1. Para 46 & 47 argue that contrary to headlines (and what was in the interimreport) stating that apart from large customers there had been no benefits from liberalisation, “over time, we would expect both smaller businesses and residential consumers tobenefit from choice, a more efficient service and new products”. How this will happen is not spelled out. In fact in para 197 the Report admits that “there has been less innovation than might have been hoped”.  The only suggestion is for alternative carriers to consolidate mail from small businesses (para 39) but this would further hit Royal Mail’s profits
   
   
2. Para 62 delivers a rosy future where “Services will be delivered by companies which operate across historic market boundaries and which collaborate with others to compete more effectively, enhancing choice and reliability”. This is nonsense and there is no evidence that this has ever happened. Compare to the experience of the privatised utilities. Once opened up to private capital, the postal industry will, at best, end up as a cartel of a few large companies and at worst as an unaccountable private monopoly.
   
   
3. Para 65 of the Report accepts that end-to-end competition would be limited to the most profitable routes. Nowhere in the report is it explained how a public/private future Royal Mail and the service it provides could be sustained when the private part of it is only concerned with the money making side of the business.
   
   
4. Para 66 states that “the substitution from postal services to alternative digital media reduced its operating profit by £500 million in 2007-8”. This figure, which is used to downplay the loss of revenue due to competition in para 67, is based purely on modelling by Royal Mail itself. What trust can we put on that, given that elsewhere in the report they criticise the way RM construct their finances?
   
   
5. Para 71 states that RM estimates it is 40% less efficient than its competitors. This is the figure it used in the pay negotiations in 2007. Part of the reason given for this is the lack of mechanisation. Nowhere does the Report mention that despite being lent £1.2 billion over two years ago, RM has only installed one further machine and put off buying walk sequencing machines for a further year. Instead, the Report lays the blame on the CWU and working practices. It repeats the absurd RM lie that it is common practice for delivery staff to finish up to three hours before their time. This is when staff are being disciplined for refusing to work overtime because they can’t complete in their scheduled hours. It repeats the allegations of ghost overtime and seems amazed that the CWU would want national agreements on the introduction of new technology. And it repeats the Crozier mantra that our members pay “is 20% higher for Royal Mail employees than other postal workers”. Conspicuous by its absence is any analysis of the pay rates of managers, up to and including Crozier.
   
   
6. Paras 72 & 73 make it clear that in comparing different postal operators in different countries, operating profit margins is the only worthwhile comparator. The only solution offered, is therefore to cut costs. There is no comparison in the Report on the level of service offered in different countries. Perhaps we should consider producing one ourselves?
   
   
7. Paras 79-82, in dealing with labour relations, clearly label the CWU as the culprit. Para 80 holds us responsible for blocking progress in transforming the business. No mention of the failure of management to engage us in any meaningful discussions. Para 82 takes us to task for having the gall to try and influence politicians to intervene on our behalf. This in a business they actually own!
   
   
8. Paras 94 & 95 attempt to raise the spectre of what might happen if the measures suggested in the Report are not carried out, i.e. even worse might happen under the provisions of restructuring aid. There was precious little sight of this in the banking sector during their recent crisis.
   
   
9. Paras 100 – 103 reject the idea of a compensation fund to Royal Mail for providing the USO. Apart from a mention of European law, which, as we have seen, can be conveniently disregarded when it suits, the only arguments put forward against this is that it would weaken the incentive for Royal Mail to carry out the measures the Report prescribes and that competitors shouldn’t have to pay for the failure of Royal Mail to follow their business models.
   
   
10. Paras 111 – 117 deal with modernisation. Para 113 quotes with approval the scale and speed of closures in other European countries. No analysis here of what that did to the service and we need to investigate this. Para 114 states “We believe it likely that the UK postal service could operate efficiently with around half the current number of mail centres.” No doubt it could, but at what cost to the service. Again, no analysis here. This figure of half does not assume that it will be half of the existing RM mail centres. TNT would want to use their buildings in any joint venture and this could further increase the amount of job losses and weaken the influence of the Union. Para 115 calls on the process to be completed “swiftly and cost effectively”. By that, the assumption must be that they mean cheaply. Para 117 criticises RM for its failure to expand geographically. Given the restrictions placed on RM being able to operate in the countries of the competitors operating so freely here, that must surely have been said tongue in cheek.
    
