According to the Daily Telegraph, “American activist investors” – who are becoming the main buyers into Royal Mail – believe that the company “could execute deeper cost cuts and yield far bigger profits”.
Staff costs are one of the areas being looked at.
“The productivity improvement rate is really pretty low, given the amount of new technology at the company,” said a source. “Now 80% of mail is sorted by technology, yet the productivity costs have only come down marginally in comparison. The company could be far more aggressive on driving the costs savings through.”
We all knew this would happen. The pressure will soon be on to cut staff numbers and to increase workloads in order to improve productivity.
But I can tell you now that this is just not possible, at least where delivery duties are concerned. When Panorama did a programme about the Royal Mail in 2009, it arranged for former Royal Marine and military fitness expert Tony Goddard to test a duty. He was unable to finish it in the allotted time, saying that it was “unreasonable” to expect postal workers to do it five days a week.
A postal duty is, in effect, a four hour intensive workout, and it gets increasingly difficult the older you get. Any further pressure on delivery staff is likely to leave us suicidal.
However, there is some truth in the assessment. The productivity improvement rate is, indeed, pretty low given the amount of technology that has been introduced. There’s a reason for this. It’s called “Methods”.
This is the internal name for the modernisation programme which the company has been undertaking since 2009. It involves the scrapping of bikes and their replacement by trolleys: two postal workers working out of the back of a van using customised golf trolleys, carrying two bags apiece.
The ostensible reason for the new method is so that we can carry more packets: packets being the new growth area within the postal business. However, it is also considerably slower than using a bike. Just to give you a measure of this: my round used to take around three hours and fifteen minutes. Under Methods we are supposed to manage our rounds in four hours. That’s already forty five minutes longer than before. However, there is never a day when we can complete the round even in this time, often going as much as an hour over. In other words, the new method is at least a third slower than the old method.
It is also much more tiring. Using a bike we were constantly changing position: sometimes walking, sometimes scooting, sometimes cycling, sometimes freewheeling down a slope. All we do now is four hours or more of relentless walking, mile after mile: around twelve to fifteen miles a day. My hips and my back ache from the strain and all I can do when I get home these days is to eat my dinner and fall asleep in front of the telly.
Slowing down the work while making it harder: I wonder whose bright idea that was? The reason it’s called “modernisation” and not “a big pile of shit” is that it is being modelled through a computer. We’ve replaced an old technology – bikes – which were very efficient at delivering the mail, with a new technology – computers – which are very efficient at measuring the process. We’ve privileged the needs of the office over the needs of the job. Now you tell me which is more useful in an industry whose sole purpose is the delivery of mail?
It’s a pity they never thought to ask us posties. We would have told them that it wasn’t going to work. TNT – one of the rival mail companies currently experimenting with end-to-end delivery in some parts of London – do so using bikes, while Deutsche Post has recently been testing electric bikes on the streets of Berlin.
The reason the CWU went along with the new method is that it was supposed to take the weight off our shoulders. In fact it has done the opposite: it has put weight onto our shoulders, as in an effort to get the work done on time, many posties are now dispensing with the trolleys.
But the real measure of the insanity of this is that despite the fact that it was extensively trialled, and that it has consistently shown itself to be slower and more costly than the old method, it has nevertheless been rolled out throughout the country.
This is the reason why the productivity improvement rate is so low, despite the amount of new technology being deployed. If “activist investors” really wanted to improve productivity, then they could start by bringing back the bikes. After that, they might consider reducing staff numbers by getting rid of everyone who thought that “Methods” was a good idea in the first place. That includes Moya Greene.
Royal Mail’s management don’t regard you as customers but recipients, simply a way to deliver returns to their investors.
From the Guardian, Comment is free.
Here’s a summary of the whole advert, in one paragraph:
There’s a Sikh postie walking along a corridor; a little girl placing stamps upon a parcel; a pen drawing hearts in red ink upon a sheet of paper; a man paying for his parcel delivery on-line using a tablet computer; a shot within a parcel depot featuring parcels running on a conveyor belt with lasers reading the addresses; delivery to a café (the café owner opens his arms as if he’s about to embrace the postie) followed by a series of other deliveries in quick succession: to a stately home, to a garage complete with garage-band, to a little girl’s birthday party; a Muslim postie walking passed a training centre with the words “For Hire” painted on the wall; delivery to a factory; a black female postie smiling (the only woman postal worker in the advert); delivery to an upmarket London townhouse; two rain soaked posties; another Royal Mail parcel depot featuring brand new, sparkling-clean Royal Mail lorries; a Royal Mail lorry driving passed a remote rural village; a little girl opening up a letter box in anticipation of a delivery (an intense light bursts from the letter box like a mystical sign); that Sikh postie again, in a massive block of flats (an Indian woman answers the door wearing rubber gloves); another postie dwarfed by another huge, semi-circular block of flats, followed by the slogan, “We deliver one billion parcels a year”; a shot of a postal worker raising his arms in apparent blessing of the contents of a Royal Mail van (he’s like Jesus blessing the loaves and the fishes) ending with the words, “We love parcels.”
Everyone is smiling.
All of that to the words of All You Need Is Love:
Love, love, love
Love, love, love
Love, love, love
There’s nothing you can do that can’t be done
Nothing you can sing that can’t be sung
Nothing you can say but you can learn how to play the game
All you need is love
All you need is love
All you need is love, love
Love is all you need.
And there you have it: the hypocrisy of advanced capitalism in precisely one minute.
