Home > The Post > The Sale of the Royal Mail and the Birth of the New Feudalism

The Sale of the Royal Mail and the Birth of the New Feudalism

Universal Service

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.

Natural monopoly

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.

That’s feudalism.

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?

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  1. John thwaites
    October 19, 2013 at 4:53 pm

    Just a couple of things left out. Postmen of the past saw themselves so much of the state formed a regiment in WW1 and fought at Ypres. Also when we was GPO the postal side supplemented the phone side until split in the 80s and enabled it to be sold

  2. October 20, 2013 at 1:50 am

    The Royal Mail also owns some prime real estate which will doubtless be up for sale in the asset-stripping binge that should be expected.

    • October 20, 2013 at 9:03 am

      I’ve heard that Mount Pleasant alone, in the heart of London, is worth about £1 billion. That’s just one property. It shows how grossly undervalued the company was.

      • October 21, 2013 at 12:48 am

        I can believe it. The banks/ CoL are very well served by this government.

  3. martin
    October 20, 2013 at 7:53 pm

    Two must watch videos

    Arthimetic, Population and Energy

    4 million views for an old codger giving a lecture about arithmetic?? What’s going on? You’ll just have to watch to see what’s so damn amazing about what he (Albert Bartlett) has to say.

    I introduce this video to my students as “Perhaps the most boring video you’ll ever see, and definitely the most important.” But then again, after watching it most said that if you followed along with what the presenter (a professor emeritus of Physics at Univ of Colorado-Boulder) is saying, it’s quite easy to pay attention, because it is so damn compelling.

    and this in 2008 before our troubles began.

    How Unequal Can America Get Before We Snap

    Robert Reich, a visiting professor at the UC, Berkeley’s Goldman School of Public Policy and former U.S. Secretary of Labor talks about the inequality of income, wealth and opportunity in the United States and asks his audience to speculate on what will happen if these trends continue.

    • October 20, 2013 at 8:47 pm

      Thanks for the videos Martin. I see you’ve homed in on my “exponential growth is always unsustainable” comment at the end. I will watch these later.

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