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Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.
The business secretary's plans for privatising the Post Office are in tatters – after his select committee put the boot in
The words choke and cornflakes suggest themselves when thinking of how Lord Mandelson responded to a report released (pdf) by the business, enterprise and regulatory reform select committee yesterday.
The committee, chaired by the highly respected Tory MP Peter Luff, is doing a forensic job on the various options for the Post Office network. It seems from the public sessions (where key witnesses are invited to give their views on how the Post Office is and should be run) that it’s a motivated, informed and tough body, intent on finding the right solutions for a great national institution – and applying its keen intelligence to the postal services bill (prop: Lord Mandelson) and its proposal that the Royal Mail be broken up through a 30% sell-off.
The latest report on the bill is an astonishing attack on the business secretary’s plan. Though couched in the silky language of parliamentary discourse – “it is surprising”, “worrying”, “the government is coyly refusing …” – the report, to use a technical term, tears the government plan to bits. It also rips apart the key recommendations of the Hooper report, which Lord Mandelson accepted in its entirety on the day of publication and then used as a basis for his sell-off bill.
The report is a rattling good read. Its main conclusions are unambiguous. It agrees with Hooper and the government that the Royal Mail pension deficit should be taken over by the government. And it agrees that Royal Mail should be differently regulated and governed – taking away the malign political interference (or negligence) that has dogged it over the years. Nobody could disagree.
Then it gets down to business, shredding all the arguments made for the 30% sell-off.
“We do not consider either the independent review or the government has properly made the case that these two reforms, about which there is a broad consensus, can only be made as part of a package that includes the third reform – the involvement of a private sector equity partner in Royal Mail.”
The report points out that the government has not put out the figure it hopes to get from the sell-off – or explained why a much-needed cash injection has to come from a sell-off.
“We are left with the conclusion that either the government has not fully thought through its position about future share sales, or that it has done so and is refusing to reveal its hand. Either case is worrying.
“It is entirely unacceptable for parliament to be asked to approve such fundamental changes to Royal Mail Group when there is no indication of how much money Royal Mail Group needs for investment; while the government appears to have no business plan and has not indicated the use to which any private sector capital would be put.”
After such a slating, it’s hard to see what will be left of the rationale for Lord Mandelson’s plan to break up Royal Mail, given that there is no certainty that there will be a cash injection from a private-sector partnership. There are several questions about the proposed partnership that must be addressed:
The figure cited by Lord Mandelson at the second reading was 30%, but why?
How much openness will there be about the partner’s rights and any arrangements between the parties about sale of the partner’s stake? As the bill is currently drafted, parliament will not have any right to see any agreement before the government enters into it (or afterwards). Is the government prepared to make such details public before a partnership is agreed?
What is the detailed rationale for dividing the Post Office from Royal Mail Group?
What will be the effect on competition if, as is very likely, the chosen partner is already active in the UK mail market?
What will happen if Royal Mail needs further capital injections? The natural assumption is that investors would fund this in proportion to their stake in the company. But such an injection from the Treasury would expose the company to all the state-aid rules that we are told this scheme is intended to avoid.
It’s hard to see how Lord Mandelson can now persevere with his wretched, destructive bill. Nobody – including now this august select committee – wants anything to do with it. Can’t someone throw the noble lord a lifeline out of this sinking ship?
Andy Wimbush is nef‘s Communications Assistant and blogmaster. He also draws cartoons for nef‘s newspaper.
When he was Prime Minister, Tony Blair liked to pretend that Britain was ‘leading the world’ in the fight against climate change. Of course, the UK was never really leading in any meaningful sense: yes, we had a Climate Change Bill making a slow and convoluted journey through Parliament, but our efforts paled next to the renewables boom in Germany and Sweden. But Blair’s soundbite survived because, at the time, it was hard to quantify what ‘leading the world’ might mean.
These days it’s pretty obvious that Britain is not at the cutting-edge of climate change policy. We have a government which is doggedly pursuing the construction of coal-fired power stations and the expansion of airports, damning the consequences for our planet, our economy and our civilisation.
Writing on Comment is Free, GND group member Jeremy Leggett wonders how we got stuck in a ‘grey old deal’ which bails out the car manufacturers rather than investing in a sustainable economy. Leggett explains how retrofitting old houses with insulation and energy efficient technologies in Germany has created 140,000 jobs and lowered emissions and energy use to boot. He also cites a new report from the Washington think-tank World Resources Institute which says that $1 billion of government investment in green recovery programmes would create 30,000 jobs. Let’s imagine that this same equation held true for the UK: if we take the £37 billion which the British government has invested directly in bailing out the banks – a figure which leaves out the bigger picture of extra, hard-to-quantify support which propped up the banks – that money could have created well over 1.5 million green sector jobs.
