For Sale: from the LRB blog

December 17, 2013 2 comments

london-review-of-books-subscribeSomething that hasn’t been mentioned much in the post-privatisation analysis is the amount of money the Royal Mail stands to make out of its immense property holdings. One building alone in the company’s portfolio of disused offices in London – the mail centre in Nine Elms Lane – has been valued at half a billion pounds. That’s one-sixth of what the government sold the whole company for.

The office was closed in 2012, more than a year before the sell-off. And it’s not the only one. Dozens of delivery offices up and down the country, including mine, were closed in the run up to privatisation. Several of them remain unsold.

Could the offices have been kept empty on purpose? Royal Mail bosses now stand to make a lot of money out of the company they once used merely to manage.

– See more at: http://www.lrb.co.uk/blog/2013/12/17/roy-mayall/for-sale/#sthash.wrtLm9Fi.dpuf

There’s Madness in the Methods

December 5, 2013 27 comments

“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.”

Deliveries are now made with trolleys Credit: ITV

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 latest ad: the hypocrisy of capitalism in one minute

November 3, 2013 23 comments

“We love parcels…”

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.

The first TV advert from the Royal Mail since privatisation was shown over the weekend, during the X Factor, and Downton Abbey.

The advert features the Royal Mail Choir, singing their version of the Beatles’ All You Need Is Love, while postmen and women deliver parcels to their appreciative customers.

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
It’s easy

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.

http://www.theguardian.com/commentisfree/2013/nov/04/royal-mail-ad-management-customers

Magical Thinking

October 24, 2013 1 comment

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.

– See more at: http://www.lrb.co.uk/blog/2013/10/24/roy-mayall/magical-thinking/#sthash.c9opEVX8.dpuf

It’s one law for the banks, another for the rest of us

October 23, 2013 6 comments

Locust

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.

Bargain basement

Lord Sugar lambasts Government for bargain basement sell-off: ‘You’re fired!’

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.

Markets

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.

Shafted: the great Royal Mail rip-off

October 22, 2013 Leave a comment

Chuka Umunna: “Royal Mail is being sold off on the cheap”

The price of Royal Mail shares has increased by almost 50%, from 330p to over 500p.

Thousands of investors have made huge profits just days after their initial investment.

Almost 700,000 small investors purchased £750 worth of shares and have witnessed an instantaneous increase in their value.

The government are under scrutiny for having undervalued the price of the Royal Mail.

It is the taxpayer who is set to pay the price for the government’s mistake as investors, large and small, are set to continue to benefit.

In the past few days the Royal Mail’s market value has soared to over £5 billion representing a £1.7 billion increase.

Chuka Umunna, Labour’s shadow business secretary, said: “Royal Mail is being sold off on the cheap with taxpayers being short-changed to the tune of hundreds of millions of pounds. Yet out of touch ministers have ploughed on regardless and claimed this is a ‘triumph’. Increasingly this privatisation is looking like a botched job from an out-of-touch government that puts the wrong people first.”

The Secretary of State for Business Vince Cable has responded by branding the share price increase as “froth” and has encouraged people to focus on the long term implications of the sale.

However, Stockbrokers Peel Hunt responded by saying: “This is not ‘froth’; it’s real people buying, selling, averaging down.”

It is thought over 100 million shares were purchased in the first hour of trading and an estimated 700,000 people were given 227 shares worth £750.

The unusually high demand has lead some commentators to question why so many people are investing in them and whether the government did in fact completely undervalue the business.

Cable has asked people to think about the long term future of the Royal Mail, and has indicated that he has attempted to keep the company in the right hands.

Almost 40,000 people who tried to acquire more than £10,000 worth of shares were denied any form of sale.

It is also thought that government denied a number of city investors and hedge funds in a bid to keep the business out of their hands, although 70% of the shares did, in fact, go to large investors.

Cable said that demand across the country was so large that the government was able to stop shares being sold to “spivs and speculators” and instead could focus on sales to “responsible long-term institutional investors”.

Meanwhile, the National Audit Office will launch an inquiry into the allegations that the business was undervalued.

– See more at: http://www.moneyexpert.com/news/shafted-taxpayers-suffer-royal-mail-shares-soar/800582360

Royal Mail privatisation will hurt rural communities, says vicar

October 22, 2013 Leave a comment

The Rev John Owen, vicar of Froxfield, Privett and Steep, with Royal Mail postman John Luker at the post box opposite Froxfield Church

Originally published here.

A vicar of three Hampshire villages fears the privatisation of Royal Mail will hurt rural communities.

The Reverend John Owen is vicar of the villages of Froxfield, Steep and Privett, near Petersfield.

He praised his local postman, John Luker, who has collected and delivered letters in the villages between Petersfield and Alton for 32 years.

“John knows the local roads like the back of his hand. He doesn’t use a SatNav, never gets lost, and knows a good many of the 800 inhabitants of Froxfield and Privett by name,” said Mr Owen.

“If something is amiss, John is likely to notice it on his delivery round and will raise the alarm.

“We wonder how economically viable his job will be when the flotation of the Royal Mail takes place.”

Mr Owen said villagers were sceptical about official assurances of a continued daily collection and delivery in the hamlets. Most predict a weekly collection, which will mean villagers have to drive to larger towns nearby to post urgent items.

“John Luker represents that bit of community capital and cohesion which does so much for the well-being of the rural community,” said Mr Owen.

“He’s not unlike the landlord of the local pub and the people who have been running the village shop for years. They help to bind the community together.”

The vicar said rural communities would be poorer, emptier and less attractive as a place to live without the postal service.

“As Christians, we are aware that life can’t be quantified in a balance sheet,” he said.

“Our church members will be challenging this thinking and finding new ways to serve their rural communities – churches hosting post offices is just one way they are already helping.

“But my plea would be for us to hold back from privatisation of the Royal Mail until these issues have been thought through properly.”

Mr Luker added: “I have 283 calls to do, and drive about 36 miles a day from our office in Petersfield. I know any private firm wouldn’t have the same kind of local knowledge that I have. I love these villages and I know about 90 per cent of the people who live here, by sight or by their Christian names. It will be hard to replace that.”

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