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The People’s Post: Why we need a strong public voice at the heart of our postal services

When you look at the political landscape in the UK today there has been a seismic shift from the position just five years ago. Whether it is the situation in Scotland, support for UKIP and the Greens, or the ongoing Labour leadership election, old political certainties are disappearing. In order to understand this we need to understand what has happened to working people.

Around 120,000 CWU members work for Royal Mail and what has happened in the postal industry provides a perfect example. Most people will be well versed in the fiasco of the first stage of privatisation. With shares being sold at 330p, and hitting 615p four months later, this has been neatly summed up as ‘selling tenners for a fiver.’ The banks who advised the government – given preferential status as long term investors – cashed in quickly making tens of millions of pounds and Ministers insisted to the last that the sort of result most of us would lose a job over, was actually a great success.

But while there are few news stories that can engender more cynicism than this, the issues in the postal industry run much deeper. The letters market, which had previously been restricted to Royal Mail was liberalised in stages from 2003-2006, just as it was undergoing huge upheaval with ‘e-substitution’, as consumers and businesses moved to email (mail volumes today are down by 40% in the past decade).

The first regulator, Postcomm, sought to give competitors a market share by requiring Royal Mail to deliver letters they had collected (a regime known as downstream access). To make this attractive to new entrants, Royal Mail was forced to carry this mail at a loss guaranteeing rival operators a profit. By 2010 this meant Royal Mail – still publicly owned and the only operator capable of providing a national delivery service – was subsidising competitors to the tune of £160m per year.

The regime had predictable results. Rival operators catered only to the largest business bulk mailers so consumers and small businesses saw no benefit from competition but increased costs. And Royal Mail, facing a massive decline in traditional volumes from the internet, was pushed to the brink of collapse. Thousands of jobs were lost in Royal Mail, the pension scheme was closed to new entrants, workers started being put under ever greater pressure to work harder and longer and in 2012 prices for consumers went up by 30-40%.

While Postcomm was merged with Ofcom in 2011 and Royal Mail was given greater freedom to compete, we are seeing the same mistakes being repeated now. Until its operations collapsed in May this year, for three years Royal Mail faced competition in deliveries from Whistl (formerly TNT) in London, Liverpool and Manchester. When Whistl launched in these areas it was free to cherry-pick the most profitable mail and to deliver three days a week, giving it a 40% cost advantage compared with the public service obligation Royal Mail faces (to deliver all mail, 6 days a week, to every address in the country).

Again this had predictable consequences. Good jobs in Royal Mail were replaced by minimum wage, zero hours, part-time and agency contracts in Whistl and the continuation of daily postal deliveries was under serious threat. When Royal Mail raised fears about the sustainability of a daily delivery service in the face of access competition and Whistl’s expansion plan, Ofcom’s message to Royal Mail was simple: cut jobs, adopt ‘flexible’ employment models and squeeze wages in real terms.

What is striking about these developments is that (i) the workforce, consumers and small businesses have all lost out; (ii) the core public service has been put under threat; and (iii) the public voice has been lost: regulators exercise huge power with little scrutiny and the final public stake in Royal Mail is to be sold in this financial year.

The postal industry is just one area in which we have seen these trends, with the interests of working people being subordinated to markets and competition. For those of us on the left, these forces highlight an urgent need to redress the balance of power in the world of work and wider society.

The CWU is campaigning to defend postal services and decent employment standards in the postal industry, two elements of the public service this country relies on and can be proud of: the People’s Post. At the heart of this has to be an overhaul of regulation, stronger legislation to safeguard daily deliveries and the retention of a public voice in Royal Mail.

The fact that this requires a fundamental shift in thinking in government and regulators about the way public services, and the country itself, are run is one reason why those old political certainties show no sign of returning any time soon.