Privatisation is the real threat to Scottish postal services, say SNP

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  By a Newsnet reporter

With Westminster set to debate the sell-off of the Royal Mail today, the SNP has called on Business Secretary Vince Cable to apologise for what they say was his scaremongering over the future of postal services in an independent Scotland.

SNP MP Mike Weir has said that Mr Cable’s recent warnings that independence posed a threat to Scotland’s postal services were “ideologically driven” and “nonsense”, and pointed out that the real threat comes from Westminster’s decision to privatise the Royal Mail.

Last week while on a visit to Glasgow, Mr Cable claimed that many Scottish post offices would be commercially unviable with independence, and also asserted that the cost of posting a letter would rise dramatically. 

However Mr Cable’s claims were dismissed by Fergus Ewing, the Scottish Government’s Enterprise Minister, as “simply a set of assertions by an organisation that is opposed to independence”. 

Mr Ewing’s position received apparent support in evidence presented by key figures in the postal industry to a recent Business, Innovation and Skills Committee hearing.  

Paul Hook, Head of Policy and Communications for the National Federation of Sub-Postmasters, told the committee that the status quo “was not great for the post office network in Scotland”, and added that an independent Scottish postal service would “have a lot of options”. 

Robert Hammond, Director of Postal Policy and Regulation with Consumer Futures, added that after independence Holyrood and Westminster could negotiate the retention of flat rate charges throughout Scotand and the remainder of the UK.

Mr Hammond said: “If you do have a uniform rate it cuts out all that uncertainty that could exist where traditionally you have just had a one-price-goes-anywhere system. So that would be my recommendation.”

Experts giving evidence to the committee also agreed that there was no reason why independence should put the Universal Service Obligation (USO) under threat.  The USO is the statutory obligation that requires the Royal Mail to charge the same for deliveries irrespective of an addressee’s location within the UK. 

However, the SNP say that the USO is currently under threat if the Royal Mail is privatised and forced to operate within a competitive market.  The SNP’s Mike Weir argues that the Royal Mail’s competitors will “cherry pick” the most lucrative markets and undercut the Royal Mail, leaving service users in rural areas with the most expensive service.  

Last month in response to suggestions that the No campaign would seek to use the future of post offices in their campaign, Willie Marshall, Secretary of Communications Union (CWU) Scotland, Number 2 Branch, said:

“Privatising Royal Mail will be the biggest threat to customers and employees all over Scotland but particularly in remote and rural areas if the universal service obligation is ditched.  People know perfectly well that an independent Scottish government would protect those services in a way that Westminster simply won’t.”

Today, Mr Cable is set to reveal the UK Government’s privatisation plans for the Royal Mail to the House of Commons.  It is understood that the UK Government plans to float the Royal Mail on the stock exchange with a value of £3 billion.

Critics claim that the privatisation is ideologically driven, noting that the Royal Mail is not a failing business which can only be saved by privatisation.  The Royal Mail posted pre-tax profits of £324 million in 2012.  Nearly half of revenues (48%) come from the parcel service, which is seeing increased business as internet shopping becomes established as the norm.  The Royal Mail delivered 1.4 billion parcels last year.

Billy Hayes, general secretary of the Communication Workers Union (CWU), which represents more than 100,000 postal workers, denounced the sell-off, saying:

“Nobody outside of government and their potential investors wants their postal service sold. The public consistently oppose the sale and recently 96% of workers voted against.”

Commenting ahead of Wednesday’s Commons debate, the SNP’s Mike Weir MP said:

“The UK government’s ideologically driven obsession with privatising Royal Mail poses real danger to the postal service, and in particular, the universal service obligation which is of huge importance to Scotland. Vince Cable has spouted nonsense about independence being a threat to post offices yet Scotland could lose its post offices due to a UK government they did not elect.

“A privatised postal service in a competitive market will undoubtedly put pressure on government to reduce the terms of the USO, as its competitors ‘cherry pick’ the profitable urban routes leading to a reduced service in rural and less affluent areas.

“It is a nonsense that a public flotation on the stock exchange will make any difference to the eventual outcome. In previous Tory privatisations they trumpeted the idea of mass shareholding but the truth is that many were soon sold, the numbers of people holding shares peaked in 1997 and has steadily declined since.

“Most of the privatised companies, such as the energy companies, were soon taken over and most have now ended up as divisions of overseas companies.

“It is highly likely that Royal Mail will soon end up losing its independence and becoming part of one of the larger European mail companies, or worse still, fall into the hands of those seeking to asset strip the organisation.

“The only protection to the consumer is Ofcom, who have already lifted the price cap on most products, allowed competitors to establish delivery services on profitable routes and confirmed that they have no power to stop the introduction of different prices for different areas of the country.

“Only with independence can Scotland be assured of a mail service that meets the needs of Scotland and our communities rather than the money men of London.”