Tuesday, 16 December 2008

Royal Mess

Seeing how the rest of us are rapidly returning to the 70's it is appropriate that the archetypal 1975 business model, the Royal mail is in the news.
A tale of underinvestment, old fashioned and outmoded working practices, mistrust, large losses, public sector pay scales and pensions, weak management, unfocused business plans, heavily unionised strike prone workforce, secrecy, lack of clear data, ignorance of the competition and a true 'them and us' attitude Royal Mail has mostly allowed the intervening decades to drift by unnoticed.

To be fair they made progress towards modernisation and changes to the sort of working practices that a fleet street print worker would have envied. However with the unbelievably bad and unnecessary decision to allow mail liberalisation early, the ability to generate revenue to modernise equipment and pay for generous redundancies was lost. Royal mail must subsidise their competitors.

But what exactly is the purpose of the latest Lord Mandelson announcement?
Having persuaded James Punell to stop his pensioner angering, business destroying pension card removal plan, Mr Mandelson is keen to keep the USO, as binning it makes business sense but would be a horrendous vote loser.
If Royal mail went to a five day a week delivery they could shed 1/6 of the workforce immediately. If they offered a regional pricing service rather than a flat rate they would be in profit. But this appears not to be an option.

No sane private business would take on a £7bn pension deficit {that is £7bn BEFORE the credit crunch/investment crash have been factored in} so it looks like the government will take over responsibility for the pension. Not to odd. they are the only shareholders. It is a public sector utility like any other that need their pensions funding. But why get into this at all?
The Hooper report is out..Its the usual bad news.

Lord Mandelson has recommended a part privatisation. This has been met with cheers from the Tories and surprise from
Labour MP's who were pretty surprised and probably rebellious as they have a manifesto commitment to keep royal mail in the public sector.Plus judging by their comments so far many have understood the real problems of the unfair regulatory framework .
And the Unions have reacted as expected. Badly.
Does Labour no longer need the money from the CWU? Or does Lord Mandelson know that the CWU behaves like a battered wife and after rushing to complain to the press they will eventually fund the Labour party again at election time, no matter how mistreated they are.
Post Office counters, which Lord Mandelson has just saved, earn around 1/3 to 3/4 of their revenue from royal Mail. To lose that would close four out of five post offices say the NFSP

And what is the point of selling off the profitable parts of RM to the Germans Dutch and the French and keeping the loss making parts? Surely that will give a future government no option but to abandon the Royal Mail and the Post Offices as a massively unprofitable business that loses the government thousands of millions of pounds a year?

Or is it a pension raid? Take over the £22 billion Post Office pension fund and add it to the governments books.Reduce borrowing by £22 Billion at a stroke, even though they will have actually increased it by £7+ billion.

Or is it the EU postal regulations making way for an EU postal service?

Or is it just selling a chunk of the governments stake to TNT to raise some cash for the very empty government coffers?

Is it that the election manifesto commitment to not privatise royal mail will shortly expire so now is a good time to begin talking about a repositioning

Or is it just more of a government that is getting through the crisis by taking it one day at a time?


Houdini said...

I made this comment on Dales blog. Yes, it is slightly simplistic, with the losses made on letters by RM and the trade price given to TNT etc. but the main thrust stays the same. Labour has for ideological reasons needed a good reason to present to the voters why they can't privatise, so instead destroy and make inefficient and trumpet privatisation as the only economical way to save these institutions. It is dishonest and criminal, as will be shown in years to come, but meantime....

You're being extremely silly by not looking at who is behind the destruction of Royal Mail, and that is the Labour party. They, since 1997, have deliberately run it into the ground in order to make it ripe for selling off because it is not performing and needs revitalising as an excuse to do just that.

In 1997 Royal Mail had 60,000 more employees than today, made more than double the deliveries to private addresses, as well as having a Sunday pick-up, and running a large rail service too, and all that while making £500million of profit. With the cuts in services and personnel you would have thought they would be making £500 million more TODAY So what happened?

One of the first acts of the Labour Government was to take the profit of Royal Mail and chuck it into the kitty of the Treasury instead of allowing it to invest that profit in infrastructure, and little things like pensions.

So we have had now near 12 years of chronic underinvestment and deliberate decline.

THAT is what you and the Tories should be shouting about, not more bloody reform of this criminally near destroyed institution.

Bill Quango MP said...

Maggie always wanted to dump royal Mail, mainly because of the militant unions and to kill Labour party funding, but even she was dissuaded.
Whether that was due to public pressure and the threat of massive strikes {in the pre-email age that would have been almost as crippling as coal} or whether she was told one war at a time {ie miners, printers et\c is unclear.
either way she decided against, and so did John and so did Tony.
No one knows what Gordon thinks but Peter has spoken for him.

