A right royal rip-off - What the Royal Mail privatisation tells us about modern Britain
It’s the wilful destruction of another much-loved British institution. The privatisation of the Royal Mail, the British postal service, brings to an end nearly five hundred years of history- stretching back the days of King Henry VIII.
By privatizing the Royal Mail,
our coalition government has shown that it does not care a jot
for our national heritage, or the devastating impact the sell-off
will have on remote rural communities, or how the elderly and the
poor will be disproportionately affected. They have shown us that
all they care about is rewarding their wealthy backers in the
City of London and keeping in with the giants of global
Even Mrs Thatcher, the Prime Minister who started the privatization process in Britain in 1979 thought that selling the Royal Mail was a step too far. However the current UK government with its fanatical commitment to neo-liberalism is determined to take us to dark, scary places that even the Iron Lady shied away from.
The British public, who know only too well from first-hand experience that privatization invariably means higher prices and worse services, was overwhelmingly opposed to the sale. An opinion poll in July revealed that 67% were against the privatization, with 36% ‘strongly’ opposed. Just 4% were ’strongly’ in favor. 96% of Royal Mail employees were against the sale too. Yet despite this overwhelming public opposition, the government arrogantly pushed ahead with its plans, showing once again the contempt with which it regards the views of the majority. Ludicrously the sell-off has been hailed by Prime Minister David Cameron as ‘a piece of popular capitalism’. In fact, it’s a piece of highly unpopular capitalism, in which the public have lost out in a massive way.
Once again, an asset that we- the British people- owned has been flogged off way below its real value. The fact that shares leapt by as much as 38% on the first day of conditional trading, shows us how much the government undervalued the company.
For instance, the Royal Mail’s real estate was valued at just
£787m-a laughable figure considering that it owns some prime
sites in our major cities, including a depot in London estimated
to be worth £1bn. The Royal Mail plans to reduce its number of
sites from 45 to 37 by 2016, with the profits from property sales
going to the new private owners. Meanwhile, as the private
investors gorge on the profits, we - the taxpayers - have been
left holding Royal Mail pension fund liabilities of around
£37.5bn - a clear case of nationalizing the losses and
privatizing the gains.
The pledge by the Business Secretary Vince Cable that only ‘responsible, long-term institutional investors’ would be permitted to buy Royal Mail shares is at variance with the news that hedge funds, the vilest manifestation of modern vulture capitalism, have been allowed to invest. It’s been reported that Lansdowne Partners, one of the world’s biggest hedge funds, had taken ‘a massive stake’ in Royal Mail. The co-head of developed markets strategy at Lansdowne, Peter Davies, is a long-standing friend of UK Chancellor George Osborne and was the best man at his wedding. Lansdowne was said to have made £18m after the first day's conditional trading of Royal Mail shares.
Lansdowne are not the only giant of global capitalism to benefit, for the lead adviser to the government on the sale was none other than the ’great vampire squid’ itself, Goldman Sachs. Overall, the government paid £21.7m in fees to ‘advisers’ for advice on selling a company which the owners - the British public - didn’t want sold.
Whichever way you look at it the sell-off represents a right royal rip-off for the British taxpayer. There’ll be further costs down the line too. On Wednesday, the Royal Mail admitted that more postal workers will lose their jobs following the sell-off. And although the universal service obligation remains, it's likely that the privatised Royal Mail, whose sole aim will be profit maximisation, will lobby hard for it to be dropped. What are the odds that in a few years time, the taxpayer will be subsiding a privatised Royal Mail to enable it to continue delivering the mail to remote rural areas six days a week? Let’s not forget that Britain’s privatised rail companies have received around four times in taxpayer subsidy than the publicly-owned British Rail did. It’s a neo-liberal myth that privatisation saves the taxpayer money - on the contrary; it invariably costs us far more than keeping the service ‘in house’.
If Britain was a genuine democracy- as it used to be in the period 1945-79, before the neo-liberals and neo-cons took over, the issue of Royal Mail privatisation would not even have been on the agenda.
But the very fact it was sold - with such a blatant disregard for public opinion - tells us everything we need to know about the country we have become. Our government doesn’t act in our interests, in the interests of the majority, but in the interests of powerful financial and business elites. It’s these elites who wanted the Royal Mail sold, not the British people.
The sell-off of this much-loved historic institution is proof that even after the successful democratic people's uprising which stopped our government taking us into a war against Syria - a war which no one outside elite circles wanted - there is still an awful lot of work to do.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.