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.
If private companies can pick the best bits of the network, the obligation to deliver to all is undermined. That’s why we’re considering action.
From the Guardian, Comment is free, Thursday 6 December 2012 15.05 GMT
According to a headline in Wednesday’s Daily Mail, postal workers are threatening “to ditch half of their deliveries in bid to protect Royal Mail from ‘unfair’ competition“.
The Mail makes it clear with those quotation marks exactly where it stands on plans by the Communication Workers’ Union (CWU) to ballot its members on whether to boycott letters handled by rival companies.
As the article says: “Royal Mail has lost business to the likes of TNT Post and UK Mail over the past seven years. Currently, half of all letters are handled by a rival company, with Royal Mail responsible for only the final mile of the delivery.” Again, it’s that little word “only” which betrays its prejudice. In case you’ve forgotten, the business of a postal delivery service is to deliver the post.
The Royal Mail doesn’t “only” deliver the final mile. The final mile is the actual work. All the rival companies do is collect the mail from the bulk mail contractors (such as banks and utility companies) and then drive it to one of the Royal Mail’s delivery hubs for distribution around the country. We do all the rest.
It is Royal Mail postal workers like me who walk along your street and up and down your garden path, six days a week, in order to get the mail to you. The technical term is downstream access. Private mail companies have access to the Royal Mail’s distribution system. The Royal Mail has to apply something known as “headroom” in fixing its price for this service. Headroom is the difference between what the Royal Mail is allowed to charge for its bulk mail contracts and what it can charge its rivals for access to the network. It has to allow rival companies headroom to make a profit.
The whole system is administered by Ofcom, the postal regulator. In other words, the Royal Mail is heavily regulated to achieve what is sometimes called “deregulation”, ie access of private companies to the postal market.
This is what the CWU is talking about to when it refers to “unfair competition”. As the union says: “CWU is concerned that unfair competition is undermining the sustainability of the universal service … Private postal company mail makes up 45% of letter volumes delivered by Royal Mail, a figure which has consistently grown under competition arrangements. New end-to-end competition is a worrying expansion, further undermining the USO [universal service obligation].”
Guardian readers will not be surprised by this statement, as I’ve been banging on about the issue for the last three years at least. What is new is the introduction of so-called end-to-end competition into the postal market. Currently only one company, TNT, is doing this, with around 300 delivery staff delivering mail to about 350,000 households in west and central London.
What this means is that TNT continues to use the Royal Mail’s downstream access service in all but those 350,000 households, although in a recent press release it said it planned to increase the number of its postal employees to 20,000 in the next five years.
There is no obligation on TNT to deliver the universal service, therefore it is able to cherry-pick those parts of the network that are the most profitable. Nor is there any obligation to match the Royal Mail’s pay and conditions.
In other words, what this amounts to is an attack upon our jobs. If TNT and other private mail companies are able to pick the best bits of the network with no obligation to deliver to the rest of the country and, at the same time, are able to pay reduced wages, then this is clearly a threat – not only to our pay and conditions, but also to the universal service. Personally, I will be voting yes when my ballot paper arrives.
Read more here.
At the Royal Mail you are sometimes made to come into work even when you are sick or injured.
They monitor your attendance. If you are off work more than a certain number of days they put you under threat of dismissal. It doesn’t matter how ill you are, they still threaten you.
If you are off work for sickness or injury more than three times in a year, or for more than three weeks in a row, you are given a warning. This is a Stage 1 warning. If you go over the limit a second time you are given another warning. This is a Stage 2 warning. If you exceed the limit for a third time you are given a Stage 3 warning and threatened with dismissal. After that you can’t afford to take time off from work no matter how severe the illness.
The Attendance Procedure works whether you are ill or not. All absences are assumed to be illnesses, but all illnesses, no matter how severe, count towards your absences. So a day off from work with a hangover is counted the same as a week off from work for a hernia operation; and a month off work after a heart attack will count the same as three separate days off for sheer laziness. Hernia operations and hangovers and heart attacks are all counted the same in the Royal Mail book of illnesses.
So say you have an accident and you’re off work for more than three weeks. At this point the office starts to ring you up asking when you will be back at work. They will ring you up daily, hassling you to come back to work. And no matter how ill you have been, you will get a warning when you do eventually come back.
You could come in on crutches, and you’d be given a warning. You could be bandaged up to the eyeballs. You could have coughed up your oesophagus. It makes no difference. You’ve been off work, so you will be warned. Three weeks off twice in a year and you’re up for dismissal, and that’s that.
We’ve all seen it. People who have had heart attacks or hernias, or some other major illness, crawling into work to avoid the warning, or hauled up before the “lino” (as we call the manager) and given a reprimand. People under severe stress, or with depression. People with broken arms or legs or twisted backs. People on medication, too drugged up to walk in a straight line, pleading for some understanding.
It’s no good protesting that you are ill. The lino loves his job. He will smile at you – sweetly, or gravely, or maliciously, depending on his personality – and say he’s sorry. But he’s not sorry really. He doesn’t have the choice, he’ll say, the computer has flagged you, and you have to be given a warning. No space for personal initiative here, or judgement, or an intelligent weighing up of the circumstances: you’ve had too much time off and you will be punished.
Also, one day off counts the same as a week. So if you’re off for one day you might as well take the week off. If you underestimate your illness and come back to work too soon, only to find you are still ill, or the illness recurs, and you take another day off, this will count as two absences, and the computer will flag it, and you’ll be one step nearer a warning.
The result of all of this is twofold. One: you will take a week off work even for the slightest illness. Two: you will sometimes have to go into work even if you are sick and contagious.
In other words, the Royal Mail would rather you came into work and make everyone else sick than allow the possibility that occasionally people might ring in sick and take a day off because the wife is feeling horny that morning.
Such is life in the modern Royal Mail.