The Royal Mail delivers none of that. It doesn’t deliver love. It doesn’t deliver diversity. It doesn’t deliver a welcoming smile. It doesn’t deliver to stately homes, to garages or to birthday parties. It doesn’t deliver hope and anticipation. It doesn’t deliver mail to remote communities. It doesn’t deliver friendliness in the rain. It doesn’t even deliver parcels. We do all of that: the men and women of all backgrounds and ethnicities who work for the Royal Mail. That’s our job.
Now that it is privatised, the Royal Mail’s job is simply to deliver returns to its investors.
For a long time now the Royal Mail has been divided, between management and postal workers, between those who see it as a business, and those who see it as a service. The people who commissioned that advert are the former rather than the latter. It’s not a service to them, it’s a way of making money.
We were told this many years ago: “Granny Smith doesn’t matter any more.”
“Granny Smith” is the postal worker’s affectionate nickname for you, the customer. Or rather, for the people that we regard as our customers, the people we meet on the doorstep everyday. But the Royal Mail management doesn’t regard you as their customers. They don’t meet you but once in a lifetime. You are merely the recipients of the mail. Their customers are the people who send the mail in large quantities: the utility companies, the banks, the advertisers, the bulk deliverers, the people who churn letters out by the tonne using advanced computer systems, the mail-shot companies using lists they’ve purchased from other advertisers, the conveyors of junk mail and other unwanted material, the people who fill up your halls and your bins with garbage, the landfill merchants. Those are the Royal Mail’s customers, not you. The people they make the money off.
See: that’s the hypocrisy of that advert. They know that postal workers are held in high regard by the public. They know that most of us will go out of our way to look after our customers, that we will do our best even in adverse circumstances, that we will give that cheery smile in the rain. That was always the case in the past, though it’s getting rarer and rarer as time goes by.
In the old days, we loved our job. It was great getting out and about, on the streets of our towns, delivering the service we knew you wanted. The work was energetic but satisfying. It brought us face to face with our neighbours. And we had a little time to spare back then. There were enough of us doing the job to get the work done and still have enough time left over to lead lives of our own.
Fifteen years ago, the average delivery span was two and a half hours. That’s two and a half hours of high-octane energy expenditure: a workout by any other name. It kept us fit, it kept us happy, it kept the endorphins flowing to our brains. It kept us smiling.
We would get up early to greet the dawn and have the mail on your doorstep by breakfast.
That’s not the case any more.
Ten years ago the delivery spans were increased to three and a half hours.
These days the average delivery span is four to four and a half hours. After two and a half hours of intense work the endorphins cease flowing and the pain starts to kick in. We walk till we ache. We no longer have time for our customers and we’re so dog-tired at the end of the day that we don’t even have time for ourselves. We eat, we sleep, we work, that’s all. There’s no energy left for anything else.
This is called “productivity”. Less posties doing more work, at a faster rate. In the past decade the company has lost 50,000 jobs, with more job losses promised now that it has been privatised.
Less jobs means more work for me. More hours on my feet. More weight in my trolley. More gates, more doorsteps, more letter boxes. More endless miles of trudging drudgery on the streets of my town.
The choice of the X Factor and Downton Abbey to air the advert was very telling.
The X Factor represents the illusion of capitalism, that we may find a way out of its servitude one day: that some of us, at least, through good luck or talent, will be given the keys to escape. Downton Abbey represents the reality: a servant class serving a privileged elite.
As a public service our service was to you, the public. As a privatised monopoly our service will be to the shareholders from now on.
From the LRB blog.
One of my neighbours came over to say hello the day the Royal Mail was privatised.
‘I expect you’re looking forward to getting your hands on all that money you’ve just made,’ he said. The shares allocated to me as a member of staff had gone up by almost 40 per cent in a day. The government had brought forward the date of the IPO in order to beat a strike ballot by the Communication Workers’ Union. Most of us, like most people, were against the privatisation. It felt like my neighbour was congratulating me on taking a bribe.
I lost my temper, and told him what I really thought about the privatisation. I pointed out the contradictions: that the state has spent billions of pounds of public money to subsidise the bargain basement sell-off; that the pension fund was nationalised to sweeten the deal; that the loss-making Post Office was decoupled from its more successful partner and retained in public hands; that pricing restrictions were lifted in anticipation of privatisation, allowing the company to increase its profits.
None of this has got anything to do with the free market. This is direct government intervention to create a rigged market. If the price restrictions had been lifted ten years ago, the entire argument for privatisation would have disappeared overnight.
My neighbour said that governments shouldn’t be involved in the business of running companies. He said that privatisation would allow the company access to future investment. He said that previous privatisations had been a great success, and cited British Telecom and British Airways as examples. He said that taxpayers were fed up with subsidising the Royal Mail.
The argument went on for a while. Every time I was about to get in my car he’d say something that I had to contradict. I finally lost patience and drove away when he talked about the investors who were going to help the company become a big success: ‘They are wealth creators. They build the factories so that we can have jobs.’
You hear that phrase ‘wealth creators’ a lot. It is a commonly used justification for the privatisation agenda, the idea that these individuals generate wealth by their investment. They are the ‘wealth creators’, and we are the beneficiaries of that wealth. It’s a form of magical thinking, like the pharaohs believing that their rituals were responsible for the flooding of the Nile, a post hoc fallacy: because they have invested in the company and increased their wealth, their investment somehow ‘created’ the wealth. The actual wealth creation, the work that my colleagues and I do, in this version of reality, is an accidental by-product of the process, a privilege I am allowed by the goodwill of these magically endowed individuals.
