but sooner or later (the former is more likely) they are going to want to see a return on their investment. The only place that can come from is revenue, (i.e. postal charges) so if there has to be a return to an investor on top of normal running costs then it could only be found by, er, increasing postal charges.

    Of course there is always the option of making sure that RM is working efficiently; it is always popularly rumoured that it is not, but it is unfair to comment solely on the basis of popular rumour. But again any inefficiency can be just as easily dealt with with RM as it stands now; it should not need an external company to sort it out, unless of course their purpose is to take the blame when the CWU find they don't like what is being proposed.

    Of course the idea of bringing in an outside company may have more to do with some EU Directive than it has with changing RM from a loss - making into a profit - making organisation, but with the EU being about as popular as a notifiable disease (at least in the UK) no - one in government is likely to tell us about it, are they.

    The Royal Mail has for too long been seen as a "social service" with charges being held below where they ought to have been for too long, but as that is a function of government policy I don't expect any startling admissions there either.

    Now any or all of the above may be complete tosh but if there is a really convincing argument for bringing in another company I have yet to hear it. Anyone here know what it might be?

  • Comment number 56.

    ahoy there mateys; hilarious connection between Whacko Jacko and the Dark Lord - well done Peston

    there are certainly similarities - both live (lived) in a bubble and were entirely separated from reality; the tarnished and tragic genius of it all etc etc

    anyway, regarding the Post Office, as #36 supercalmdown and several others sensibly point out, they should stay in the public realm but simply be allowed to have a sensible business plan

    in other words, let them charge a sensible price for a stamp! it is hardly rocket science!

    and the pensions problems will have to be faced for not just the PO but all things

    the private sector does not have the answers Mandy; anyway looks like all your plans are scuppered and it's just a matter of twiddling one's fingers between now and the election in 11 months' time; time will drag slowly for a man of action like the Dark Lord

    #30 moraymint - you have a strong argument but the whole point of following an unsustainable and reckless course is to stick to it to the end and beyond, until you go right over the cliff and take everyone with you; so our politicians and business leaders will take one more hit of smack or Demerol or whatever and give it one more try before dropping dead on the eve of their latest world tour

    more Jacko - Mandy comparisons later

    Canada is lovely by the way and the Great Lakes piracy is lucrative; did you know that Canada is now one of the world's leading sources of drug smuggling - official US govt ratings!

  • Comment number 57.

    I posted several weeks ago when this dumb idea raised it's ugly head:

    'Who the hell in their right mind is going to buy a lump of a failing business with a black hole as a pension fund?'

    Mandelson has obviously been working on the problem since the question now is:

    'Who the hell in their right mind is going to buy a lump of a failing business with a black hole as a pension fund for an investment which is acceptable to Mandelson?'

    Well credit where it is due. He has secured his unacceptable offer which gives him a mechanism to wriggle out of what was an absurd idea in the first place. How long before he stops spouting on about 'Common's time' and remembers that one of the prices you pay for ministerial office without the inconvenience of consulting the people is that you don't sit there?

  • Comment number 58.

    thanks to recent scandals the sale of the post office is off becouse the government fear the back handers some ministers want will be noticed and they will cause more problems.
    sadly it will not stop them selling this countries assets out from under us with out asking but who are we to judge as we the voters elected this current bunch of MP's.

  • Comment number 59.

    Labour want to dodge the issue right now as they might be defeated on a vote. They are dead, but want to kill everything before they breathe their last, and leave us even weaker after they are gone. It would be a miracle if any member of the present government had the guts to spell out the truth before they totally destroy the country.
    They will all be ok, off with their secure pensions, all the money they have made whilst being MPs, and into some lucrative job. The only thing this government will leave behind is a very wrecked country and a foul smell.

  • Comment number 60.

    #58 delminister: "...sadly it will not stop them selling this countries assets out from under us..." *Very* naughty of you to tell it like it is; the correct expression is "inward investment".

