Private Letters

Rejoice! And again I say, rejoice! The privatisation wheels are turning again and the British postal system is going the way of all flesh towards liberalisation.

Having made the State-run monopoly, Consignia, run under its own internal management and revenues for a short time, the government beheld the haemorrhaging of cash and is now on the threshold of making a very sensible decision. Either subsidise the one million pound a day losses or get out of the postal business altogether. Obvious choice, to me at least.

The Consignia chief executive bemoaned the fact that it is taking 28 pence to deliver a letter with a 27 pence stamp on it. My immediate reaction was to suggest raising the stamp price to 28 pence but I didn’t want to upset the privatisation apple cart and one just knows that the problems in this business run far deeper than the price of a small piece of adhesive paper.

The unions are raging at this "betrayal" and we can expect the usual counter-productive strike action for these are people from another age determined to put the producers (themselves) before the consumers (us).

Meanwhile, your Scottish correspondent has his contacts everywhere reporting back to him on the internal machinations of Statehood. Well, okay, I have a friend who works in the Post Office as a postman and, despite his socialist leanings, he readily confesses to the ineptitudes and inefficiencies of this 365 year old monopoly as he witnesses it at his local sorting office.

Tales of high staff absenteeism, absconding to the local bar or just consuming alcohol on the premises are just the tip of the iceberg. Managerial laziness and union obstinacy all add up to a bloated monopoly that is ready for the culture shock of competing in the real world.

So, despite the left of centre Labour Party coming to power in 1997, the privatisation paradigm continues and that is surely a telling sign that this is an unstoppable machine. To remind readers of the process that Margaret Thatcher began when she came to power in 1979, here is the golden thread of privatisation that has run through British politics:

  • 1982 – Amersham International
  • 1984 – Associated British Port Holdings, Enterprise Oil, Jaguar Cars
  • 1985 – British Aerospace, Cable & Wireless, Britoil
  • 1986 – British Gas
  • 1987 – British Petroleum, British Airways, Rolls-Royce, British Airports Authority
  • 1988 – British Steel
  • 1989 – All 10 regional Water Providers (except Scotland)
  • 1990 – All 18 regional Electricity Providers
  • 1993 – British Telecommunications
  • 1995 – British Coal
  • 1996 – Railtrack, British Rail, British Energy

Ah, a most pleasant sight for the libertarian eye!

Where companies were privatised in stages, the final year is given. From these sell-offs, the Treasury reaped more than 60 billion, which sounds a lot but would only be a small fraction per annum of the entire tax revenues of the British government. This may explain why the burden of taxation has remained largely the same throughout that historic period (though some of the cash was undoubtedly used for pre-election, tax-cut sweeteners). Ultimately, the cost of running these companies was heavily outweighed by the cost of the healthcare and welfare benefits sectors.

This leaves the London Underground and British Nuclear Fuels as the only major State run companies. Of course, I would also add the contentious National Health Service but even here we see the dawn rays of privatisation probing the darkness as recent governments have sought to introduce private partnership and funding into healthcare.

Will Consignia survive? Massive redundancies are inevitable and (according to my friend) that is why so many idle and long-term workers are staying – large redundancy pay cheques. Survival is less likely if the government insists that it guarantees universal delivery to remote regions at fixed prices. This kind of retro-fitted State interference has given previous privatisations a bad name by insisting on socialistic price and quality controls totally divorced from what the consumer is actually prepared to tolerate (see my previous article on rail privatisation). So far, that has proven to be merely an irritation in the grander scheme of things – no one would dare renationalise all these companies now.

But, looking again at the initial reaction, I noted with some amusement the alarmist logic of the media and unions such as the claim that it could cost from 2 to 16 to send a letter to remote regions and that the private companies would cherry pick the lucrative urban delivery areas and ignore the countryside. They may well do in a frighteningly realistic sort of way.