Moya Greene, the chief executive of Royal Mail, has already told us to expect job losses. Very soon I expect to be begging for the privilege of working longer hours for less money.
Vince Cable’s efforts to keep the Royal Mail in the hands of “blue chip investors” and away from “spivs and speculators” was delivered a blow this week when it emerged that the Children’s Investment Fund has taken a 5.8 per cent stake in the company following its privatisation earlier in the month.
The fund was founded by Chris Hohn, described as a “locust” by German politicians, and damned by the former CEO of Deutsche Börse, Werner Seifert, for his part in scuppering a previous business deal.
The London-based hedge fund has bought 58.2m shares or 5.8pc of Royal Mail. Under stock exchange rules, TCI had to declare its stake when it reached 5pc of the company. The threshold was reached on Friday.
Mr Cable has often criticised hedge funds for being short term investors and has repeatedly insisted that Royal Mail would be sold only to “long-term, blue chip” institutional investors.
Meanwhile Chancellor of the Exchequer George Osborne has responded to criticism that the government had sold off the Royal Mail too cheaply.
At a Thomson Reuters Newsmaker event on Tuesday, he told his audience that initial public offers are routinely offered at a discount and the government had followed advice from its bankers on details of the sale.
“On all fronts it has been a great success,” he said.
And in the House of Lords, Labour peer Lord Sugar, star of TVs The Apprentice, questioned the expertise of the banks which had been advising the government on the sale.
He demanded: “Why did these so called experts sell the stock at such low levels and get it totally wrong to such an extent that the stock rose by 33 per cent the day afterwards and since then 54% on the issue price?
“Bearing in mind other reputable banks had come on record giving a valuation of £5 billion, why were these banks ignored and what will you be doing by way of an inquiry in finding out who the lucky institutions were that underwrote this bargain basement sale?”
Government spokesman Lord Popat said the key objective had been to “secure value for money for the taxpayer”.
Pressed by Labour’s Lord Donoughue on the level of fees paid to the banks, Lord Popat said: “The underwriting banks will share a maximum fee of 1.2 per cent of the IPO receipts or £16.9 million. This maximum includes a potential discretionary fee of £4.2 million. The actual fee will be finalised shortly. Lazards will receive £1.5 million as the Government’s independent adviser.”
For those of you without a calculator, it means that three banks, UBS, Lazards and Goldman Sachs, share £18.4 million between them.
Of course, the usual reasoning behind the sale of the company, is that it would allow the Royal Mail access to the financial markets; but, you have to ask, what would have stopped the Royal Mail accessing the markets as a publicly owned company? The answer, it seems, is “very little.”
According to a letter in the Guardian prior to the Royal Mail’s flotation it “is purely the Treasury’s insistence on keeping to the UK’s unique borrowing rules, which are not followed by any other country.” The government-owned French energy company EDF, and the German transport company Arriva, have no such limitations, and operate freely in the UK. The Royal Mail was already classified by the Office of National Statistics as a public corporation and could have enjoyed the same freedoms as state-owned companies elsewhere in Europe. All that was needed was for the Treasury to adopt the same rules as other countries have had for decades.
The writer, John Perry, adds: “It continually surprises me that opponents of Royal Mail privatisation have not pursued this argument, especially as it addresses one of the government’s main arguments in favour of selling it off. Given that the government have already made a similar rule change in favour of the publicly rescued banks, there is a clear precedent for such a change in favour of Royal Mail.” This would have rendered privatisation unnecessary, he says.
In other words, it’s one law for the banks, and another for the Royal Mail.
David Cameron calls it ‘popular capitalism‘. He is referring to the fact that the flotation of the Royal Mail was oversubscribed many times. On the back of this he is planning even more sell-offs. But how many people could actually afford the £750 required to buy the minimum amount of shares in the company? Very few, I would think. Only the well off have that sort of money to spare these days.
As for us employees, well we had the right to buy shares at a reduced rate, as well as the shares that we were given. I don’t know about you, but I don’t have any spare money either, and I can’t imagine that many employees would have taken up the offer. Except on the highest level of management, that is, where, once again, certain people, including chief executive Moya Greene, have done extremely well.
Eleven directors have between them more than 35,000 shares in the firm. Those shares started off being worth around £115,500 but are now worth more than £168,000.
Moya Greene has 3,643 shares in the company. They started off being worth just over £12,000 but were worth £17,300 within less than a week.
Ms Greene’s basic salary is £498,000, but other benefits mean her total package is around £1.1m.
Meanwhile Peter Davies, a member of management committee for Lansdowne Partners, and a close friend of George Osborne, saw the value of his company’s shares rise by £18 million after just one day’s trading.
In fact 67% of the British public were against the privatisation. Only 4% were ’strongly’ in favor. 96% of Royal Mail employees were against the sale.
In other words, what Cameron really means when he refers to the popularity of the sale is that it is popular with investors and with higher management. With his friends, in other words. They’re obviously the only ones that Cameron thinks are important.
So guess who was behind the undervaluation of the Royal Mail? That’s right: it was Goldman Sachs, the “great vampire squid wrapped around the face of humanity”, as described by Matt Taibbi in Rolling Stone in 2009. According to Taibbi, not only was Goldman Sachs behind the financial collapse of 2008, but it has been heavily involved in every collapse since the Great Depression, engineering them in order to extract profits. It was Goldman Sachs who valued the Royal Mail at £3.30 a share, despite earlier valuations putting it much higher, at £5.00 a share, the current price. I wonder how many shares Goldman Sachs’ employees bought in advance of the sale in order to cash in on their gross underestimation of the price? Vince Cable talked disparagingly of “spivs and gamblers” in 2010, and yet here he is doing a deal with them, listening to their faulty advice.
