An Essential Service Even In A Modern State

Mary Dejevsky writes:

The UK government – a Labour government, no less, with a huge parliamentary majority – has given the go-ahead for a Czech billionaire to buy Royal Mail for £3.6 billion. Yes, that’s correct. A foreign businessman, an oligarch by any other name, with the classic combination of interests in energy, communications and football, is about to buy one of the UK’s oldest and most recognisable public institutions – and almost no one has turned a hair.

All right, so it’s almost Christmas and everyone is frantically busy. Those of us still old-fashioned enough to send actual cards probably posted them a while back, with a sense of relief that it would be another year before we had to stand in another Post Office queue in pursuit of ever more exorbitantly priced stamps. Insofar as the fate of Royal Mail impinged on our consciousness, it was for a fleeting moment, if at all, as we tipped our cards into the post box or spotted a postman or woman on their rounds.

Having other things to do, though, is really no excuse. Are we so inured to the sell-off of parts of the UK’s national heritage that we can’t at very least shed a tear for the loss of Royal Mail?

England had one of the first universal postal services in the modern world. The red pillar boxes bearing the cypher of the monarch of the day are national symbols on a par with red phone boxes, and almost up there with Big Ben. Once upon a time, the very idea of selling Royal Mail to anyone, let alone to a foreign businessman, would have prompted outrage. But in December 2024, outrage came there none.

Let me clarify. The problem is not really foreigners or Czechs or Daniel Kretinsky, the successful buyer. Kretinsky may have much to recommend him as a businessman and a human being. He certainly has a taste for things British. After all, he already owns a 27 per cent share of West Ham United and a 10 per cent share in Sainsbury’s. But Royal Mail is not West Ham, nor is it Sainsbury’s – it is a venerable British institution and an essential public service.

Some may ask whether a universal postal service is still possible or even necessary in the age of digital communications. The need is undoubtedly much less than it was, and will doubtless decrease further. The Royal Mail may need to change shape more than it already has. But I would argue that the need is still there, and that a universal postal service remains an essential service even in a modern state.

The idea behind the sale is that the state will be rid of a loss-making concern, and the private sector, in the shape of an energetic and Anglophile entrepreneur, will have the chance to turn it around. Well, maybe. But there is more at issue here than efficiency.

Given that such a service has to be universal and geographically inclusive, it is therefore unlikely to be commercially viable. As such, there is a good argument that it should continue to be provided by the state. This is the view even in that bastion of the free-market, the United States, where the postal service is even now regarded as an integral part of being one nation.

Elsewhere, countries have either fully or partly privatised their postal services. In Europe, they include the Netherlands and Malta, which have gone the whole hog, and Germany and Austria, which have gone down a similar, semi-privatising route to the UK – in the face of some public and trade-union misgivings along the way. What these examples show is that a postal service can indeed be commercially viable.

What is not defensible with the arrangements for Royal Mail is that the service is being sold off to compete as just another market player, while retaining the name and all the trappings of the Royal Mail. The government of the day as the guardian of the state should have thought long and hard about this – and then decided against it. Sell the service if you think that makes sense, but Royal Mail is not just a ‘brand’ and should not be sold.

Of course, the Royal Mail sale comes with conditions, such that Kretinsky will find it almost as hard as the state to make the universal postal service a going concern. The service will still have to deliver the length and the breadth of the UK, at the same price for the cities as for the highlands and islands. The new owner has undertaken to keep its headquarters in the UK and for tax purposes – but only for five years. He has promised not to touch the pension fund and to make no compulsory redundancies for a year. The UK government retains a ‘golden share’, so the state keeps a role, just in case.

But it is hard to see how even Kretinsky, with his record of success, can make his new venture viable without eventual changes. There is already talk of guarantees for second-class deliveries being slackened. And a time must surely come when he, too, faces the hostility of a workforce steeped in tradition and well aware of its worth. In other words, he will face the same battles as successive governments have faced, except that he could presumably decide just to walk away if he cannot, in the end, make it work.

In the meantime, the apparent lack of public concern has to be a reflection of how far the postal service – all of it – has sunk in public esteem since the Post Office and the Royal Mail were separated 12 years ago. The Post Office is going through its own agonies, as the scale of the Horizon computer scandal continues to unfold, with the eventual costs surely outweighing any benefits of the restructuring. Now, the Royal Mail is to be treated as just another business.

Yet there was an alternative. The Swiss Post remains a state-owned company. It may be regarded as perhaps the best postal service in the world. Its post coaches are a source of national pride and affection. There, you can still glimpse the vestiges of nostalgia for a national postal service – a knock on the door from Postman Pat still has its appeal.

The Labour government is re-nationalising the railways, so why not the Royal Mail and the Post Office, too? Putting the two back together under the aegis of the state would have been the perfect opportunity for Keir Starmer to set this Labour government apart from its Conservative predecessors, and perhaps earn some public kudos in the run-up to Christmas. As it is, the timing of the sell-off decision is almost as bad as it could be. But the decision itself is worse.