Classicamiga Forum Retro Edition
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Thread: The state of Royal Mail
Harrison 16:35 21st May 2008
How much does the general public actually know about the current state of Royal Mail, and how it got to this point?

Working for Royal Mail I get to know about everything that is going on in the company, and about what has happened in the past. We have weekly team meetings where we are informed and discuss current matters, and a monthly news paper going over everything in the company in more detail.

All of the time I hear people moaning about Royal Mail and the UK postal system in general. But when you are moaning do you know the whole truth?

Lets see...

The problems all began when the government, who you have to remember own Royal Mail, looked into the companies pension fund and saw all this lovely money sitting there doing nothing. So they thought. This is good. We can "borrow" this money to pump into the government funds to help improve the spending budgets.

Was that fair? Cause it wasn't! The money in the pension fund wasn't the governments to take. The company might be owned by them, but the money was owned by the employees, paid into the fund to pay them once they retired. The government had no right to take it. It was theft. Plain and simple.

But what did Royal Mail and the government call it? Taking a "break" from paying into the pension fund! No money that employees were paying into their pensions was actually going into the fund for over 10 years. Instead it was going directly into the government funds!

So what did this end up meaning. After of 10 years of no money going into the pension fund it meant there suddenly wasn't all this excess money in there. In fact it was suddenly short of money and there wasn't enough to pay the people retiring. I wonder how they happened? Doh!

So we move on to the recent strikes and issues regarding pensions. Royal Mail have since had to pay more money than they could afford into the pension scheme to try and keep it going to pay the retired workers. This has now led to the company forcing a change from a final salary pension to an average salary pension. This is what the employees are up in arms about. Why should they work hard all their lives and then have to settle for a pension based on the average wage their earnt throughout their employment, rather than based on what they were earning at the time of their retirement? They shouldn't. Imagine if you had been working in the company for 30 years. Your wage when you joined might have been equivalent to something like £2 per hour, and now it is more like £9. So the average would be about £5.50 How is that fair, or in line with inflation? It isn't.

Next on to the next issue. Opening the mail system to tender.

Again remember that Royal Mail are owned by the government. But what did they decide? They the UK mail system was a monopoly and unfair to the consumer so they opened it to tender for any private mail companies to move in and take over parts of the mail system.

Now the issue here is that Royal Mail is a public service which aimed to get personal mail to every address in the country. They do this at a lose because it cost much more than the price of a stamp to deliver a letter to many UK addresses. So they recover these loses through business customers who post bulk mailings every day guaranteeing the company revenue.

But the other mail companies are not interested in personal stamped mail for the very reason that is costs too much to deliver. Instead they want to make money and it is the business customers who can do this for them. So they undercut Royal Mail and take the business customers away from them, meaning that Royal Mail lose the profit making revenue and start to struggle because they are not getting enough business customers.

But it gets worse. Who delivers business letters? Only Royal Mail. How can this happen if these other private companies are now handling the mail from these business customers instead of Royal Mail? Simple. Royal Mail still actually handle it. This is something I don't think many people realise. A company such as TNT receives the bulk mailings from their business customers and charge them for the postage. TNT then deliver the letters directly to the closest Royal Mail distribution centre where it is sorted using Royal Mail sorting machines and it them goes through the Royal Mail system to delivery offices and to your door by the postman. So what has really happened? The private postal companies are undercutting Royal Mail, steeling their customers, then just collecting the mail from the customers and giving it directly back to Royal Mail to be sorted and delivered. How mad is that! The difference to Royal Mail is that before they would get 34p for a first place business letter coming directly from a business customer, whereas now they are paid about 13p a letter from TNT to sort and deliver it on their behalf.

So can you now see why Royal Mail are losing money?

Business customers are leaving Royal Mail because they are offered a better deal from other postal companies, but fail to realise that it is still Royal Mail who are actually handling their mail past the collection point.

And the idea the government are now having to partially privatise Royal Mail. How is that going to help?