    Come and join the rest of us on the naughty step.

  • Comment number 61.

    The Paws of Gordon's boss. Lord Meddlesome of Hartlepool and Brussels are all over everything at the moment and he will now lie it low and slink in the grass until a more appropriate time (For HIM)!

    How we have allowed a twice disgraced MP to become THE UNELECTED Supreme Commander of Great Britain PLC shows how defencless the British people are.

  • Comment number 62.

    You just shake your head, the absolute incompetence of it all.

    Royal Mail can't even figure out the correct price for a stamp (or let themselves be bullied); the government can't do the simple arithmentic on who can possibly pay for all these pensions liabilities; Mandy won't admit he has a dead dog he can't sell, unless he retains all the debts..........

    What a sad, second-rate bunch we have entrusted with running the country.
    I wish I was foreign and could laugh at us.

    (I think I am 1/256 Spanish, maybe that gives me the right.
    We reckoned a survivor of the Spanish Armada jumped a shipwreck round the north of Scotland.... and fell in lurve with a local lass)

  • Comment number 63.

    If the name Michael Jackson means nothing to Lord Mandelson then he has risen in my estimation. He sounds like a man to be trusted.

  • Comment number 64.

    Now that's it's official I want to say what I have been saying for a long time (but kept getting moderated)

    Madoff is now officially a crook, and has got 150 years.

    However there is a fine line between what he did and what the Capitalist Governments of the world are doing (running a giant Ponzi scheme).

    In Madoff's fund, new investors were paying for the returns of existing investors.

    In the Capitalist economy the unborn children (new entrants) are paying for the existing participants greed and the eventual overproduction which happens thanks to the market (which is what we're seeing now). The over-valued Economy is being subsidised by future taxpayer.

    So why does Madoff go to prison and Governments are left to carry on running their Ponzi schemes?

    ....and why do Ponzi schemes still exist? It's not like they're new, and it's not like they can't be spotted - however every time there is a recession it's clear how many of these schemes are in operation.

    So next time you bump into the Chancellor Robert - please ask him this question. I'd like to hear what he has to say about it.

    I'll be here all week...

  • Comment number 65.

    hear, hear @61 GrumpyBob

    Has everyone forgotten how Lord Voldemort of Hartlepool was twice disgraced?

    and we allow him and the other unelected Deaf Eaters into power...

    Call an election - "we are the people of England and have not spoken yet"

  • Comment number 66.

    #24 "More proof this country needs an election now.
    It's like being diagnosed with cancer, but told the treatment which always makes the illness worse...can't start for year."

    Strange you should mention this. This is just what happens in the NHS *despite* billions poured in by this government !!

  • Comment number 67.

    #33 "2) Decrease the volumes of junk mail. This would happen because of the higher prices of postage. Companies in general would find other, greener ways of communicating with customers."

    I would go one step further and either cancel business post altogether or charge them at the same level as ordinary post (in effect, turning them into ordinary post) !! Otherwise, junk mailing will use up the majority of the postal resources whilst contributing far less to the coffers. Just today, I received 8 pieces of mail - 6 junk mail and 2 letters/invoices - from the postman !! I have *never* received any junk mail from the other postal/courier services !! Isn't there a moral buried in this somewhere ??

  • Comment number 68.

    #35 "Why not "outsource"/hive off the pension funds/liabilities of the Royal Mail and other public businesses eg civil service etc? Give them to a business which runs pension schemes...."

    Brilliant idea !! I hear Mr. Bernie Madoff may be looking for a job soon !! Pay him a few millions to make the pension funds vanish just like he did the other people's savings and then blame it all on him !!

  • Comment number 69.

    #36 "If they want it profitable, why not undertake the changes that would make it so whilst it is in the Public Sector and then keep it and its Profits to benefit the Taxpayers."

    Whitehall mandarins make changes ?? Heresy !! Unclean !! Infidel !!

