December 24, 2008

Ghost of Thatcher Past Haunts Royal Mail

A British plan to sell shares of the state-owned Royal Mail Group to a foreign firm has created a heated dispute among labor unions, members of Parliament and pundits on the U.K.’s media circuit.

The Telegraph reports that a set of recommendations for partial privatization was accepted by the British government, provoking a bidding war among overseas investors angling for up to a 33 percent stake in the Royal Mail service.

The two leading prospects are the Dutch postal group TNT, and the private equity house CVC, according to The Times.

Boosters say the deal will mean an updated, globally competitive, automated mail system to replace a 360-year-old system that often sorts mail by hand.

Yet critics say privatization will mean the loss of thousands of full-time jobs, decreased quality of remote mail services, and a slide towards Conservative “Thatcherite” policies, which doesn’t sit well with stalwarts of Prime Minister Gordon Brown’s Labour Party.

One editorial in The Guardian provided a laundry list of recent complaints about privatization in the United Kingdom, and said that the Royal Mail has suffered years of under-investment while the government pockets the profits.

The move is so controversial that a key Parliamentary staffer in the business ministry resigned in protest.

The Communication Workers Union, which not only represents postal workers but also funds two-thirds of the Labour Party, is furious, and plans to launch an opposing campaign backed by sympathetic lawmakers.

According to Bloomberg news, however, the Prime Minister’s office expressed some support of the deal to quell Royal Mail’s troubles. These include the loss of hundreds of millions in profit from corporate rivals and the Internet, frequent strikes by employees, and a pension deficit reaching into the billions.

The government has to pass legislation for the deal before it can sell, and hopes to speed through the process in early 2009, though Bloomberg.com reports that one Conservative lawmaker predicted a Labour rebellion against the decision in the lower House of Commons.

–Lauren Riggs/Newsdesk.org

Sources:

“Lawmakers Protest U.K. Plan to Sell Royal Mail Stake” (Update1)
Bloomberg.com, December 17, 2008

“Mandelson Says U.K. May Sell Royal Mail Stake to TNT” (Update 3)
Bloomberg.com, December 16, 2008

“Dutch firm to bail out Royal Mail / Lord Mandelson faced an angry backlash from Labour supporters after he opened the door for a part-privatisation of Royal Mail.”
Telegraph, December 16, 2008

“Investment banks pitch to run Royal Mail sell-off”
The Times, December 19, 2008

“A positive future for Royal Mail”
The Guardian, December 18, 2008

“After such fraud and failure, privatisation is just reckless”
The Guardian, December 18, 2008

“CVC looks at Royal Mail”
The Wall Street Journal, December 18, 2008

“Banks pitch to work on Royal Mail stake sell-off”
Brand Republic, December 19, 2008

“Postal workers’ strike called off”
BBC News, December 18, 2008

One thought on “Ghost of Thatcher Past Haunts Royal Mail