Two years ago Ofcom deputy head Richard Hooper reported on the Royal Mail. It was an inefficient, outdated fish in a declining pool of letters business, he concluded, and it needed an injection of private cash and partnership with a private carrier to give it the cash and expertise to survive before EU rules open the whole market up to competition. Now, another report and a change of government later, it looks as if this might actually happen.
It's not a radical proposal. Predictably, the Royal Mail's £8bn pension deficit will be palmed off on taxpayers. Then a chunk of the business will be sold. If business secretary Vince Cable thinks that it can be sold to another private carrier, he might well be disappointed. We're posting 10m fewer letters than we did five years ago because. Some 87% of those are business letters: for other things, we use email instead, and even Christmas cards are rapidly going electronic. And who would want to take on such a mess? The Royal Mail is up to 40% less efficient than some EU carriers – not sorting letters electronically into walk order like they do. And at present, some 88% of the business is price-controlled. And like all regulators these days, PostComm is grotesquely bloated and intrusive. Would you buy a business that has to pay £4m a year to a state-sponsored consumer lobby, PostWatch, that regularly beats up the brand?
There's no doubt that if any of the Royal Mail is sold, the public will want to be included. Selling a large chunk of a government business to come private firm smacks too much of crony capitalism. But while the public might think it only right they should be offered shares in a business that nominally the public owns, would they really have the appetite, right now, to stump up a decent amount of cash? The government will have to show that the business is getting in shape (which as yet it isn't), and explain all over again the virtues of buying into a privatisation – language we have not heard in fifteen years.
Yes, there is no doubt that the Royal Mail should be sold. If it is to have any chance of surviving the market liberalisation in 2012, that is a certainty. But what a pity that we didn't sell it when the idea was first developed in the early 1980s, or when other EU countries were privatising their mail services, or indeed any time after that when stock markets were looking buoyant.