Labour and Ed Miliband could have stopped the Royal Mail privatisation “dead in its tracks” if they had vowed to renationalise the service, an SNP MSP claimed.
James Dornan said if Labour had pledged to do this if it won the 2015 general election, no-one would have bought Royal Mail shares
The Glasgow Cathcart MSP hit out at the loss of the “valuable public service” after some 690,000 small investors bought stock in the highest-profile privatisation for years.
He told the SNP annual conference in Perth the sell-off had resulted in ” a billion pound bonus in 24 hours given in the main to those already seriously well off”.
He added: ” One of their saddest most disappointing aspects of this privatisation is that if Labour had the courage of this Scottish Government, if Ed Miliband had half the sense of social responsibility and decency that our First Minister has, he could have stopped it dead in its tracks.
“Who would have bought shares in the Royal Mail if Red Ed had come out and said Labour would renationalise it? No-one.”
The Royal Mail is approaching 500 years old – 497 to be exact. It was established in 1516 by Henry VIII. It has always been in public hands. Unlike other privatisations, where, perhaps, there might be some argument for saying that they were originally established as private companies and that privatisation means a return to some sort of “natural order”, the Royal Mail has always been owned by the government, having been part of the civil service originally, and afterwards treated as a public service.
There’s a good case to argue that the Royal Mail is one of the forces which helped to create the British Nation. The USO (universal service obligation) by which a letter between the Scilly Isles and the Outer Hebrides costs the same as a letter from the City of London to Westminster, helped bind the nation together. Would this have been done if the company had been privately owned? Certainly not. The aim of private companies is to maximise returns for their shareholders. A private company would have created a postal service which ran between the big cities but would never have included any of the remote and rural areas, which are always going to make a loss.
Historically the profitable parts of the Royal Mail were used to subsidise the unprofitable parts in order to create a unified service. But, in order to make the Royal Mail profitable, in order to sell it, the government has had to retain the Post Office in public hands. Until two years ago they were the same company. The Post Office has always made a loss and has always been subsidised by the Royal Mail. From now on it will be subsidised by the taxpayer instead.
It’s privatisation of profit, socialisation of cost. We, the taxpayer, pay for the unprofitable parts, while the sovereign wealth funds, the hedge funds and the City wiz-kids take a nice cut of the privatised cake.
It was us, the taxpayer who invested in the postal industry, not the people who are currently making a quick buck from its gross misselling. It was us, the nation, who generated the company. We are the investors. Everything has been created in public hands. All the infrastructure, the network, the systems, all of this has been built at public expense over those 500 years of history. Plus all of the political, social and economic engineering that has gone on since the privatisation of the Royal Mail was first mooted by Richard Hooper in 2008 – the modernisation programme, the restructuring of the industry, the investment in new equipment – all of it has been done by us, in order to sweeten the privatisation, in order pay dividends to the large investors, to the Emir of Kuwait and his family. It’s a form of asset stripping in disguise.
The Emir of Kuwait is the absolute ruler of a medieval, feudal state, fabulously wealthy because he has claimed the assets of his nation for himself. And this is the real basis of this, and all other, privatisations: the mining of public assets for private consumption. Future profits will be generated by lessening the pay and conditions of the workers. Moya Greene has already said that there will be further job cuts. That can only mean that us postal workers will be expected to work harder. We will be expected to work harder so that the Emir of Kuwait can take home even larger dividends.
Since the privatisation people have congratulated me on the profit I’ve made from the increased value of the shares which have been promised. I haven’t even seen them yet. This just makes me angry: firstly because I know that it was a bribe, and secondly that it is the investment firms who will be taking the profits, while we, the workers, will be paying the costs in terms of our health and well-being. We’re not even allowed to sell our shares for three years, by which time who knows what they will be worth?
The cost of water has increased by 245% since privatisation. The argument was that privatisation would lead to investment. In fact it hasn’t. Investment in the maintenance of the water supply has decreased since privatisation, and there is a very strong case for re-nationalisation. It was also argued that privatisation would lead to competition, but in the case of water there can only be one water supply at a time, so there is no competition. It is a natural monopoly, which means we’ve replaced a publicly owned and publicly accountable monopoly, with a private monopoly.
The Royal Mail is also a natural monopoly. What competition there is, is rigged through various regulatory mechanisms. In a truly free market, none of them would survive. The Royal Mail, too, will remain effectively a private monopoly.
Another argument for privatisation is that it saves on public subsidy and is more efficient, but in the case of the rail industry – another botched privatisation exercise – we’ve seen subsidies increase fourfold, while the one publicly owned rail company which still exists – East Coast – is actually the most efficient, and takes the least subsidies.
The term “wealth creator” – which is often applied to the entrepreneurs who will be investing in the company - is a piece of self-generated propaganda. The wealthy grow wealthier, and then say, “look, we’ve created this wealth.” But as they grow wealthier, so we grow poorer. There’s a direct correlation between the two. What is really happening is a form of wealth redistribution: from the public to the private, from the less well off to the wealthy. It’s communism for the rich. One group, the 1% with wealth and power and access to government, enrich themselves at the expense of the majority. They are the new robber barons and what we are watching is the growth of a new feudalism, in which a corporate elite lord it over us using debt as a form of rent.
