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Labour drops privatisation of Royal Mail

Robert Peston | 12:18 UK time, Monday, 12 April 2010

It looks to me, from the manifesto, as if Labour has completely dropped its commitment to privatise Royal Mail in whole or part.

Royal Mail would stay in the public sector under Labour. The CWU union, big donors to Labour, have won that battle.

Update 1220: Labour's policy on the privatisation of Northern Rock will be seen by many as facing in two contradictory directions.

On the one hand, Labour would encourage "as one option" a so-called "mutual solution", or turning the reconstructed Rock back into a building society owned by members.

One the other hand, it wants the deal to generate "maximum value-for-money for the taxpayer".

These two ambitions are - on the face of it - completely incompatible.

Mutualising the Rock would involve giving it to the banks' current savers and borrowers.

Even if some way could be found for the Rock's customers to pay something for the Rock, it stretches credulity to breaking point that this would raise as much as a sale to another bank or even a stock-market flotation.

Many will say that Labour can't have it both ways - that it must choose between maximising the return for tax-payers or mutualising the Rock.

Comments

  • Comment number 1.

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

  • Comment number 2.

    The unions have won and that is good because, provided Labour wins the election, the business interests who hoped to make another fortune, by buying "family silver" cheap, will have lost, and the public that rely on Royal Mail's cheap and efficient service will have won.

    I hope that the government will also provide the investment needed to update Royal Mail's equipment. Recovery from the recession is far from complete and now is the time to undertake such projects.

    I hope also that they now understand how foolish it was in the 80's and 90's to sell infrastructure and utilities companies to private profit driven interests.

  • Comment number 3.

    Robert,

    Yes, Bill Rammell on BBC2 has confirmed what you say re the Royal Mail. I think it proves a point.People don't really care if organisations are 'public' or 'private but they care about organisations they IDENTIFY with. They want those organisations they hold dear, whether its the Royal Mail or Cadburys to stay intact. Most importantly they see what has happened to outfits that have been sold off to prosper from foreign investment - BAA, rail franchises, water and see that they will be treated worse. And for the country, yes it does matter that there are British owned champions; goodness even Alec Salmond can see that's the case for Scotland.

  • Comment number 4.

    The trend has been against mutualisation across many enterprises. Is there any point in turning the clock back? The right course is to return Northern Rock to private ownership.

    As for the Post Office the way forward would be to open up their franchise to competition with conditions around service ie. delivery to all parts of the UK without differential pricing. Deutsche Bahn runs Chiltern Railways quite successfully etc etc.

  • Comment number 5.

    1., minuend.

    Oh fear not, any criticism that the moderators do not like are also witheld on these boards. Funny how posts are moderated here without breaking the house rules. In fact the rules go on to explain that if you are moderated out you will receive an e-mail explaining why. Anyone here ever received that e-mail? No, thought not.

    And why do we need pro-active moderation anyway? There is a button on all posts allowing complaint so why not reactively moderate and thereby allow posts through in something less than the 2 hours they can often take.

    Sorry, the BBC ceased being impartial many years ago.

  • Comment number 6.

    'Royal Mail would stay in the public sector under Labour. The CWU union, big donors to Labour, have won that battle.'

    Labour caving in wholesale to the unions. What a surprise. Expect 5 more years of the same should they get re-elected.

  • Comment number 7.

    This has nothing to do with the unions.

    The simple truth is that the Royal Mail has been disembowelled by this government, the regulator and an over-bonussed management to the point that nobody would buy it other than to pick over whatever assets were left.

    Furthermore the pension fund remains a major difficulty in any sale.

    I know the Tories remain optimistic that they can find a buyer but why give yourself all that pain for no return? Just foolish dogma that's all it is.

    I like the idea of a universal postal service run as a functioning part of the constitution of a united country. The Victorians managed to do it, it ran well throughout two catastrophic wars, so where is the problem? We should set about making it work rather than deliberately blocking any attempt by the Royal Mail to be a success.

  • Comment number 8.

    The Government has done the right thing. Selling off the national communications network- aka privatising Royal Mail- was a dreadful, unpopular idea based on pressure from the usual commercial, free market apostles. The Conservatives are adamant that they will privatise the Royal Mail- but there will be a huge fight against this if they get to power.

    So give Labour a little credit for a good decision!

  • Comment number 9.

    Paul wrote...

    'It looks to me, from the manifesto, as if Labour has completely dropped its commitment to privatise Royal Mail in whole or part.

    Royal Mail would stay in the public sector under Labour. The CWU union, big donors to Labour, have won that battle.'

    ---------------------------------

    So Royal Mail's £10b pension deficit had nothing to do with it then!

  • Comment number 10.

    #2 "I hope that the government will also provide the investment needed to update Royal Mail's equipment. Recovery from the recession is far from complete and now is the time to undertake such projects.

    I hope also that they now understand how foolish it was in the 80's and 90's to sell infrastructure and utilities companies to private profit driven interests."

