aPrivatisation of the Royal Mail
By C J Stone, previously published here
As I’m sure you are all aware by now, the Royal Mail was privatised on Friday. It was sold for £3.3 billion. Within a day the share price had risen by 38%, meaning that the company was seriously undervalued and some people made a quick profit.
Billy Hayes, General Secretary of the Communications Workers Union, said, ‘If you sold your house and the buyer sold it on the next day for 38% profit, you’d ask “what was the estate agent doing?”’
Actually it is even worse than this. If you remember, the government took on the company’s pension liability two years ago. That was at a cost to the exchequer of over £10 billion.
So in this case the government has spent three times the value of the property, in order to sell it at a significant loss, in order for the new buyer to then sell it on for a profit.
Meanwhile, the company has spent the last two years modernising the business. Postal workers have been provided with new vans, new trolleys, new walk-sequencing machines, new GPS devices, new bags, new shelving units, new uniforms, and a range of other equipment. Delivery offices have been closed all over the country and consolidated into larger units. Costs have been cut and door-to-door (junk mail) incorporated into the work load. New working methods have been introduced, and every round in the country has been extensively restructured.
All of this has been done at the taxpayers expense, of course.
The regulator has lifted pricing restrictions, which means that the company is now making a healthy profit. So, you have to ask, why couldn’t the regulator lift the restrictions earlier, in which case the company could have been earning a healthy profit for the taxpayer for years?
70% of the company has been sold to large investors: to banks, hedge funds, pension funds and sovereign wealth funds, including the one belonging to the Kuwaiti Royal Family. In other words, the British public have taken a significant loss so that this fabulously wealthy family can extract even more wealth for themselves.
The Kuwaiti Royal Family are the absolute rulers of a medieval feudal state. Not ‘wealth creators’. Wealth extractors. That means that postal workers in the future are going to be the servants of a feudal Lord. Serfs, in other words. Who says there’s no such thing as progress?
Moya Greene, the current CEO, has also said there will be further job losses, which can only mean that postal workers will be expected to work harder. She took £1.47 million in pay and bonuses last year. No doubt she will be given substantial share options too, now that the company is in private hands.
So what will this mean for you? Let’s make the comparison with previous privatisations.
Water charges have risen by 245% since the water boards were privatised. Subsidies to the rail industry have more than doubled, while fares have increased above the rate of inflation and standards have declined. And in the same week that the Royal Mail was floated on the stock exchange, the energy company SSE put up its prices by 8.2%. More price rises are expected to follow.
Our public utilities are now almost exclusively owned by foreign corporations.
Did you know that the origin of the word ‘idiot’ is from the Greek word meaning ‘private’? Or, to put it another way, the sale of Royal Mail has brought even more idiocy into our public life.
Is there any justification for still call the new private business “The Royal Mail” since we no longer own it? I would love to see Her Majesty withdrawing permission for the use of the name – don’t see it happening. Perhaps if her head was removed (from the stamps of course!) and replaced with the Kuwaiti Monarch it might make a difference.
Maybe we will get it back one day. (Ed?).
I hate to be blunt, but, get used to it.
George Osborne (forget Cameron he’s just a bumbling irrelevance) came to power with one intention. To tear down and wreck every mechanism of State to a point that would render it beyond repair to an ensuing Labour Government in just five years. He doesn’t care about re-election. He doesn’t care about the future of the Conservative Party. Beyond what he and his Neo-Liberal friends can suck out of it, he doesn’t care about Britain.
By 2015 his work will be done. The NHS, already buckling under the strain, will lie in ruins. The welfare state will be eviscerated, Education in chaos. Most importantly anything that offers a potential revenue stream (such as Royal Mail, publicly owned banks, the East Coast Mainline) will have been removed from the grasp of his successor. Any attempt to rebuild the mechanisms of state will have to be funded, therefore, by unpopular taxes.
There was a brief period where, much to Osborne’s incredulity I’m sure, the Labour Party seemed incapable of scoring in an open goal. I’m sure the Neo-Cons in the Government must have been wondering ‘but what could we do in 10 years?’.
The popularity of Ed Miliband’s pledge to freeze energy prices, though, put it beyond doubt. The public weren’t buying the ‘Back to the bad old days of the 70’s agenda’.
Osborne knows he only has 18 months left. He is a dying animal. And they are always the most dangerous.
The remaining months of this coalition government will see the most brutal acceleration of every effort to tear down the state we have ever seen.
“Any attempt to rebuild the mechanisms of state will have to be funded, therefore, by unpopular taxes.” This is wrong. We have our own central bank. It can create money, fiat currency. If that fiat currency is used to create proportionate wealth, schools, hospitals, services etc. then there’ll be no inflation. There’s no need for any of what’s happening at all, Osborne (or whoever pulls his strings) is dependent on our programmed ignorance of basic economics to get away with this appalling heist.
Thank you, Bill, I stand corrected, although, if I created the impression that I believe any of this economic savagery is either justifiable or necessary it was not my intention.
The principle and workings of ‘fiat money’ in this sense are new to me though. I am not sure that most people would understand this as basic economics , though, and I hope that I am not the only one to Google the term.
I am quite happy if my ignorance helps others to expand their understanding.
Most people don’t understand it. We are systematically misled on the subject see here http://www.positivemoney.org/2013/03/the-veil-of-deception-over-money-how-central-bankers-and-textbooks-distort-the-nature-of-banking-and-central-banking/ follow the link near the footer and download the study. There’s 17 pages of it but they’re eye-opening.
no mention of Goldman Sachs who avised on the flotation and according to the Guardian benefitted, then I suppose Ed,s and his appointed chair of the board wouldn’t want to distract 🙂 http://t.co/A8aUHq3dWP
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