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UK Gov't Outlines Plans To Privatize Royal Mail
Ellie K writes "After 500 years, Britain announced plans to fully privatize Royal Mail today. Shares of stock (common equity) will be offered to the public 'in coming weeks', according to Reuters. 10% of shares will be given to current Royal Mail employees, Deal size is estimated at $US 3 to 4.7 billion. Goldman Sachs and UBS were chosen as lead advisers." That doesn't mean you'll be able to buy a piece tomorrow, though; as the BBC's report notes, "The plans have provoked strong opposition from unions. The Communication Workers Union (CWU) is currently balloting members on strike action. Ballot papers are due to go out on 20 September to 125,000 Royal Mail workers. The earliest possible strike date would be 10 October. Plans to privatise the 250-year-old postal service have been on successive governments' agendas since the early 1990s."
The RM has already been broken up and sold off in stages, each made worse:
- PO Telephones became British Telecom became British Telecom Plc. in the '80s.
- Post Offices are barely even owned by one company any more, with each outlet acting as an independent contractor.
- Much of the post is processed by private firms which get the profitable work, while RM is stuck with the last mile, and all the unprofitable routes.
- All the above has meant typical public-private partnership inefficiency, such that the price of sending letters has gone up recently way above the rate of inflation - with special increases in the last two years to reflect fattening of the cow for sale.
Just another ideological move by a country slipping down into oblivion. Will make a few people rich, though. I expect China will be interested in a piece of the pie - it's been buying up a few British infrastructure companies recently. They know how to manipulate "capitalism" all the way to the bank.
Contracted with Hogwarts they have!
The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
I wonder how much of that money generated by the government, which it doesn't need, as it's obviously not spending more than it gets from taxes, will be distributed to each citizen.
I'm sure a simple division of the three billion dollars among the population would work, but maybe they come up with a distribution strategy that gives more to those who have less.
Things will likely go the same as with every other UK public service that has been privitized: The service will get worse, costs for consumers and end-users will go up, fewer workers will be paid less, but some 'top executives' will be brought in to 'clean things up' and make a mint.
This plan is corruption at its most horrible. Activate the usual propaganda merchants to persuade everybody the government has a good plan for how to improve a public monopoly service, sell off the public asset to private entities, let politicians earn massive fees (bribes!!), increase prices charged to the public, cut costs thus boosting profits but decreasing the quality of service to the public, publish tons of fake statistics proving how much better it all is now, etc. We've seen all this nonsense before. The train services in Britain are outrageously expensive (compared to cars, planes, and buses), often late, usually dirty, with an aggressive security force with police powers of arrest. Thirty years ago, the public monopoly train service in Britain, called British Rail, offered a much cheaper, and more reliable train service to the public. Prices of many ordinary train tickets bought at the counter or automated ticket machines for journeys at peak times were less than 20% in real terms of the current equivalent ticket prices charged by the private companies who now greedily charge whatever they like. There is no free market. For most journeys, you simply cannot choose which train company to use. Similarly at whatever level of granularity they choose to convert it into private companies, the home-delivery portion of a postal service is a natural monopoly, especially in the more isolated, rural locations. During the last five or so years the public postal service in Britain has been the victim of a disgraceful government push to deliberately degrade the quality of the service, e.g. by encouraging a 50% increase in postal loss rates, so that when private companies take over, they can easily demonstrate an improvement. Etc etc
Everything you say is true, but you need to rewrite it in paragraphs. It's annoying how some sensible arguments end up looking kooky merely because they're badly formatted.
(Meanwhile, the worst kooks can be populist and eloquent, and end up leading powerful nations.)
...I mean it's not like we've already seen privatisations of Gas, Water, Steel, Coal, Telecoms, and Rail go down the tubes is it. And it's not like in some of those we're subsidising the PRIVATISED industry while they give bonuses to bosses. And it is absolutely not the case that a regulator has ever had to step in against any of those industries to stop them doing amoral or ridiculous things...
US postal service was "sorta" privatized but it isn't really. And it causes issues. For example, the postal service needs to ask congress permission to raise the cost of stamps. That's silly. If they're a business then they should be able to follow that where they will. Including bankruptcy.
If you're not willing to let the organziation die if it fails then it can't be privatized.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
http://en.wikipedia.org/wiki/Going_Postal
"Kill 'em all and let Root sort 'em out"
I can't decide if this is a stupid troll or some clever analogy to selling Royal mail. You know, something along the lines of "asking a bank to help hurting yourself by doing something really stupid"
bickerdyke
Will anyone think of the owls.
EMail: 0110001101100010010000000110001101110010 0110000101111010011011100110000101110010 0010111001100011011011110110
If private, would it then still be 'Royal'?
Follow the money: from whence comes cash the proponents of this collect? If only I'd been in on a stake in "Railtrack", the company which got to own the tracks the broken-up British Rail trains would run on with no requirement to actually maintain them.
If that happens, it'll be cheaper to drive a letter to a location yourself. I don't think there's quite as much competition for mail service over there as there is in the US.
In 2006, the US Congress passed the Postal Accountability and Enhancement Act", which mandated $5.5 billion per year to be paid into an account to pre-fund retiree health-care, 75 years into the future.
Since none of USPS's competitors (Fedex, UPS etc) are required to do this, USPS has essentially been setup to fail & then be privatized.
It's a trap. The NSA can't as easily access and archive paper mail yet. This sounds like a reasonable plan to eventually get everyone on electronic messaging and transaction services. Physical articles can still be couriered.
Give 1 share to every citizen with a "holding period" of at least one business day, then dutch auction off just enough additional shares in an IPO so the market can set a fair price.