    
11. Paras 118 – 147 deal with what the Report considers Royal Mail needs to do to modernise. Paras 121 – 124 argue for political separation, mainly on the grounds of ending the CWU’s ability to influence the direction of the company by taking up issues with Ministers and MP’s. This attempt to end democratic control of a public service is consistent with the aim of the Report to introduce privatisation. Paras 125 – 130 deal with the poor industrial relations. Although there is an acceptance of a lack of trust on both sides, the emphasis is on the Union changing. We must “accept the scale of the transformation required, and show (we) can tackle the behaviour and internal processes which at present result in confrontation and obstruction”. In other words, act as a junior partner in management’s plans. On the other hand, all that is required from Royal Mail is that it “sets out its vision for the company in a transparent way, the implications of transformation, the risks of failure, and the opportunities in diversification”. In English, that means tell us what they’re going to do.
    
    
12. Paras 131 – 147 deal with access to capital, access to corporate experience and partnership. Para 132 rules out significant Government investment because of the constraints of European rules. Given recent experience in the finance sector, this argument simply fails to hold up. On the other hand, para 133 lauds private capital as “in general more flexible and tolerant of commercial risk than the taxpayer. It can be raised more easily, faster and for a wider range of purposes, and does not come at the cost of other competing public priorities”. It can only be assumed that the author of this para has been living on another planet recently.
    
    
13. Paras 134 – 136 argue that Royal Mail needs access to corporate experience from private sector companies to carry out change. Given the record of “corporate experience” in running other services, this assumption is dubious at best but it does lead to the assumption that the Report considers Royal Mail management to be not up to it.
    
    
14. Paras 139 – 147 argue for partnership. “In short, we believe that partnership is the only approach which can deliver Royal Mail’s modernisation and, therefore, secure the future of the universal service.” The Report has the cheek to argue, “The UK needs a pragmatic solution, not an approach based on ideology.” But this approach is based precisely on ideology. The ideology that it is better to have a private company that makes a profit but provides a poor service than a public company providing a superior service. Why would a private partner be interested in the long-term future of Royal Mail? Surely they would only be concerned with their own interests. Para 146 gives the game away. “While we would not dismiss the possibility of listing the company on the public markets as an option for the future…this would only be appropriate and feasible if modernisation had been completed.”
    
    
15. Paras 153 – 165 deal with pensions. Para 153 applauds the recent changes to the scheme and condemns the possibility of strike action against them. Para 155 makes the valid point that “Few other European incumbent operators have an equivalent issue, owing to the nature of arrangements made at the time of liberalisation of their markets.” Quite so. The same para makes it quite clear that the reason for dealing with the pension issue is to remove the barrier to external investment or joint ventures. Para 162 recommends that “the responsibility of the historic liabilities should be transferred from Royal Mail to the Government” but only “Provided that the constraints on Royal Mail’s ability to modernise have been removed”. Presumably, they mean our opposition. What isn’t considered is that removing the burden of the pension scheme from Royal Mail will in itself remove the biggest constraint. Several possible ways are listed in which the Government could take on responsibility for the scheme but no recommendation on which would be preferable.
    
    
16. Paras 166 – 204 deal with regulation, with a recommendation in para 167 to transfer the responsibility for regulating the postal sector from Postcomm to Ofcom. The implications of this are not spelt out in the Report so it is unclear how this would benefit us. Certainly, the Report is far from critical of the current rules on competition, believing that they “encourage Royal Mail to reduce it’s costs and, therefore, to become more efficient” and “encourage product innovation”. We would question both of those assumptions, although no one can deny the cost cutting part.
    
    
17. The threat to the USO from cherry picking through the downstream access provisions is dismissed. “A system of cost-reflective pricing for access products has been introduced by Royal Mail to protect against cherry picking based on the uniform tariff. In our view, this system represents a reasonable response to the risk.” (para 191). The Report states, “We are clear that the access regime has brought benefits” (para 196) but accepts that there are problems with the current regime in respect of access headroom margin. On this it passes the buck. “It will be for Ofcom to assess the benefits of access regulation and consider viable alternatives” (para 201). It does, however, make one recommendation. “The regulator should consider the case for directly setting the price for access to Royal Mail’s network.” Would this give us the worst of both worlds?
    
    
18. Paras 181 – 185 deal with Royal Mail’s finances and the lack of transparency. Although this is raised in the context of regulation and joint ventures, outside scrutiny of RM’s finances is something that we should probably welcome, provided that we were able to gain access to it as well.
    
    
19. Having attempted to remove democratic control by Parliament earlier on in the Report, the authors attempt to re-introduce it in paras 212 – 216. But this is only in the form of an annual report by the regulator to the BERR Select Committee on the provision of the universal service. This would be a poor substitute for the (theoretical) control that Parliament has at the moment of a business that it owns. Once Royal Mail is privatised, it is difficult to see what in practice the Select Committee could do to change matters if they didn’t like what was being done. What you don’t own, you can’t control.