We have to think more deeply about what creates wealth, and what wealth actually is. Vast sections of the world’s population live in abject poverty, while an elite few can ride around in private jets and own property in several nations. That’s not wealth by my definition. That’s not wealth by any definition. That’s poverty, on a grand scale.
The privatisation argument goes back to the eighties, when deregulation, privatisation, supply side economics and the neoliberal agenda was first put into practice, first of all by Pinochet in Chile, and then by Thatcher in the UK. It was an experiment back then, but now we can see the results. And the results are economic devastation, impoverishment, economic collapse, indebtedness, austerity and an exponential growth in the wealth of the world’s elites.
Exponential growth is always unsustainable. The collapse of 2008 was only the beginning.
Who knows what the future will bring?
From the LRB Blog.
In the last year our delivery office has moved from working on bikes to working in vans.
There are two of us to a van, doing two rounds between us. We’ve also been given new trolleys so we can carry more weight, new bags to fit onto the new trolleys, and new tracking devices to show customers exactly where their post is. They also, coincidentally, show the Royal Mail exactly where its employees are.
We’ve been given new tools in the office too: a wheeled basket each, like an oversized shopping trolley (called a ‘mini-york’), for moving our bags about, and a new storage and shelving unit for keeping our equipment in.
Our rounds have been extensively restructured to take account of the new working methods. For the past year a union rep, a manager and a planner have been huddled together in a room working out every detail of every round: how long it takes to open every gate, to walk up every path, to deliver every letter.
Everything about the Royal Mail operation is being changed. There are very expensive new walk-sequencing machines in most offices, for sorting the post into the order in which it will be delivered, new regional mail centres, where the post is gathered together and then sifted and sorted for delivery to local offices, and new lorries for shifting it around the country. Meanwhile hundreds of local offices have been closed and consolidated into larger units serving several towns at a time.
So far the Royal Mail has invested £2.1 billion in its modernisation programme, buying around 36,000 new tracking devices, 30,000 new trolleys and 11,500 new vans, and building new mail centres around the country.
All of this is being done at public expense in advance of privatisation. When the Royal Mail is floated later this year, it is expected to fetch up to £3 billion.
The Royal Mail is undertaking a major modernisation programme at the moment. Gone are the old, worn-out, Victorian ways of doing things, to be replaced by new, sleek, 21st Century methods.
Gone are the traditional, old fashioned bikes, for example, in use for more than a hundred years, to be replaced by golf-trolleys.
Here are some of the many ways in which golf-trolleys have proved themselves more modern than bikes:
You have to walk with a golf-trolley. You cannot scoot, glide, pedal or push. You cannot relax on a downhill run and allow the bike to take the weight. Obviously this means you are much slower with a golf-trolley than with a bike, making the round that much longer. But it has the advantage that you are expected to walk at a steady four miles an hour, which means that the computer back in the office can calculate exactly where on your round you are supposed to be. See how modern this is? It means that the man on the ground is connected to a computer. And computers are very modern.
A golf-trolley has only two positions. You can push it, or you can pull it. This is unlike the bike, which has numerous positions. You can push a bike and park it. You can push from the right hand side or you can push from the left. You can leave a bike and walk. You can scoot a bike. You can use your left leg to scoot, or your right. You can get on your bike and pedal. You can pedal standing up or you can pedal sitting down. Or you can simply sit on a bike and let it freewheel down a slope. This is obviously wrong. The Royal Mail doesn’t pay its workers to sit on bikes. It pays its workers to work. This is why the golf-trolley is much superior to the bike. The work is much harder with a golf-trolley than it is with a bike. The Royal Mail workers go home much more tired than they used to do. They ache in every bone. See how modern this is? It means the Royal Mail is getting its money’s worth.
In the old days postal workers used to park up their bikes and do a loop. They would take a bundle of letters, walk up one side of the road, and then down the other. Then they would pick up their bike and cycle on to the next loop. The new delivery method is very similar. It is called “Park & Loop”. Except that instead of a bike, the postie now uses a van. This too is much more modern than a bike. Bikes don’t use diesel, whereas vans do. Bikes don’t give off Carbon Dioxide gases, whereas vans do. Bikes are cheap, whereas vans are expensive. Bikes don’t get caught in traffic, whereas vans do. Bikes don’t break down all that often, and when they do they are easy and cheap to fix, whereas when a van breaks down it has to be hauled off to a workshop. And the vans aren’t fixed in-house any more, they are fixed by a sub-contractor attached to the dealer. Meanwhile the Royal Mail has tied itself to the dictators and despots in the oil producing countries, and to a technology with hardly any future. You can’t get more modern than that.
Bikes are easy to park, whereas vans are not. Bikes can be parked on the pavement, whereas vans have to be parked on the road. Vans cannot be parked where there are double yellow lines, whereas a bike can. Bikes can be leaned against a tree or on the nearest wall, whereas a van has to spend time looking for a parking place. This is the modern way of going about things. If it isn’t difficult, it isn’t worth doing. It keeps the Royal Mail workers on their toes, having to think. It blocks the rest of the traffic up while the postie parks the van, causing more hold ups and more frustration, the way the modern world was meant to be.
