Wednesday, 10 July 2013

Privatisation and the Delivery of Success

Today we are about to witness the biggest privatisation in decades. Royal Mail will soon be floated on the stock exchange at the value of billions of pounds. Like the vast majority of privatisations people from the workers to the consumers are left better off than they were when nationalised.

Royal Mail is set to be privatised and be a boon for customers.

Royal Mail at this moment is in a good place for privatisation as it is seen as a safe business prospect. Last year Royal Mail managed to make a profit of £44 million which is good. But this is hardly going to be sustainable for it will need to meet the constant costs of depreciation. Private money can provide for the capital to combat this and innovate to have a better postal service. It is likely that the Royal Mail will see a greater deal of mechanisation and an increase in robots to make for a more efficient, quicker, and much easier service for postmen. And will this lead to job loses? Well if the history of industry is to go on then mechanisation job loses have not been the case as staff are relocated to other jobs that are more technical and thus higher paid with better quality of life following. This coupled with the 10% share deal with workers will lead to a better productivity and a much wealthier workforce.

A more efficient service means one that is better for customers of the Royal Mail.

Shares also bring me onto the second part of why privatisation has been such a success because it has lead to competition to drive down prices and increase quality. 90% of these shares will be floated on the stock market where individuals can buy them. As well as a force to make profit, which is essentially a force to make a better service (see above), there will be a greater deal of competition. This competition will mean a battle on Britain's streets between parcel companies and the revolutionary post companies, such as TNT, for a service that is better or cheaper or both. The mantra of the day will be faster, better and cheaper. Better service for customers is the result of competition in the market place.

TNT and other companies will be seen more on the road delivering us mail with a much better service.

But what of the most major criticism of the reforms which is that it will leave isolated communities, say in the Scottish Highlands, without any mail because they at the moment are not profitable. I would like to highlight the at the moment bit because many areas will be able to be profitable and receive service when Royal Mail and competitors become more efficient.

Isolated communities will still get their post as so long as they are willing to pay, as they do now, someone will do it.

And for those areas that are still not profitable to have a red van visit every door the future still looks bright. It is easy to envisage localised mail companies doing the deliveries who don't need such large costs or big margins. Community mail boxes in easily accessible areas may become a thing and there may be a innovative teenagers, like when doing a paper round, to deliver the mail. I can envisage this because this is exactly what happens in Germany with their privatised postal service where mountain villages are equally cut off. People power will make a better service and solve the problems.

So Privatisation of the Royal Mail is going to lead to very good things so long as Capital, Innovation and Competition are all achieved.


  1. Dunno, mate. I might challenge this a little on my blog later. : )

  2. After the Bonkers Off comes the Blog Off.