11 February 2009 - Steve Lawson - Editors Comment - © Hellmail Postal News

The idea of liberalising the postal market in Europe was to break monopolies and create competition that would provide more cost effective ways to move goods around.

The way to do that (apparently) was to hound Royal Mail into slashing its operating costs to try and make it perform like a commercial enterprise but with years of neglect and an extended pension holiday resulting in a massive deficit, it was all rather late in the day and like trying to force a square peg into a round hole. It was never going to fit.

Most European postal operators are just not experiencing the growth that was envisaged by the liberalisation plan. In fact most operators are experiencing annual decline in mail volume, hastened by a global recession, and because each European country is moving along at a different pace to the next, the entire playing field is at a forty-five degree angle. In the UK, we face the very real prospect of Royal Mail being partly sold to a Dutch operator which in its own country is enjoying a protected market.

The UK moved far too quickly on liberalisation, based mostly on misplaced optimism and concentrated all its efforts on accusing Royal Mail of being bloated and inefficient. Whilst the latter was certainly true in comparision to the private sector, running lean doesn't always mean running better. None of those involved in the process are actually willing to admit they failed to deliver, but all the same, it just hasn't gone to plan. The Hooper report was both accurate and fair, even if it fell short of directly blaming anyone but it seems to have been seized upon as the only possible solution and that troubles me.

I don't work for the postal industry. I have no connections with it and no affiliation with any political party either (few of us do now), but I do have a strong sense of right and wrong when it comes to consumer issues in line with my other work, but with over four years researching and writing articles for Hellmail, often at incredibly unsociable hours, trying to fathom the direction the UK postal market has been heading, I am still left scratching my head. I have yet to meet anyone who thinks liberalisation was a great idea.

Even Postcomm's triumphant shout every time a leaflet distributor applied for a licence, hasn't excited me. Even the licence fee was dropped to a mere £50 just to get more people onboard. Now the government can't go back without being fined by the EU, and it can't go forward either without ultimately facing the prospect of asking the tax payer to cover the cost of the Universal Service on top of the pension deficit.

To a large extent this is why there is so much resistance to Mandelson's plan from within the Labour party. Few can even comprehend why the government would be saddling the country with the debt and handing the profits to someone else. Liberalisation will effectively have brought nothing but reduced services and a cost we previously never had. On the surface it would seem to be in the Conservative's interest to vote against the government too but it won't do that and risk tumbling Gordon Brown - their election plans coud be in tatters if there was a sudden change of Labour leader, particularly when the Conservatives presently lead in the opinion polls.

Brits don't like to make a fuss, its in our genes I'm sure, but even Slovakia this week is digging its heels in over retaining a monopoly on Hybrid Mail so it is able to fund its Universal Service and risking the EU fine because it feels it has no option.

Ah yes, the Universal Service Obligation, collections and deliveries for all and the fly in the ointment that was so conveniently sidelined by the entire plan. Even in the first year of liberalisation, European trade unions marched to protest over the lack of clarity on the funding of the USO until some quick-thinking individual suggested that it was "Up to individual countries to decide how and if they want to fund the Universal Service" - not so much solved as buried then.

In the UK, the Royal Mail is picking up the cost (or loss) on the Universal Service, mostly because no one else is actually providing it and the suggestion of contributions to the USO from rivals was seen by Postcomm as obstructive to a competitive market, even if rivals could still happily eat into Royal Mail's key business contracts.

Much has changed since postal liberalisation was first put on the table. The internet for one, but Europe seems determined to make this work at whatever cost, regardless of the bitter rifts between countries and the strain it is placing on the Universal Service.

The CWU are in determined mood on part-privatisation. If it goes ahead, the government will lose an important source of funding. I don't imagine for one moment that many postal workers will vote to continue paying part of their union fees to a party that sold Royal Mail (even part of it) to a rival operator.

I have no axe to grind either way and I really don't know whether Royal Mail can thrive without a strategic sell-off, but this plan has far more against, than for it. If the press and opinion polls are to be believed, the only group in favour of part-privatisation are Adam Crozier and the Cabinet. Mandelson could just be a convenient stooge to blame if the government were forced to climb down on this.

In the meantime, Royal Mail hangs, as always, like a wet balloon whilst everyone decides what is next on the agenda.

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