Failure, thy name is Royal Mail


Peter Mandelson was thinking along the right lines when he proposed partial privatisation of Royal Mail (although I would have gone for the full deal). In the end, however, pressure from the Communication Workers Union as well as backbench Labour MP’s sank the proposals. That surrender was a bad move for a government supposedly keen to fix this loss-making institution.

The Royal Mail's pension fund deficit is now running in the billions of pounds (which will be paid for by the taxpayer to the tune of around £12bn) and inefficient practices still prevalent. Even turnaround experts like Allan Leighton, who has helped some of the biggest names in business, have been unable to make a significant difference hitherto.

The Royal Mail has been performing even more abysmally with the gradual opening of the postal market to private enterprise, but the CWU still fails to see the benefits privatisation could bring. Even partial privatisation would mean a more efficiently run Royal Mail, leading way to modernisation in the company’s operations and structure as well as helping to reduce the pension fund deficit (for which the unions are demanding a government bailout).

Striking from union workers has meant a slow down of operations, damaging not only Royal Mail's services, but also its reputation. But the unions are being unrealistic: without the modernisation that privatisation would bring the Royal Mail does not stand a chance against efficiently run, well-managed private sector competitors, in an increasingly open market. Ultimately, the Royal Mail must adapt or die.