The CWU Alternative

1. The crucial question we need to pose to both MP’s and the public is “Do you want Royal Mail to be a publicly owned company offering a quality service at a reasonable cost or do you want it to be a business simply making profits?” The success of our campaign will be judged on our ability to win support for the former. We should also be asking how come 10 years ago Royal Mail provided two deliveries and up to five collections a day, employed thousands more people and made a healthy profit? What has changed?
   
   
2. We need to spell out in some detail what our idea of a modernised postal service looks like. This could include an agreed last letter time of no later than 14.00 for town deliveries and a restored firms delivery of 09.30 last letter with a second, sweeper delivery. It could also include the provision of a super first class service with an 09.30 last letter time and teatime delivery or re-delivery of packets. In Delivery Offices, the spec. for products would be rigidly observed but shifts could be flexible, as opposed to everyone starting at the same time as now. Collections should be flexible to suite the needs of the customers, not the company. Enquiry Offices should be expanded and offer more services to act as Royal Mail’s local shop front. This would offer a clear alternative to private carriers, where you have to drive miles to collect packets. By raising the issue of the service with the public, we will find out if there is anything else they might be looking for from their postal service.
   
   
3. Mail Centres and the Distribution network should be arranged on the basis of what provides the best service, not the cheapest and machinery introduced to make the service better, not worse. This will inevitably lead to some changes and possible staff movement and job losses. Our members should not have to suffer as a result. Guaranteed jobs for those who want to stay with the transport provided to get them to their new workplace. For those who want to go, a decent exit package plus re-training to qualify them for other jobs. And until they find other jobs, an interim payment for at least three years to keep earnings at the average level of the past three years.
   
   
4. A modernised postal service should also involve modern conditions for the workforce. Our members should not have to pay the price for the failure of others. The worst aspects of the pension changes should be reversed. The agreements with the employer to significantly raise the value of the jobs of our members, in terms both of wages and conditions, should be honoured. The discrimination against new starters in terms of sick pay and pensions should be ended. The bullying regime now commonplace in many workplaces must be halted. The Union must be seen as an equal partner at every level.
   
   
5. Who is going to pay for this? We must reject the idea that private capital is the answer. Even if there was any going begging, and that’s debateable at the moment, private companies would only be prepared to put something in now if they thought they could take more out later. Part of the funding could come from Royal Mail itself. If the Government takes over responsibility for the pension scheme, or even just the deficit, there would be a minimum of £250 million a year extra available and possibly up to £700 million. If the rules on competition were changed to either remove cherry picking by competitors or make them contribute towards the USO, then this would bring in extra. But the real task ahead is to convince the Government that Royal Mail is more than just any old business. To convince them that it is a service that’s worth saving and that they’re going to have to start putting money in instead of just taking it out. After all, if they can spend hundreds of billions bailing out wealthy bankers, then why not us with the chance to save tens of thousands of jobs thrown into the bargain?
   
   
6. We need to deal with the issue of management. Firstly, there are far too many. As the frontline workforce has declined, there appears to have been an explosion in management numbers at every level. We should demand to see the figures to verify if this is so. This is surely an area for potential savings so far untapped. Secondly, in the main they are useless. What we don’t need, however, is an injection of private enterprise expertise. They are only experts at asset stripping. If we reject the private option in favour of retaining the publicly owned model, we should be arguing for an increase in democratic decision-making. The Royal Mail board should be opened up to both the Unions and customers, both large and small. The model here could be, perhaps, a third Union, a third customers and a third management. This could be replicated at lower levels with regional or area boards with a similar makeup. A radical idea, maybe, but one that might catch the public’s imagination.

1. Even the best public campaign will be ultimately useless unless we can stop Royal Mail’s current slash and burn policy. Our members will lose faith with our ability to defend them and the public will conclude that there is little left to save. Management believe, probably with good reason, that the Report gives them full backing and they are planning to step up their cutbacks. Many delivery offices were given further proposals on Xmas Eve to take out yet more hours and duties. Past agreements on last letter times and maximum length of deliveries are being torn up in their attempt to save every last penny.  Further announcements of more mail centre and delivery office closures will no doubt appear shortly into the New Year. In the meantime, management are continuing to refuse to come to agreements with us on the introduction of new technology and are breaking off contact in areas where progress was being made, such as with telemetry.
   
   
2. We have always said that we are more than willing to discuss change, but by negotiations and agreement. Management must be persuaded that this is the only way that change is going to happen. Hopefully, this can be done by discussions with us and with a little arm-twisting from those with influence outside the business. If not, then a national dispute in the near future will be inevitable.  This will need to be seen as part of our campaign and the groundwork laid with the public. It should probably kick off with a national day of action, which will involve our members out campaigning in shopping centres and other public areas as well as just stopping work.

You can donwload the Hooper report here

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