Bikes can be used in a number of different ways: as a road vehicle, or on the pavement, as a trolley, as a scooter, as a work-station, as a place to sort and store your mail. There are several different parts to a bike. There’s the tray on the front for carrying bags, and the panniers on the back for carrying parcels. There’s the rack over the rear wheel which can be used to sort the mail. You can use the panniers for itemising the mail and helping you to remember. One pannier can be used for parcels still to be delivered, and the other for parcels which have to be returned to the office. This too is an advantage that vans and golf-trolleys have over bikes. Bikes are obviously too versatile for the modern world. Versatility is an old-fashioned virtue, like politeness or decency or cheerfulness or being concerned about our customer’s welfare. Such things can be dispensed with in the new, thrusting 21st Century world.
The new delivery method involves parking up the van, getting out the golf-trolley, loading it up with bags, and then doing a loop. There are two posties in the van, doing two loops simultaneously. This has the advantage that the two posties might be travelling at different speeds. One of them might be a slow and steady type who does everything by the book. The other might be a flyer. He might jog along, skipping over walls and obstacles along the way. One postie might be old, the other might be young. One might be worn-out the other might be fit. One might be cautious the other might be carefree. This too is a good thing. Posties love their job because they love working on their own. They like going at their own speed and not being obliged to other people. Who says posties should love their job? They should learn to hate it like everyone else.
The rule with the golf-trolley is that you have to take it everywhere you go. You cannot park it up and leave it, as you can a bike. A bike can be locked, whereas a golf-trolley cannot. What this means is that both hands are full. One hand is carrying the bundle, the other hand is pushing the trolley. You cannot rifle through the bundle as you are walking. You have to stop at the end of every path, sort through your bundle, and then deliver. This slows you up even more. This is a good thing. It means the postal worker is only doing one thing at a time. He is either walking or he is sorting through the mail. Postal workers are notoriously inept. They cannot walk, fart and sort at the same time. There are walking times and sorting times and farting times and each has its proper place. Walking while farting is not allowed either. In order to fart one must stop still until the gaseous emission has been satisfactorily expelled before continuing on one’s way.
Golf-trolleys were originally designed for carrying golf-clubs. So naturally it would have occurred to Royal Mail executives to use them for carrying the mail. The idea must have arrived on a golf-course. One day an executive was playing golf. It was a working day so of course he was playing golf. And he realised just how much weight his golf-trolley could take. A whole heavy golf-bag of full of clubs. He had his caddy with him. It was like a neon light flickering on in his head, a sudden burst of illumination. Of course! Postal workers are just like caddies really. Why not get them to use golf-trolleys instead of bikes? And he swung his six iron and landed straight on the green.
But the main advantage of the new delivery method over the old is that it doesn’t in any way take the worker’s needs into account. It was imposed from above, without consultation with the staff. It was devised in the drawing room, in the office and the boardroom. It was negotiated with the union and then presented as a fait accompli. It was either take it or leave it and take early retirement. No other choice was on offer. It doesn’t matter whether it is more efficient or less. What matters is that it has created a new disincentive for the workforce to care about their job. It has alienated the worker even more. It has reinforced the worker’s view of himself as a replaceable cog in a large and complex machine. It has reminded him of just how meaningless he is. This, of course, is entirely right and proper, because this is all he is, and the sooner he gets used to it, the better.
Welcome to the modern world.
Royal Mail may be viewed with a high level of affection by the public now, but will that still be the case after it’s privatised?
From the Guardian Comment is free
The inevitable has happened. The government has announced its schedule for the privatisation of the Royal Mail, due to begin in 2013.
It’s not clear yet whether it will be full privatisation or part-privatisation, whether it will be sold off to another mail company or to a private equity firm, or whether it will be floated on the stock market as an IPO (initial public offering) and advertised to the public in the manner of the “Tell Sid” campaign for the sale of British Gas way back in 1986. “We see no reason why this company should not be IPO-able,” said one senior figure. “Royal Mail is viewed with a high level of affection by the public.”
The reasons given for the privatisation were outlined in the Hooper report in 2010.
They are as follows:
1) Falling volumes of mail due to competition from electronic media such as email and texts.
2) The inefficiency of the Royal Mail compared with its competitors.
3) The need for modernisation and the private investment to complete this.
Hooper consulted widely throughout the industry. However, he has never, as far as I know, spoken to any postal workers.
What we would have told him is that while it may be true that mail volumes have fallen, staff numbers have been falling at a faster rate. Up to 50,000 job losses since 2002.
In other words, the weight of mail for the average postal worker has been increasing. We are carrying more mail, to greater numbers of people, on larger rounds than ever. Our sacks are heavier. We work longer hours, and we’ve taken an effective pay cut since the postal agreement of 2010 in which door-to-door (junk mail) – which we were previously paid for separately – has now been incorporated into our workload. In other words, falling mail volumes have been more than compensated for by staff efficiencies.
We would also have told him that the so-called inefficiency of the Royal Mail is due as much to market liberalisation as it is to anything inherent in the company.
Private mail companies have access to the Royal Mail network through a mechanism known as downstream access. They bid for the most lucrative contracts from corporate customers, but have no obligation to deliver the letters. They leave that up to the Royal Mail, dropping it off on our doorstep for final-mile delivery. In other words, our so-called competitors have a peculiar market advantage. They take a cut of the profits, while we do the actual work.
As for modernisation, that is being subsidised by the taxpayer. The government has already loaned the company £1.7bn and is proposing to write off £1bn of that.
