Quality | 2009.10.29
Royal Mail has no choice but to change | Richard Hooper
The postal service must modernise, with the government and unions supporting the process
The Royal Mail strike is extremely damaging. It harms the customers, each and every one of us. It harms employees since it accelerates the decline of the business that pays their wages. It harms shareholders (the taxpayers) who will have to find yet more money to keep the Royal Mail in business.
The government commissioned a year-long independent review of the postal services. Our remit was clear: how to maintain the universal postal service – it was not to question its validity, kill it off or degrade it. Our central concern was to ensure it flourished. The universal postal service involves six-day collection and delivery from 12,000 post offices and 115,000 red post boxes to 28 million homes and businesses, at prices which are independent of distance.
Everyone, including the Communications Workers Union , agreed with us that in order to maintain the universal postal service, the Royal Mail had to accelerate urgently its modernisation plans. If not, it would inevitably decline because it would fail to compete with other postal companies in the liberalised European market, and because the digital media such as email and texting are causing a decline in letter volume. The Royal Mail is embarrassingly near the bottom of the premier league of European postal operators by measures of efficiency, such as levels of automation. As a result, the survival of the universal postal service is seriously threatened.
We obviously looked at whether the modernisation that was required to sustain the universal postal service could be carried out with the Royal Mail under 100% public ownership. We found little evidence that it could. For a range of reasons, it has proved very difficult to get the improvement of industrial relations which would then allow modernisation to accelerate, thus ensuring the health of the universal postal service.
Industrial relations are exacerbated by the constant arguments surrounding the nature of the Royal Mail. Is it a commercial venture which has a strong and regulated public service obligation? Or is it a public service with some commercial trappings? Given the irreversible liberalisation of the postal market across Europe, and the ever-greater competitive impact of the internet and mobile phone industries, we came to the conclusion that the Royal Mail had no choice but to be more commercial. For example, advertising mail produced £1.7bn of postal revenues in 2006-07, 14.9% of the total postal market in the UK. Without it there would be little chance of survival for the universal postal service. Unless, of course, the taxpayer was willing to pump in yet more billions of pounds.
But there are obstacles. As the report stated: "However strongly the government emphasises that Royal Mail must follow commercial objectives, the union perceives it is in the interests of its members to encourage ministers to intervene in the management of the company." Partial privatisation would increase levels of political separation. Modernised postal operators around the world told us firmly that it is very difficult to achieve modernisation if there is constant political intervention in their commercial management.
Britain once had a world-class postal service. Everyone involved in the service – government, unions, management, and regulators – has contributed to its relative decline. The country has a chance now to reverse the decline – but it will require bold action from all parties. The key is for the Royal Mail to modernise: to give high-quality service at a fair cost to taxpayers. Managers must drive through modernisation: government must support them; regulators must facilitate the process; and, above everything else, the union must stop resisting modernisation. This is the moment to do the right thing.
For more information, please visit
http://www.guardian.co.uk/commentisfree/[...]22/royal-mail-choice-to-change