Alternatively, do a dutch auction for the whole lot.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
One of the things I've never understood about these privatization deals is that people think it will save taxpayers tons of money. The simple truth is that some public goods should be provided by non-profit or state-owned companies simply to maintain the level of service.
An example from the US is the Postal Service vs. FedEx, UPS, etc. The private delivery services have squeezed every single nickel out of the process of delivering packages, and one of the ways they do this is cherry-picking the easy services to perform. They also charge a lot of money for this service unless you're a big company with a better contracted rate. Anyone can get a package from New York to Atlanta overnight . It's very different when an organization has a mandate to provide affordable delivery of letters from anywhere to anywhere in the US for the cost of a stamp. I can mail a letter from Key West, Florida to Prudhoe Bay, Alaska for 46 cents - that doesn't even cover the fuel required. FedEx and UPS don't directly deliver to areas of the country where it's not cost-effective to do so. The Postal Service has a Constitutional mandate to do this, so it has to be inefficient by nature. Since I'm not a business, I usually use the USPS to ship stuff just because the walk-up rates are way cheaper than FedEx, and now they even offer cheaper rates if you pre-pay the postage online. The USPS is under pressure to keep these rates low, has a huge workforce to pay, and has a congressional mandate to prepay their retiree medical and pension costs
There's plenty of other examples. Electric and gas utilities have to provide service at a cheap enough rate so almost anyone can afford it. Amtrak in the US has to run very unprofitable long-distance rail service and subsidize it by using the money it makes from its Northeast and California rail services.
The other thing to consider is employment. Especially now, given the fact that suitable jobs for the majority of the population are going away with no replacement work on the horizon, we need to find something for people to do. A privatized postal service will lay off everyone but the bare minimum number of people to keep the lights on, and outsource all the business processes to cheaper countries in the name of cost savings. This is where my "lefty socialist" tendencies kick in - Do we really want a world where 5% of the population are fabulously wealthy, 15% are working in jobs like IT, engineering, and others, and 80% have nothing to do and no prospects? Remember, the seismic shifts in employment last time generated better jobs. Subsistence farming went to organized agriculture, then mechanization of that caused a shift to factory work, then outsourcing of that caused a shift to service and paper-pushing jobs, now outsourcing and obsolescence of that leads to.....hmm....there's nothing for Joe Average to do anymore and a well-protected aristocracy with no incentive to help. That's a recipe for French Revolution 2.0.
I know economic theory isn't on my side, but I think monopolies are more efficient at delivering some types of services than others -- not from a dollar perspective but from a service delivery perspective. It may be more expensive, but think back to how reliable AT&T phone service was back before they were broken up. It was expensive, but it almost never went down. Obviously this doesn't apply to all goods and services, but those that have to be universal and cheap are not good candidates for privatization IMO.
That would mean the end of good service and reasonable prices for their postal service. A bloody shame. As a regular customer of Royal Mail, I hope that never happens.
One's Government would like to read all of your electronic communications.
Aside from a number of loudly touted exceptions, privatization works very well. It's only when the government and other organizations have greedy fingers embedded deep in the service being privatized that it causes issues.
Paying taxes to buy civilization is like paying a hooker to buy love.
Every single UK privatisation since 1979 has been ideological...and not one has improved as a result.
I would generally agree with that statement with one exception: telephones. Privatising BT was a huge leap forward and massively modernized the system as well as lowering costs...but only because there was real competition. The rest have been a complete waste of time and money.
Christ, do they have to have their tentacles wrapped around everything?
Why the fuck would anyone hire those incompetent fucktards? They may be rich but they certainly aren't "good" in any sense of the word.
If Goldman Sachs is involved, the UK citizens are screwed. That company does nothing but leach off the public and place enough "inside men" into government positions that they always know what's coming and can influence the creation of their next scam against the public. I wish I could even say this is a big scam for them, but really it's not. These guys are scum even among investment bankers.
As i understand it, the EU issued an edict that all postal services must be privatized, and this is just Parliament doing what the EU told it.
So aside from the long list of epic failures, privatisation works very well in the one or two companies that aren't a disaster.
By that reckoning the Soviet Union worked very well because they were awesome at rocketry and chess.
In that noted hotbed of free market radicalism, Germany, the Post Office has been a private business since 2000... http://en.wikipedia.org/wiki/Deutsche_Post
If they did that in the US, I would be tempted to remove my mailbox. I was just wondering if PO boxes get less junk mail.
I took down my mailbox a few years ago. If it's important they will e-mail me.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Mail is one of those things that the free market does not handle very well.
- The primary benefit of a good mail system is that it exists at all; it is infrastructure.
- The person who chooses what company/service to use (the sender) is often not the consumer of the service (the recipient).
- There is a huge requirement for cross-subsidy (cities hugely profitable, rural areas loss making).
- Vast economies of scale.
The government argues that the Mail needs investment, but last I checked the state has a far lower interest rate than the cost of capital of blue chip company.
The good news is that it doesn't matter anymore.
If you are not using MyHermes already then you probably will be soon...
Never so few have done so much to so many...
BT have been experimenting with becoming a content producer since the 90's In a mega regulated telecoms market where else do you expect them to expand into.
Murdoch makes a fortune from cable why should I as BT share holder not get some of that
I live in Australia and frequently buy items from amazon.co.uk, as the parcel arrival time is generally under a week (compared to amazon.com where it's anything from 2 weeks to a month). Similarly items I buy from bleep.com arrive in around 3 days. I can only attribute such speedy delivery to Royal Mail (and Australia Post). If the postal times worsen, then why should I send my money to the UK when I can get an equally inferior service elsewhere?
Please find me an example of privatisation where the government and other organizations DID NOT have greedy fingers embedded deep in the service being privatized.