Which brings us to the pension deficit, which has already been taken into government hands. Even then it was never as great a problem as has been made out. The deficit currently stands at £9bn but the assets stand at £28bn. That’s three times as much. The deficit only becomes a problem if all Royal Mail workers cash in their pensions immediately, something that is not going to happen.
These are just some of the ways in which the argument for privatisation has been skewed.
Meanwhile, in preparation for the event, the new regulator, Ofcom, has announced a lifting of the cap on how much the company can charge for first-class mail. The public are hardly likely to enjoy that. Nor is this going to increase public affection for the company.
However, here’s the problem. The cost of mail delivery has been way too cheap for way too long. Sixty pence to deliver a first-class letter from the Outer Hebrides to the Scilly Isles: it’s still a bargain by anyone’s reckoning.
Traditionally the profitable parts of the company were used to supplement the unprofitable parts. This is the means by which the Royal Mail has been able to deliver the universal service obligation (USO).
It is the breaking up of the company that has lead to the threat to the USO, one of the reasons Hooper gives for the need for privatisation. (Indeed, his report is called “Saving the Royal Mail’s universal postal service in the digital age”.) The irony here is that the USO might be dropped in order to sweeten any future deal.
Anyone who wants to know what privatisation means for staff only needs to look at the Dutch model, where postal rounds have been franchised out to home workers in a system known as “sort and deliver”. Boxes of mail are dropped on a home-worker’s doorstep, who then has to sort the mail and deliver it on an agreed day. The worker is paid per item, not by the hour.
The trick here is that there is often a gross underestimation of the time it takes to do the work. Casual workers get no sick pay, no holiday pay, no health insurance, no pension and – depending on how long the round takes – often end up being paid below the minimum wage.
All of which is likely to erode that “high level of affection” felt by the public for the Royal Mail.
Read more here.
Royal Mail has a new regulator, but its proposals fail to protect the service from privatisation and unfair competition
From the Guardian, Comment is free
Friday 28 October 2011 08.00 BST
The Royal Mail now has a new regulator, Ofcom, which took over the role from Postcomm on 1 October. Ofcom has already issued a report in which a number of changes are proposed. There is a public consultation under way, which closes on 5 January 2012.
The most contentious of the proposals is the one to lift the cap on what the Royal Mail can charge for its principal service. According to some reports this could mean the price of a first-class stamp going up to £1. Less well recognised, but equally important, is the proposal to lift the cap on the price of bulk mail and business mail, which could also have an impact on customers further down the line.
The move to Ofcom follows on from proposals made in the Hooper report, which has been the basis of policy for successive governments since it was first published in 2008. It was updated at the request of the current government in 2010.
Hooper makes a number of recommendations, of which the change of regulators is just one. Other recommendations include the introduction of private capital through a “strategic partnership with a company with corporate experience of modernisation” – privatisation – and the removal of the pension deficit to the public purse, thus lifting the burden from any future buyer. In March 2010 the deficit stood at £8bn. Hooper states that his proposals must be taken as a package, which implies that privatisation is not far off.
The stated aim of both the Hooper report and the Ofcom proposals is the protection of the Universal Service Obligation (USO) by which the Royal Mail is required to collect and deliver letters six days a week at an affordable and uniform price across the UK. None of the other mail companies has this obligation. It is interesting to note that these proposals come on the eve of privatisation. They allow any future buyer the freedom, not allowed to the Royal Mail for the past few years, to set a price in line with actual costs.
Meanwhile Ofcom also offers safeguards to protect vulnerable consumers from onerous price rises by placing a cap on the price of second-class stamps of between 45-55p. It also, very significantly, promises “to require Royal Mail to continue to provide competitors with access to its delivery network”.
It’s at this point that we enter the bizarre world of “downstream access”. Hooper explains the term in his report, in a footnote on page 12:
“Royal Mail delivers 99% of all letters downstream. Royal Mail is required by the regulator … under the terms of its licence to deliver letters for competitors who collect and sort upstream in competition with Royal Mail. This is called the access regime or downstream access regime. Competition in physical mail happens upstream whereas downstream delivery of physical mail has the characteristics of a monopoly.”
Do you get that folks? “Competition in physical mail” – that is competition for profits – “happens upstream”, while “downstream delivery of physical mail” – that is, the actual work – “has the characteristics of a monopoly”. Royal Mail has a monopoly of the work, while the other companies get a share of the profits. And you wonder why the USO is under threat?
The Ofcom proposals continue: “Royal Mail would have the freedom to set the ‘wholesale price’ for access to its network but would be subject to rules regarding the allowed margin between the wholesale and retail prices. This would help ensure that efficient competitors can compete effectively with Royal Mail.” This is known in the business as “headroom”. It is the difference between what the Royal Mail is allowed to charge, and what the “competitors” – who don’t, in any recognisable sense of the word, actually compete – require in order to continue to generate profits for themselves.
Ofcom makes a sort of nod of recognition to the absurdity of the situation when it promises, in the next sentence, “to assess on a case-by-case basis any interest in providing so-called ‘end-to-end competition’ in the UK, where a postal operator receives the letter and delivers to an address without using Royal Mail’s network.” It is interesting to speculate what this might mean. Are we going to see rival pillar boxes on our street corners, and rival posties with different coloured uniforms vying with each other to get to the letter box first? Will there be a kind of postal workers’ turf-war going on, in which I meet my rival at the gate and have to fight him off for access to your letter box?