    Over the last 40 years the Royal Mail has wanted to invest to update equipment and has been held back by a combination of unions unwilling to adapt and govt unwilling to provide funds. Stop blaming the Tories for this it happened under Labour too. What makes you think a new Labour govt would be any different given that (a) it has no money and (b) it is completely in hock to the unions.

    As for infrastructure and utilities I will suggest you consider BT post privitisation versus the service you got when it was govt owned. Now telephone must be an infrastructure/utility and anyone who remembers the 1970s will be able to remember the fact that the telephone system was overpriced, the service useless and as for the phones that they actually allowed you to connect to the system - well lets just say desing was not
    part of their remit. Now the service is much cheaper (taking into account inflation, or in the case of international calls, just cheaper even if you ignore inflation), there are 100s of phones to choose from and the service is much better.

    Of course you will counter with electricity companies who have not built enough power stations but here the electricity is cheaper (allowing for inflation) than pre privitisation and who stopped electricity companies building power stations (gas power stations) in the late 1990s and early 2000 - ah oops the Labour govt.

  • Comment number 11.

    Surely a state owned bank is the ULTIMATE MUTUAL solution!

  • Comment number 12.

    That's the power of labour's union backers. Another top quality job from the unqualified, unelected Mandleson.

  • Comment number 13.

    "Royal Mail would stay in the public sector under Labour. The CWU union, big donors to Labour, have won that battle. "

    ...and there goes the siren to the working class - fight, defend and you will win.

    The ruling class cannot produce by itself - it does not have the manpower (I mean have you ever seen a factory working with purely management staff???)

    As for the Northern Rock - isn't it a bit premature to talk about 'sale' when the gaps in the market are being filled by the new entrants (Metrobank, Virgin money) - a market which has massively diminished because the demand for borrowing (in the private sector) has all but vanished?

    Still, I suppose they need to keep repeating the line "when we sell Northern Rock" - because eventually the manchurian candidates of Britain will eventually "get the message" if you say it enough.

    What a complete mess within a complete mess and surrounded on all sides by a total and utter mess.

  • Comment number 14.

    2. At 12:49pm on 12 Apr 2010, stanblogger

    ...and in fact a recession is the best time for Government to invest in the industry - picking up market share as the competing private sector struggle and collapse.

    Unfortunately for that you need investment capital - and I think we just 'invested' it in our banking system, a zombified bunch of un-deads who walk this earth looking for their next 'victmless crime' of paying huge bonuses to themselves from the public coffers.

    ...and meanwhile the entire world looks the other way...

  • Comment number 15.

    5. At 1:05pm on 12 Apr 2010, Uphios wrote:

    "Anyone here ever received that e-mail? No, thought not."

    I get them regularly - but they are no help as they simply state.

    "You have had your post removed for breaking the house rules"

    ...it then lists all the house rules - but not explaining which one of them you have broken. Never mind any right to appeal (because I think some of them have been for the most ridiculous things)

    Considering the BBC is supposed to be impartial - they seem to be quite happy subduing the comments of their audiences. It's fine that swearing is removed (although who defines what a swear word is) - but to remove posts because of their content - or the possibility of being defamatory is simply oppression.

    I mean if Mandelson or Osbourne (I'm being impartial) don't already know that the country thinks they are both a pair of %&*$£*&$£(^%£&£$^(*^^&%"£*&^%^&£$^£*&$%^£&*%^(£%&^£& - then hiding it from them is only going to give them both a false impression when they go out on the streets and met ordinary people.

    ....it's not fair on them really - but while the Beeb is busy trying to ensure that the feelings of snake oil salesmen isn't hurt - they act surprised when people accost politicans in the street and shout and swear at them as the only forum where true anger can be shown (as the man did to Gordon Brown recently)

  • Comment number 16.

    6. At 1:13pm on 12 Apr 2010, jobsagoodin wrote:

    "Labour caving in wholesale to the unions. What a surprise. Expect 5 more years of the same should they get re-elected."

    ...or prepare yourselves for 5 years of no transport, public services or mail as the Conservatives battle with them to the death (not realising that even if you disbanded all the unions, it wouldn't be long before wildcat and unorganised strikes hit).

    Of course the Tories could change the law to allow strikers to be sacked - I'd like to see how long the Economy lasted with reduced immigration and nobody 'indegenous' prepared to work for the wages on offer.

    ....still, I can't expect anyone to actually think about the consequences of anything - well not with a name like 'josagoodin' - I guess it's the first thing that comes into your head - right?

  • Comment number 17.

    Once again, many posters forgetting that government money is in fact OUR money. We will be stumping up the cash to soack up the cost of sending the Rock Mutual. It wont happen without pain.

    I for one woul rather see it sold for billions and see the deficit reduced and eventually eliminated so we can start reducing some of the national debt (fat chance this decade for sure)

    When will the socialists realise that Labour have run out of us taxpayers money?

  • Comment number 18.

