Business
DM sector cautiously optimistic on postal part-privatisation Bill
Plans to sell off around 30% of the Royal Mail have been greeted with "guarded optimism" by the print industry after business secretary Lord Mandelson described the Bill as the only credible way to save the postal operator.
In the plans published last week, Mandelson confirmed his commitment to keep Royal Mail publicly owned, but reiterated that a strategic partner was needed to maintain the six-days-a-week, fixed-price universal postal service.
Reacting to the Bill, Gurdev Singh, managing director of direct mail company Howitt, said: "Partial privatisation is a start, but I believe that they should be given full rein to go and compete in the market.
"There is no point changing the tyres if the engine is still knackered otherwise it will run for a little bit then fall over again."
Jude Whitford, operations director at direct mail house Pepper Communications, said the shackles need to be taken off the Royal Mail so it can compete effectively.
"There are concerns over whether any outside investor would maintain the universal cover for all addresses. There needs to be that level of reassurance, so there is a guarded optimism," he added.
The Bill would allow the government to take on the Royal Mail’s ballooning pension deficit and comes at a time when, according to Mandelson, the operator has been severely affected by dipping mail volumes due mostly to a rise in emails.
He said: "Our policy will keep Royal Mail in the public sector and this legislation makes this clear. The Royal Mail will run out of money to sustain its current universal, six-day service unless its pension fund deficit is solved and its business transformed."
CDMS head of marketing Richard Higginbotham said that anything that leads to greater investment and innovation can only be a good thing for the direct mail industry. He added: "My hesitation is whether the privatisation plan will lead to this level of investment. There is a need for innovation in print in order for it to compete with the digital channels."
Any move towards privatisation though could trigger a backlash from the unions. The Communication Workers Union has so far opposed the Bill with Billy Hayes, the union’s general secretary, having said there is still no convincing argument for privatisation.
However, in a recent printweek.com poll asking if Royal Mail privatisation would benefit print, an overwhelming 66% voted against the bill, 32% of which expect part-privatisation will lead to a profit above all approach suggesting that support may be confined to the direct mail industry.
PART-PRIVATISATION DETAILS
- 30% sell off of Royal Mail proposed
- Government takes on pension deficit
- Outside investment said to help maintain service
- Concerns over: level of investment, committment to service coverage, job losses at Royal Mail
Royal Mail: strategic partner needed for universal service
Comments
Print Lifer - 06 March 2009
Erm - call me old fashioned, but there is a running Poll - just to the left of where I am typing that says that the 'no' votes are adding up to 67%.
Which draws me to these conclusions:-
Either - the PW 'journalists' don't read their own media
Or - the users of this website aren't representative of the printing industry.
Or maybe my maths is bad
Or something
?1?!
Print Veteran - 06 March 2009
The same argument for effeciency and consumer benefits were made when privatising \(and this is the first step along that path) of the rail.
When you consider the results the consumer has to now endure the highest prices in Europe and poor service. The government has also had to poor in sugnificant assistance to the rail industry.
If the Royal Mail requires further investment to make it more effecient then the government should provide it in the form of a loan which can be paid out of future profits. It would appear that this is a better investment than pooring money into banks to shore up massive losses.
I cannot see how partial privatisation will work as the management of Royal Mail will have two masters. They are likely to be distracted with endless negotiations between the two shareholders rather than getting on with the job in hand. I also presume that the minority shareholder will have a disproportionate influence on the Royal Mail.
It is without doubt that the UK postal service must compete against other media, and that to do so it needs to modernise, and to have its shakles taken off.
In the meantime the enevitable industrial action will put a masitive burden on the UK postal industry and drive customers to other media.
Madness!
The Mighty Wind - 06 March 2009
Agree with both posters above. Political suicide and industrial stupidity. However that said, changes at the core of the service must happen
To post comments please log in here