Of course not. The rival companies will only consider an end-to-end service if there is profit to be made, which means they won’t be in the slightest bit interested in the USO. If such a thing happens at all it will be delivery within one city, or between cities, no more. Rural and remote areas of Britain will never be graced by any but the Royal Mail’s characteristic uniform. Whatever else happens, the Universal Service Obligation will remain the obligation of one company alone. Which is the reason why the Royal Mail will always remain a special case.
Read more here
The Royal Mail’s decision to leave undelivered mail with neighbours fits in with its policy of closing delivery offices
From the Guardian, Comment is free
Monday 3 October 2011 10.09 BST
How well do you know your neighbour? Well enough to trust him with your valuables, for instance, with confidential information, with your cup-final tickets or your passport? Well enough to allow him to receive your latest bargains from eBay or your brand new iPhone?
Currently the Royal Mail is the only postal company not allowed to leave undelivered mail with your neighbours. Instead a 739 (“Sorry you were out”) card is left and the items returned to the local delivery office for collection.
In future, if you are not in, the postal worker will be expected to try delivering to a neighbour instead. A neighbour is defined as someone who “lives within close proximity”. It’s up to the postal worker to decide who this might be. If the neighbour accepts the item, then a 739 card will be delivered to your door detailing the address where the mail is left. If the item requires a signature, then the neighbour’s signature will be taken. If the neighbour is not at home, or refuses to accept the item, then the postal worker will return it to the delivery office in the usual way. The Royal Mail will not accept liability for loss, damage, or delay once it is in the neighbour’s hands.
According to the latest research by GfK NOP market research carried out on behalf of Consumer Focus, customers are generally suspicious of the proposals. Four out of five of those questioned said that they should be allowed to opt-out of the scheme if they wished, while nearly half (49%) said that neighbours shouldn’t be allowed to sign for recorded post. One in five people said they were unhappy for any neighbour to be given any post.
The Royal Mail states that the reason for the change in procedure is to “bring its service into line with other providers”.
That’s “modernisation” for you. Because other mail companies provide a lesser service, the Royal Mail feels obliged to reduce the quality of its service too. I always thought the idea of competition was that it would improve the service. Not so, it seems …
Actually, I think the company is being disingenuous here. I think it has little to do with saving money or with competition. Something else is going on, something you will know about if it is happening in your area, but which you will not have heard of otherwise: the large-scale but mostly hidden closure of delivery offices up and down the country.
Just to give you some idea of the scale of these closures: in the last month I’ve had notification of the impending closure of more than 10 delivery offices in the UK. This includes the closure of a number of delivery offices in the RG7 postcode area around Tadley, Hook and Thatcham and their removal to Reading, about 11 miles away. The Reading delivery office is also due to close, and the whole lot moved into an industrial estate outside the town. Also planned for closure are offices in Dundee, Hull, Holbeach, Fishguard, Droitwich, Guisborough, Malmesbury, Whitstable and Herne Bay.
The most high-profile closure is that of the central London delivery office in Rathbone Place, which serves W1, WC1 and WC2, which Great Portland Estates has just bought for £120m. I have to say that sounds like a bit of a bargain for a 2.3 acre site, just off the eastern end of Oxford Street, in the heart of the London’s fashionable West End. The Royal Mail operation will be moved to the Mount Pleasant office in Phoenix Place, Islington, a significant bus or tube journey away.
These are only the ones I’ve heard about in the last month. According to the Royal Mail annual report 2010-2011, 19 delivery offices closed last year. This should give you some idea of the on-going scale of the programme.
The reason news of the closures remains hidden is that the story always appears in the local paper and as yet there has been no notification in the national press. There are small-scale protests happening throughout the country, as local people are beginning to recognise the implications of the closure of their particular delivery office, but no recognition of the sheer scale of the closure programme, nor what this will cost in terms of extra journeys to and from distant offices for the nation as a whole.
Just to give you one example of this, if the Herne Bay and Whitstable delivery offices close and their operations move to Canterbury, some eight miles away, then this could mean in the region of 1.5m extra miles of road journeys per year for staff going to and from work and for customers forced to pick up their undelivered mail.
Hence the need to change procedures. While staff will have to undertake the journey regardless, customers might well prefer to risk having their mail dropped off with a neighbour rather than having to drive to some out-of-the-way office on an out-of-town industrial estate to pick it up.
Royal Mail is supposed to be a low-carbon company. As it says on the website: “We want to make sure our services have a positive impact on society and a minimal impact on the environment – and we’re working with you and our partners to make it happen. For us, sustainability affects every part of our business, every day, and we can all make a contribution.”
Meanwhile the Royal Mail are raking in vast amounts of cash for the sale of prime real estate in the heart of our towns and cities. Where will all the money go I wonder?
Read more here.
A Panorama programme on postal junk was compelling, but didn’t mention that the market is skewed against Royal Mail
From the Guardian Comment is free
Read more here
A column written by Roy Mayall for the You & Yours programme on Radio 4. The item is 35 minutes and 20 seconds into the programme.
Listen to it here.
As profits dive, it’s clear this management isn’t modernising, it’s running the company into the ground – but why?
Read more here.
“The Royal Mail is being slashed back, and it breaks this old postie’s heart”
From the New Statesman.
Read more here.
Last week all the new walk-sequencing machines in our area broke down. This meant that only about a third of the letters arrived at our delivery office on Wednesday. So on Thursday we had two days’ post to deliver, and everyone’s mail was late.
From the LRB blog.
Read more here.
Vince Cable needs to look beyond the headline figures and develop a long-term solution to Royal Mail’s problems
From Comment is free.
Read more here.