Northern Isles MP Alistair Carmichael has insisted Shetland will not be left with a threadbare postal service following privatisation this autumn.
The coalition government confirmed this week that privatisation will go ahead – a move Mr Carmichael is backing. He is adamant that islanders will continue receiving mail six days a week at the same price as the rest of the country, despite trade union fears to the contrary.
The MP pointed to “meaningful” protections within the legislation ensuring the regulator has the power to charge companies a levy to subsidise the universal postal service. Those could come into play if firms engage in excessive cherry-picking of lucrative deliveries in cities and big towns.
But the CWU union has warned the service could face a dire future under private ownership. Its Grampian and Shetland representative Alan Robertson described privatisation as a “despicable” demonstration of disregard for rural communities. He added the end result would be “bad for our members and bad for the public”.
Government ministers maintain that they want to ensure all of Britain’s 28 million households get an equal service. But unions suggested Steve Davies from the institute of economic affairs (IEA), a right-wing think tank, let the cat out of the bag this week.
Mr Davis told the BBC on Wednesday that he saw nothing wrong with those in remote parts paying a higher premium for their post: “It’s part of the price you’d pay for living in beautiful rural surroundings,” he said.
Crediting Mr Davis for his honesty, Mr Robertson said it seemed inevitable that communities like Shetland would be “the ones hurt hardest by privatisation”. He believes private investors will soon start lobbying for a watering down of the universal service obligation.
“Let’s face facts: the privateers are not interested in the workforce,” he said. “They just care about profit. They’d come in and cherry-pick. They don’t want to go to Shetland or the Outer Hebrides six days a week. This disregard for vast rural constituencies is despicable.”
The CWU points to the privatisation experience elsewhere. In the Netherlands, it has resulted in job cuts, a “demoralised” workforce and four different postal companies competing to provide the same service, the union said.
On the back of a booming market in parcel deliveries, the Royal Mail’s annual profits doubled to £400 million last year. Mr Robertson said unions accepted the need to adapt the service to fit the internet age, but called on the government to examine alternatives to privatisation.
Jobs have already been shed to improve the service’s profitability, and the sell-off would “hurt us even more”. He said: “We are modernising, and we’ve been doing that for years.”
But Mr Carmichael said he saw no way of Royal Mail attracting the necessary investment while remaining part of the public sector. It requires “the sort of investment where they need to have access to outside funding”, he suggested.
As part of the deal, its pension fund – which faces a substantial deficit – will be taken onto the public books to protect postal workers’ retirement income, he said.
“I think privatisation is probably the only way, now, to guarantee that we can maintain a Royal Mail,” Mr Carmichael claimed.
Unions dispute that assertion. They point out that Network Rail, effectively a public body, has been able to borrow sums far greater than Royal Mail needs on private markets.
CWU members also fear their workplace rights will be diluted. A recent consultative ballot saw 96 per cent back the union’s anti-privatisation campaign on a turnout of 74.2 per cent.
Mr Robertson said that “speaks volumes for our members, who feel they can’t be bought off with a couple of thousand pounds of shares” which would put their rights in jeopardy.
A recent pay offer had been “in the right ballpark”, but was unacceptable due to there being “so much stuff attached”. Terms and conditions would only be protected for three years, after which the CWU believe salaries and working conditions will be under threat.
Mr Carmichael said he did not recognise the picture painted by the CWU. He said it seemed as if the union was engaging in “a sort of exaggeration designed to support a view that they’ve already reached”.
“The CWU will still be in a very powerful position as a dominant trade union in a dominant public service – that’s not going to change,” he said. “This also comes with a share ownership scheme for employees of Royal Mail itself, so they continue to have a pretty direct stake in that.”