The rest of the globe is moving rather faster, with the Guardian reporting that ‘calls for “green new deals” are coming from every part of the world‘. The Financial Times has a neat little graphic which lets you compare the ‘greeness’ of the stimulus packages for different nations, both by volume of expenditure and by percentage of overall stimulus spending. As reported previously, South Korea has been enthusiastic about the Green New Deal, so it’s not surprising that the UK’s stimulus plan looks pretty paltry by comparison. What’s more striking is that the UK is now being eclipsed in its environmental ambitions by those countries normally thought of as big polluters – the ‘climate criminals’ of the USA and China:
Green bail-outs by percentage
Today, Gordon Brown is holding a ‘low-carbon summit‘ with business leaders, unionists and select members of the environmental movement, in which he will discuss how the UK might boost the economy via a ‘Green New Deal’. The target for job creation is rather modest, however: Ed Miliband suggested 400,000. Which is better than the 100,000 previously mentioned by Brown, but still much lower than needed. And those green activists who’ve been left outside the conference have reminded us that this Government doesn’t exactly have a good track record on helping low-carbon business: Peter Mandelson, the Secretary of State for Business, Enterprise and Regulatory Reform, was ‘slimed’ on his way to the summit by Plane Stupid‘s Leila Deen who was protesting his closed-door meetings with BAA corporate lobbyists.
The Financial Times also reports on how the world will quickly lose the opportunity to re-engineer the economy along low-carbon lines unless more nations follow South Korea’s ambitious example. If the UK really wants to be a pioneer, to be remembered in the history books as a nation which helped rather than hindered the creation of a sustainable future, our Government has a lot of work to do.
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UPDATE: Gordon Brown’s call for a Green New Deal is now the top story at Number10.gov.uk. Watch Brown, Mandelson and Miliband talk about it in this video:
I can’t help but ask why a Prime Minister needs to ‘call for a Green New Deal’. Surely that’s our job, as citizens. His job is to make the thing happen.
Veronika Thiel is a researcher and project manager on nef’s Access to Finance team.
Can the leopard change its spots after all? It appears so! It was a ‘leaked’ letter by Lord Mandelson to the Guardian that indicated a change in Government thinking. Instead of finding new ways to justify post office closures, the Government abandoned a tender for the running of the POCA and left it where it was – with the Post Office.
nef welcomes this move, but we also, as always, go a step further: we want to see the creation of a People’s Bank at the Post Office. Now, it seems, there are some MPs who start to come round to our thinking. As the Financial Times report, the Post Office could indeed soon be offering current accounts.
Since we seem to have the Government’s ear at the moment, can we ask you to consider the following when you recreate the People’s Bank?
- make sure it is accessible for all, and a champion for innovation as the Girobank once was.
- make it a bank for people on lower incomes and the financially excluded by being transparent and flexible
- make sure it invests its deposits where they are collected – in the local communities
- and use the opportunity to make the high-street banks follow suite.
Britain already has one of the highest banking concentrations, with only four high street banks covering most of the market. This reduces customer choice and stiffles innovation. By introducing a new bank, people would finally have what has recently become a scarce commodity: choice of where to bank.
I would not be surprised to find that many would choose the People’s Bank.
Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.
The award of the Post Office Card Account to the Post Office is more brilliant news from the Government (a rarely crafted phrase). Today’s news that the Department for Work and Pensions is, after all, to award the Post Office Card Account to the Post Office, after an ill advised tender process, will safeguard much needed business for the network and provide a better service to ithe card’s 4.3 million users.
So now we have the Government, in the form of Lord Mandelson and James Purnell, publicly recognizing the future potential of the Post Office to provide financial services at a time when the big banks’ credibility and popularity is shot to bits.
It looks as though the Government has seen that being the Dr Beeching of the 21st century by allowing a key part of national infrastructure to be smashed on the altar of privatization and de-regulation isn’t a smart move. If this is so, then crucially the business secretary must now halt the current round of 2,500 post office closures if the Post Office under Royal Mail is to have a chance of being fit for the tough economic future that’s looming.
There are 14,500 post offices in the UK. A key and under reported role they have is in supporting the small and medium sized businesses that will be Britain’s economic saviour . This is a network that can be used to link the productive economy to stable finance. Therefore the next thing the Government has to do is investigate how to set up a People’s Bank based on the trusted PO network. This banking service would be fair and it would provide both local expertise and national linking.
In addition, the Post Office can be a hub for local and national government information. It could become a digitally backed network in addition to the vital real contact with real people. It holds local communities together. It includes the financially excluded. It exists in those place from which banks have pulled out.