Now, I love the countryside, and look forward to my various annual holidays in the far north of Scotland. But it is with some sorrow and not a little anger when I hear yet another demand from rural dwellers for subsidies from city consumers and taxpayers.   The farming industry is heavily subsidised, the government is the major employer whilst the rest are involved in tourism and whisky making. How much more do they want? The only thing I think I am with them on is the opposition to the government’s attempt to ban fox hunting.

The basic moral argument here is whether country-dwellers should live off the backs of urbanites. Some sections of the countryside seem to think they have a moral claim on the hard earned cash of city-dwellers in the same way that the poor and sick have a claim via the Welfare State. They do not and there is no compelling moral argument why they should unconditionally share in the urban centres of wealth-creation.

I suspect some want the share of the wealth but not the hassle of grimy, noisy, crowded, criminalized cities. Understandable, some may say, but indefensible. When things got tough for the Highlanders and Irish (after Culloden and during the Potato Blight), they didn’t demand State subsidies; they followed the money and emigrated to cities of the British Empire or the new verdant lands of America. These far flung lands are thankful for the skills and good sense these people brought from afar off.

One may ask then what the price is to pay for splendid views of God's creation, very low crime rates and an altogether more peaceful state of existence? Evidently, the potential shift to reality-reflecting delivery charges is not worth it. We are all tempted to be socialists when it comes to the State offering "free" money to us, but the old capitalist shoves over when it comes to acquiring money on the markets.

I know that applies to rural capitalists as well because they hike the price of holiday cottages during the peak demand times of school holidays – despite the fact that many of the clientele are financially strained young families. The only consistent thing about human nature is its inconsistency!

So, coming back to delivery of letters to remote regions, it is either State subsidies or the extra cost being passed onto businesses and urban postal customers. Neither argument is morally sustainable. It is no more sustainable than demanding that travel from the countryside to the cities should be subsidised. What then is the free market solution? By its very nature, no one knows and that is the beauty of it, some inventor will think of something novel and even simple. Then some entrepreneur will implement it and market it for the general good of all.

But, by way of speculation, the Internet, phone and fax are obvious ways of delivering information thousands of times faster than snail mail ever could. Privatised post offices could have a fax machine sitting there for a small charge instantly delivering various forms of information to corresponding offices in other areas (well, that is how the old telegraph system worked). The idea that information must be hand-delivered via miles of dirt tracks is verging on the prehistoric. Maybe now is the time to put this old assumption to the test.

Moreover, there is no need to pay bills or order items by post when we have direct debit, mail order and Internet shopping. This problem of remoteness is becoming less and less important as we analyse it more and more.

Free market capitalism is all about change, evolution, progress and the constant search for improvement. A monopoly such as the Post Office fears such things as the Internet – unless it is wholly subsidised by taxpayers’ money. Private companies embrace new technology with a speed that makes State-run industries dizzy.

Okay, so what about those items that have to be sent physically such as Christmas presents? For items purchased by phone or Internet, these can be gift-wrapped and forwarded to the recipient at a minimal charge. But what about those who wish to support the local economy and buy their presents from the nearest town? The question is its own answer, for if you are in a town, you are likely to be at a more cost-effective point of posting anyway, so shop, wrap and post at the same time.

What will likely happen is that private rural services will have less frequent collection and delivery times as the cities – the introduction of bus travel competition bears that out and I suspect that this is not an issue except for the most urgent type of letter. The rural dweller can also be thankful for one type of letter he may receive less of – junk mail. As for those zillion Christmas cards that clog up the system every December, I would take them all to a cost-effective town-mailing centre while I am doing my Christmas shopping. But, ultimately, the price of a stamp will go up or down depending on where one lives.

At the end of the day, the State will plough the savings into yet more failing public sector ventures rather than cut taxes. I also have a horrible feeling those holiday cottage owners will just pass the extra postage costs onto their city clientele.

Nevertheless, the mills of privatisation grind on and the ethic of it burns that little bit more into the public psyche …

February 4 , 2002