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Royal Mail must remain first class

ROYAL Mail and the Post Office network are two cornerstones of British life, according to Business Secretary Vince Cable.

Yesterday, the words rang hollow as he announced that one of those much-treasured institutions, Royal Mail, is to be sold to the private sector.

Opinion is divided between those who believe that privatisation is the only way to secure access to the new capital necessary to develop the business and those who fear it will lead to the end of the universal service, which delivers to the furthest-flung rural communities and city centre addresses for the same price. The critics include many of the 150,000 Royal Mail staff. As a sweetener, they will receive 10% of the shares in the company for free, which they must retain for three years, when their individual allocation could be worth some £2000.

Royal Mail needs investment to make the most of the game-changing opportunity offered by the growth of online shopping. The volume of letters has declined steeply but parcels already provide half of Royal Mail's revenue and last year the volume of packages increased by 6%. The timing of the sale, with the flotation taking place before the end of the year, must fuel suspicion that Royal Mail is being sold off to boost the Treasury's coffers.

The key question, however, is how long the principle of a universal service delivering mail the length and breadth of Britain will be protected. The assurance built into the plans, that only a future Parliament could change the obligation to continue that service, has an inherent limitation. The pledge by Michael Fallon, the UK Business Minister, that there are no plans to rescind the requirement could prove worthless following the next General Election in 2015.

Ofcom, the regulator, will be able to intervene to stop cherry-picking by competitors if that threatens the universal service but, over the long term, it is difficult to see the survival of six-days-a-week deliveries to every address in the UK under a company whose prime duty is to shareholders.

It is a welcome step that 10% of the initial shares will go to staff and that the public will also be able to invest. Nevertheless, the privatisation will result in a loss of public ownership that will not be allayed by retaining the Queen's head on the stamps. Mr Cable has proposed a mutual model for the Post Office network in recognition of the vital role it plays.

Royal Mail is equally important in rural areas where the postie is the supply line for rural businesses and a vital daily link for people in isolated settlements. Royal Mail and the Post Office are inter-dependent, so much so that they signed a 10-year commercial agreement in 2012. With the postal service under new ownership, the question must be aked: what will happen when the agreement runs out?

Royal Mail must not be reduced to a mere business. Privatisation will be an irreparable loss to the fabric of the nation unless there is a watertight obligation to maintain a service that is universal.

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