Next on the to do list: Lord Mandelson must stop the creeping de-regulation of key parts of Royal Mail and announce that this great British institution is not up for grabs from private companies. Then he should say he recognizes Royal Mail as a British institution that is commercially viable but also a public service (and for this reason he could carry on the PO subsidy) which is not up for sale to private bidders- and he should advise any such potential bidders to take themselves elsewhere.
The campaign to save, strengthen and expand Royal Mail and the Post Office in these clear directions will be even more intensive now. All ideas and collaboration welcome…
Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.
Lord Mandelson‘s leaked letter in the Guardian today couldn’t be more welcome. The business secretary says he
wants the Post Office network to be built up and expanded, rather than neglected, pulled apart and run according to swivel-eyed free market principles – government policy for the last decade and a half.
And what he seems to have grasped absolutely is that the UK has been lumbered with a financial system unfit for the purpose of building up our economy and safeguarding our communities – but that the Post Office, with its astounding national network, provides the healthy economic trusted alternative.
In his letter to the prime minister, Mandelson describes the Post Office – with 24 million customers a week – as a trusted brand with a widely accessible network. And so it is. And it would be churlish to point out that the hundreds of thousands of people who have fought to save this network have been saying the very same thing for the two years since the Post Office introduced its detested Network Change programme.
But Mandelson is more than a sinner come to repentance. He has the chance to hit the bullseye, making the government popular by doing the right thing for communities across the UK (and the cities would be as bereft as villages if 2,500 post offices were allowed to close) and strengthening the UK economy as we enter the choppiest of waters.
Andy Wimbush is nef‘s Communications Assistant and blogmaster.
First Alan Greenspan admits that there is a ‘fatal flaw’ in deregulated, free-market economics, now Peter Mandelson – who just weeks ago was all but calling for the privatisation of the post office network – is urging the prime minister to save the post office network by ‘allowing it to provide financial products and government services‘, reports the Guardian. As with Greenspan, it was the financial crisis which apparently changed Mandelson’s mind.
nef has long been arguing for the salvation of post offices. From the Ashes of the Crash, our twenty point plan for stabilising and rebuilding the economic system, proposes:
4. Create a secure, accessible local banking system for people by growing the role of post offices
Following on from the reforms above, and in the context of building new, stable, secure financial institutions to meet local economic needs, such as mutuals, credit unions and cooperatives, the Post Office should be grown into a national banking system that delivers stable, accessible and dependable services to the public and businesses. It stands to be one of the best guarantees underpinning economic resilience, promoting financial inclusion and allowing people to invest and save with confidence and security. But, more than that, deposits made through the Post Office Bank could play a vital role in reconnecting the banking system with the productive economy. As a trusted source of information and advice, and a vital part of social fabric, the Post Office’s role as a shopfront for the state should be expanded providing direct, local access to a range of government services. Local and national government should be encouraged to direct services through the network. The Government should halt immediately the closure programme targeting 2500 local post offices and abandon plans to break up Royal Mail. Instead, it should build it up as both financially viable and as a cohesive social and economic institution. And, as an essential component, Royal Mail must be retained as a powerful national network and not cherry-picked by competitors and run down by a government and a regulator which have put too much faith in the deregulated market.
See also our recent pamphlet of essays: Triple Crunch. And stay tuned for a comment piece later today from our resident post office expert, Lindsay Mackie.
Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.
Here’s how the Secretary of State for Business Enterprise and Regulatory Reform (aka Peter Mandelson) yesterday described his vision for Royal Mail. He wanted it to be “efficient, modernised and viable“.
To untangle the code contained here, is to understand how far the Government is from having a vision of a new economic order that we at nef can sign up to.
We say that Royal Mail is a national institution which is both a service to the people and an economic driver for small and medium sized businesses in terms of its astonishing network and Universal Service Obligation to deliver mail at a uniform price across the country.
The Government, through Lord Mandelson, is saying that Royal Mail is a business which he judges solely by a set of bare criteria which can in any case be manipulated by anyone who believes that public institutions with a remit beyond the commercial, are out of date.
At the BERR Select Committee today we waited in vain for Lord Mandelson to say anything positive about Royal Mail. Nothing about its values, both business and social, nothing about the trust we have in it. Nothing about how the Government might have a duty to strengthen Royal Mail in order to underpin both local and national economic well being and community cohesiveness.
Just the same arguments that the neoliberals at PostComm use- “the picture is stark”, the business picture is “challenging”. Subliminal messages – it’s a basket case.
There is evidence that MPs are getting angrier and angrier about the government treatment of Royal Mail. But nef‘s campaign to keep Royal Mail as a national institution for the people, has just acquired a formidable opponent.
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