    Anyway, such a suggestion is the equivalent of asking the lunatics to run a better asylum !! Maybe *after* a wholesale slaughter of the upper echelon of their "management" and the jobsworths, there *might* be a chance of successful changes !! They have proved this by going through all sorts of contortions, name changes , etc. and they are still in a mess !! Right now they have less chance of success than a snowball in hell !!

  • Comment number 70.

    Addendun to #36 "Just a thought, does Cuba have a Pension crisis ?(No?)."

    Does Cuba have a real economy ?? No !! Perhaps we should pay all our Public Servants the same pension as that in Cuba !! Might buy 2 Big Macs or a pint and two packets of crisps !! Would be interesting to find out what our righteous Union brothers think of the Communist Heaven's idea of pensions !!

    BTW, there are *NO* unions in Cuba !! Dissent is not allowed and any dissidents are slung in jail !!

  • Comment number 71.

    #43 "Chinese laundry bags"

    Chinese laundries don't use bags !! They use secure chests (for the gold bars) !! Don't believe me ?? Go to any Macau casino !! The laundering there is fascination !! :-)

  • Comment number 72.

    #44 "Is this story the end of the end of the financial Instrument known as a 'Pension'?"

    Yes because "Pensions" had never been and should never have been a "financial instrument" !! Singapore still have a very successful system that is the envy of most nations !! No black holes there at all !!

  • Comment number 73.

    #55 "Now any or all of the above may be complete tosh but if there is a really convincing argument for bringing in another company I have yet to hear it. Anyone here know what it might be?"

    and #56 "the private sector does not have the answers Mandy"

    The private sector may have answers for him if they are/were his cronies !! Perhaps a certain Russian oligarch who holidays in the Med ??

  • Comment number 74.

    #56 "Canada is lovely by the way and the Great Lakes piracy is lucrative; did you know that Canada is now one of the world's leading sources of drug smuggling - official US govt ratings!"

    WOW !! Canuckistan for real !! Now if your southern neighbours were not so busy generating zillions in fake money, they might not have so much to spend on drugs !! :-)

  • Comment number 75.

    #65 Lord Voldemort ?? Isn't he that evil magician in Harry Potter ?? Oh no, he's THAT other one !!

  • Comment number 76.

    The problem with the metropolitan political types who decide on the destiny of institutions like the Post Office is they dont appreciate how dependant most people outside London and particularly the more rural areas depend on the Post Office.They actually do a fantastic job.
    So rather than sell them off,to the Dutch-whose postal service is appalling,they should loan the Post Office Pension Fund to cover their pension fund shortfall,then get their money back from future Post Office profits.This stategy appears to work for banks-so why not the Post Office.

  • Comment number 77.

    In 1989 managers from the Post Office were saying how they couldn't get the investment cash they needed to sort the job out. With the current Govt finances this has hardly changed so I can see why they need to do something to get funding from elsewhere in order to do whatever it is that needs doing to stop the whole thing going titsup.

  • Comment number 78.

    Slightly off-topic I know, but I feel the need to excoriate the massive hypocrisy of Mandelson on another issue - as reported by The Guardian -

    "Mandelson warns bankers to heed public outcry over huge bonuses"

    "Lord Mandelson risked antagonising the City by launching a strong attack on excess pay at a time when hundreds of thousands of British workers are being laid off"

    So Mr Mandelson, how could you possibly give such a speech the week after the appointment of Stephen Hester to run RBS, a failed business which has been bailed out by the taxpayer, on a basic salary of £1.2m per annum; with up to £2m of bonuses as reported by Robert Peston here -

    The total hypocrisy and inertia of Labour is laid bare for all to see in the context of these events, making blandly placatory speeches about public anger while still presiding over the most astonishing inequalities in remuneration between the likes of Hester and the rest of us - doesn't Labour think we are evaluating everything they say in the light of what's actually happening, or do they believe that if they express a little cod outrage on behalf of the "common people" they think we'll let them off the hook?


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