    12. At 1:30pm on 12 Apr 2010, telecasterdave wrote:

    "That's the power of labour's union backers. Another top quality job from the unqualified, unelected Mandleson. "

    Is that as opposed to the Tory backers who with their financial might will walk all over Osbourne if he even tries to implement the 'R' word?

    Unions to the left of me - Oligarths to the right - here I am, stuck in the middle with you.

  • Comment number 19.

    Erratum to #9

    Robert wrote...

  • Comment number 20.

    So there we have it Labour are for sale - doesn't matter whether you are the BPI and a trade union they'll do your bidding for the right price.

  • Comment number 21.

    18
    I can only comment on what has happened, not what might happen. Labour have shown themselves to be incompetent yet again, and just to think that's why they brought Mandy back.

  • Comment number 22.

    I can vouch for WOTW in post 15 you do receive an email but it is generally two or three days later, at current rate of replies, and it does on some occassions state why it was removed allowing you the chance to repost.

    The difficulty is that after 2 or 3 days the flow has been lost and your point of view ignored.

    My last removed post was removed as it had a weblink on it. Naoghty person you might say. It was however from the FTSE's website showing the actual rate of return on shares under their indices for 6 months, a year, 5 years and 10 years.

    For some reason the people pushing the 2010 "boom" in the Footsie objected to a post that confirmed that actually over 5 and 10 years shares had performed very poorly.

    I thoroughly expect this post to be removed for some reason or other. If it is then you can make your own mind up about the moderators.

  • Comment number 23.

    The good thing with times such as now, all politicians will change their mind and have dual standards.
    The way of the world

  • Comment number 24.

    This just demonstrates how disorganised New Labour are when having spent years and millions of pounds trying to run down the Royal Mail they then decide to change their mind at the point when the damage is done.

    Deregulation of postal services may well have been a boon to private industry but as a general principle it has just spread the market over a wider number of providers none of whom do the job well.In the process Royal Mail has become the victim of government incompetence and the scapegoat for government failure.

    It's time we had public services to a standard not a price and a high standard at that.Instead of competition we need company co-operation working towards a common service that is financially viable, provides job security, is well managed and gives the customer a better deal.

  • Comment number 25.

    I can understand why the post office will not be privatised. Given the current economic situation who would want to buy it, particularly given the massive pension blackhole it has, which unfortunately it looks as if the public will have to fund.
    The problem with the post office is that it is a contracting industry, because more and more mail is been replaced by E-mail. I definitely send a lot less mail, and probably receive less than I did 5 years ago. The post office has responded by increasing it's prices, and reducing the service they provide. My mail now comes at 1.30 pm, and post is only collected from the local post box once a day.
    I also used to collect stamps, but stopped this once the post office started to abuse it. There now issue up to 20 sets of commerative stamps a year, and insist on making high value stamps part of the sets, so if you wished to collect them all as first day covers and presentation packs it costs over £200, whereas the cost to them is a fraction of this. A first day cover with stamps costing £6 on it rather than £1.50 costs exactly the same to produce and deliver.

  • Comment number 26.

    Robert,

    As in so many areas now, you also have to consider our 'other' government - in Brussels.

    When a British government appears to be doing something against its nature, confounding and confronting even its own supporters - like Labour doggedly trying to part-privatise the Royal Mail - ask yourself why.

    The answer is it is dancing to the EU's tune. A tune none of us voted for.

    Google 'postal services directives' and you'll see what I mean. These require "full market opening" in postal services by 2012. This is why the part-sale of Royal Mail was in prospect in the first place. Because allowing private companies to take even more business from the Royal Mail than EU directives have already required would have been the absolute last nail in the RM's coffin.

    However, somehow, 'market opening' must happen. The EU has decreed it. No British government of any political colour can change that without the unanimous approval of all the EU's 26 other members. With little prospect of that, our government must meekly comply. This is the ridiculously rigid, 'one size fits all' post-democratic 'brave new Europe' we now live in.

    So if the government truly can't sell the Royal Mail, because of the pension deficit or whatever, it will simply have to achieve 'market opening' a different way. Probably, now, through allowing private companies to compete freely for all Royal Mail business.

    That, thanks to the EU (but ultimately to the politicians of ours who have short-sightedly tied us into such an irrationally over-centralised pan-European governing system), could sadly be the end of the Royal Mail.

    Beyond the Royal Mail being able to withstand the competition, as it has sadly so far failed to do in other areas like business mail and parcels (hence current troubles), there is nothing our government, parliament, or even people en masse can do to save it.

    Other than decide to leave the EU and, instead, share trade with our European friends, co-operate freely where it is in our mutual interest to do so, but ultimately govern ourselves.

  • Comment number 27.

    "Many will say that labour can't have it both ways..." - the Wikipedian in me cries weasel words

    :)

  • Comment number 28.

    "The royal mail will just have the no profit part, of the mail i.e rural mail, or be closed down. The rest will be 100% in private hands as soon as the tories are in power

 

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