Whatever happens we can be sure that this third way nonsense will turn out to be the usual highly expensive public spending hidden off balance,Large scale redundancies, a much trumpeted increase in CHOICE that soon becomes EXPENSE as the players align their prices, a regulator whose remit never includes the bleedin' obvious like investment targets, no inflation beating increases, focus on consumer not shareholder, reduced and more expensive service, quango creating mess, for a marginal increase in quality.

why the Labour party wants to kill its goose and alienate its supporters is unclear. No wonder the Tories are lapping it up.

As Napoleon said "Never interrupt your opponent when he is making a mistake"

Sebastian Weetabix said...

I've never understood why they don't make Post offices government contact points... rather than treat it as a proper business (which it isn't really) it could be the one stop shop for all interactions with the authorities (criminal justice excepted). Why have a post office/job centre etc. in every town when you could put them in all in one building?

Yokel said...

You got it in one line. It is the EU making an EU postal service.

How on earth can you have one nation (EU) when each province (formerly known as member states as a gesture to memories of independent sovereignty) does their own thing? And the usual EU way is to trash it first, and then to offer a "solution" to the problem that they themselves have created.

JPT said...

Too many vested interests with Royal Mail for a proper solution to be found.
No political party willing to grasp the vote losing nettle of sorting things out and a very militant union that funds the Labour party.

A fudge then!

Anonymous said...

The Chinese beat Napoleon by a few thousand years.

Blue Eyes said...

I am no expert but superficially I can see the merit in taking the capital from TNT (or whoever) and using it to do the modernisation that should have been done with the earlier profits. As a customer, I find the Mail's service is dreadful: they lose stuff, they mis-deliver stuff, the post doesn't arrive at a predictable time, they deliver bulky stuff when I am out and the delivery offices are open for only a few hours a day.

Nobody would design a system like this from scratch.

Bill Quango MP said...

BE you are right.It isn't good enough, but it is better than people believe it is.
But the lack of investment has done terrible damage, very much along the lines of the old British Rail.
RM has seen a huge increase in parcel deliveries yet the business is structured for the declining letters business. {That said,it is still a letters business and so that is the main workload}
Bizarrely you get a far superior collection service in the rural areas where collection depots are linked to post offices or mail centres who open all day and saturdays.

asquith said...

I have a weekend job in the runup to Christmas, redirecting mail that the automatic scanners can't read. Some of the hand-written letters are by semi-literates who don't deign to include a postcode & assume that we'll magically know where their remote village is. With machines, sometimes they're programmed to put incredible shite on the envelope & no one can make any sense of it.

Especially in November-December, it really isn't "our" fault!

I have only limited experience of the operation, but my office seems to be quite well managed. I've seen far worse in private-sector firms I've worked for.

asquith said...

Also, it's my last day there on Saturday, & I am on holiday from my main job after Christmas. I am looking forward to the end, except inasmuch as I'm too tired to feel anything but numbness. I'll enjoy waking up on Tuesday morning (Monday will be a hangover, so it doesn't apply) & knowing I don't have to bother, at least for a couple of weeks :)

mr popodopolous said...

What is it with us British and our seemingly insatiable love of privatisation?

It is the assumption that the market mechanisms always work best? Well, public transport has not exactly hugely improved with privatisation but the cost has gone up majorly!

I also think it is a bit of hype or ignorance wilful or otherwise...the job of a postman is surely not that easy.

Bill Quango MP said...

Asquith.. I was in a sorting office just today.
someone came in and told the postman that they had forgotten their card but they had had a parcel delivered that they needed to collect. Could the postman get it for them.
I could see the collection bit with the postie looking forlonly at racks of hundreds of letters and parcels there. It took him 10 minutes just to check the visible addresses before he went and told the woman
"sorry, you'll need the card AS THAT WILL TELL ME WHAT SORT OF PACKET TO LOOK FOR"

"This isn't good enough" she said..huffing off.

This happened three times in 15 minutes. Not really the sorters fault and the system could definitely have been run better, but if the person had bought the card they would have had the item.

asquith said...

I don't know about the manual sorting, as I work on computers. It's quite hard to explain what the job entails (as you can see below), but it isn't picking up actual physical letters.

You get things that the machine hasn't been able to assign a postcode to, & either enter in the postcode or any other relevant information that might help it reach its destination.

I am told (& can believe) that the machine is very efficient, so the sole reason for me needing to be employed & the whole MDEC to be maintained is the idiocy of some letter writers.

Also it's a really thankless & shite job, because it's essentially data entry.

asquith said...

Actually, the good old Urban Dictionary gives a more fluent account than mine:


It's all true. I never thought anything would be worse than my day job. But I'm trying to get as much saved up as possible in case "something" happens, hence working for agencies & what have you at weekends.

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