It is just possible that the Post Office staff will avoid hurling themselves over Beachy Head by declining in their ballot to vote for immediate suicide.
If that were to happen it would still solve nothing at all. For The Royal Mail as at present constituted and with the EU trying to strangle it, is beyond rational solutions. It’s like the Irish joke of someone asked what they’d do with the Post Office and answering “Well for a start, I wouldn’t start with the Royal Mail”.
The answer as usual lies in Brussels but there’s not a cat-in-hell’s chance of them contributing to a solution.
Christina
TELEGRAPH 18.9.09
Shackled by EU rules, Royal Mail staggers from shambles to fiasco
Britain's postal service is in dire straits and its new chairman faces an uphill struggle, says Jeff Randall.
For those who find consolation in familiar surroundings, yesterday's radio bulletins were a journey into the Comfort Zone. The main stories, it seemed, had been plucked from an archive of national treasures: Formula One was wracked by infighting, the BBC was under attack from a government minister, and the postal union was preparing its members for a strike.
These are the news desk's version of The Archers, features of British life without which paranoid editors start to feel that something is missing. For instance, can anyone remember a time when the Royal Mail was not facing some sort of industrial, financial or technological crisis? It's an organisation that seems to survive in a state of permanent distress.
My earliest recollection of trouble at The Post Office (as it was then known) was a 47-day strike in 1971, fronted by union leader Tom Jackson, over demands for a 16 per cent pay rise. It was the first national action by post office workers (in those days there were 230,000 of them) and ended in humiliating defeat, with the union on the brink of ruin.
Since then the company, in various guises, has provided headline writers with an almost uninterrupted diet of turmoil, chaos and strife. Regular readers of this column might expect me to finger the unions and their firebrand spokesmen as being responsible for pulling apart a business which, if functioning properly, should help unite all parts of our kingdom. And, indeed, the Communication Workers Union has played a significant role.
There is, however, much more to the episodic destruction of the Royal Mail than a bunch of intransigent union bosses in search of a place among the Awkward Squad. To understand how an institution with a 500-year history has been reduced to an invalid of enterprise on a life-support machine, one needs to examine the contribution of vacillating management, perfidious government (Conservative and Labour) and the European Union.
In 1969, when the General Post Office was changed from a state department to a public corporation, the aim was to improve efficiency and accountability, virtues for which its successor is still in search. It takes a special form of genius to turn a monopoly provider of popular services, with the benefit of a royal imprimatur, into a technically bankrupt business with a huge pension deficit. This, however, is precisely what has been achieved by successive governments. If it is not already, Royal Mail will one day become a business-school case study of how to destroy social and commercial value.
Throughout the 1990s, largely undisturbed by overseas competition and electronic mail, Royal Mail made healthy profits. In that decade it clocked up a surplus of about £2.5 billion. The scale of its apparent success hid a multitude of sins. Weak management was squeezed between the power of unions and the authority of ministers, leaving the Treasury to raid the till for "special dividends", cash that should have been re-invested in new systems.
The workforce became a byword for truculence. At one point, the postal unions accounted for about half of all days lost to industrial action in Britain. There were more old Spanish customs inside the Mount Pleasant sorting office than at Madrid airport. Eight-hour shifts existed, but only in theory. Managers displayed little appetite for facing down belligerent shop stewards. Appeasement masqueraded as negotiation – a recipe for decline.
Such was the befuddlement inside the boardroom that in 2001 it was decided to rebrand the business as Consignia. Can you imagine the process that led to this? "OK guys, hands up, who prefers Consignia to Royal Mail? Consignia it is." Not surprisingly, when the former Asda boss Allan Leighton arrived as the company's new chairman in 2002, one of his first decisions was to consign that silly name to its proper place – the dustbin of marketing blunders.
At that time, we still had two deliveries a day, Sunday collections and a national network of post offices. But the business was about to be hit with a sledgehammer from Europe in the form of competition directives, which forced the British government to open up the UK postal market to EU rivals. The new rules took effect in January 2003 (for items weighing more than 100 grams) and January 2006 (50 grams), since when the effort of providing the loss-making universal service while giving up profitable operations to foreign "cherry-pickers" has exacerbated Royal Mail's self-inflicted wounds.
In its eagerness to suck up to Brussels, the Government has created for itself not so much a headache, more an incurable migraine. For although Royal Mail has slimmed down its payroll, eliminated some traditional services and battled to drag the militant element of its workforce out of the Stone Age, it needs to run at a speed hitherto unachieved simply to stand still.
The option for government of increasing subsidies to Royal Mail and the Post Office network as necessary social services – in much the same way that we have poured extra money into schools and hospitals – has been removed by the EU, which has the power to decide how much state aid is allowed.
At the same time, the cloud cast by the company's ballooning pension deficit grows ever darker. When last calculated, it stood at £3.4 billion, but insiders suggest the real figure is now nearer £10 billion (equivalent to nearly half the Chancellor's transport budget). On the basis that in a very good year Royal Mail is capable of making about £300 million of profit, you can see that the pension hole is all but unfillable if the company is compelled to rely on its own resources.
It is no good ministers claiming that this is purely a commercial problem, because we the taxpayers own the company. The moral burden of its pension obligations falls on our shoulders. To help alleviate the pain, Lord Mandelson promised to bring in foreign investors, in effect part-privatising the business, but his scheme was routed by more than 100 Labour backbenchers who threatened a Commons revolt. This left Royal Mail stuck in the limbo of government control, without legal access to its shareholder's chequebook.
To describe its predicament as a shambles understates by a wide margin the political and financial fiasco that Royal Mail has become. Its newish chairman, Donald Brydon, who, during the current dispute, has yet to emerge from the trenches, has a reputation as something of a "hard nut", with a record for getting rid of underperforming managers.
Well, let's see how good Mr Brydon is. Defenestrating the company's chief executive, Adam Crozier, is of course an option. But that will not remove the killer issue: this is a business that is forced by EU legislation to clock up losses. Fix that, Mr Brydon, and a knighthood beckons.
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Adam Crozier will be interviewed by Jeff Randall on Sky News at 7.30pm on Tuesday, September 22
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