Oh and one final thing to mention. Fines. As a public service Royal Mail have to meet strict deadlines to maintain this service. This is overseen by a government run watchdog. And what happens if Royal Mail fail to meet these targets on any given day? They are fined 1 million pounds! That is right. If Royal Mail have too much mail to handle completely on one day they lose 1 million pounds which gets paid to the government.

And so what about the other private mail companies such as TNT? Well they are just running a business, not a public service, so they don't have such targets and therefore don't get fined. Fair? hardly. From my point of view, if they are submitting a tender to take over part of the UK mail service then they should also be liable for the same watchdog regulations and be fined in the same way for not meeting targets.

So to sum up why Royal Mail is in the current situation



[Reply]
J T 16:45 21st May 2008
A good post to start the topic (wonder what gave you the idea )

I think the whole 'opening up to competition' was a terrible idea. Yes it was a monopoly but one that was working in our favour. Being able to send a letter from one end of the country to the other for just pence is a great deal. Not only that, it gets there so quickly too and is (for the most part) pretty secure too.

I have a feeling that not many other countries in the world have this kind of service - and now possibly we won't for much longer. Great!
[Reply]
Zetr0 16:53 21st May 2008
I cannot believe the travesty of the pension fund, that initself should be taken to the euopean court and filed with them, as you say it is stealing.

Alas as you have notied the changed in the out-pay from the pension scheme, reflects the governments pilfering, and gross mis-management of the pension scheme, infact there may well be grounds to sue.

Personaly there is nothing wrong with opening up the service, however everyone must be given a level playing field otherwise its just unfair business practice restrictions, this can be fought in the court of euopean appeal, also discuss this with the ombudsman.

Now, forgive me, but Royal Mail must still make some profit on the sorting service, which does state that the business hadnling post was perhaps too high to begin with. to compete its not nessaserlly the cheapest price that rules, alas in business its often the case.

It will be a shame when we DO lose the post service as such, it has been a back bone for this country and a cash cow for the government.

There are only a few principle utilites that should be privatised, Postal Service, and Health Care are not one of them.
[Reply]
J T 16:58 21st May 2008
TBH I'm of the persuasion that as few public services as possible should be privatised.

Look at the mess the train system is in. Different people own the tracks to the trains, it's all divided up and I get the feeling that it could all be so much better.

I read a great article about privatisation and deregulation of the whole money-business. The crux of it was privatising the profit, but nationalising the risk - so when things get messed up the taxpayer bails them out. Unfortuantely I am too stupid and lazy to remember much more about it - but interesting it was.
[Reply]
Buleste 17:24 21st May 2008
Don't forget the reason that post offices are losing money because the closer the government gets to privatising the Royal Mail the more exclusive services it has stripped form the post offices thus increasing the argument for privitisation as Post Offices are losing money. When are we going to get a government that believes in social responsibility rather than selling stuff off for a quick buck. For the last 29 years Britain has been run by nothing but carpet baggers lining their own pockets.
[Reply]
TiredOfLife 17:27 21st May 2008
I'm a civil servant, so not in the slightest bit surprised, which is a disgrace in itself.
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Harrison 17:39 21st May 2008
I completely forgot to mention about the Post Office Counters and the trouble they are in at the moment. As most of you know 2000 post offices are schedules to be closed at some point soon, with a recent announcement that this could increase to 3000.

The reason is due to them not making enough money. Most post offices are franchised businesses owned by self employed shop keepers. This was a very attractive thing to get into until recently because a post master's salary was close to £40K. This in itself is a ridiculous salary and possible one of the reasons they were not making money?

But one of the reasons the post office counters are no longer making money is again due to the government. Most of the services offered by them until recently such as getting your pension over the counter, paying for your car tax, or your TV licence are all contracts between the Post Office and the government departments who handle these licences and services. So what did the government do? They opened these services to tender and other companies took over the handling of how they are paid. Therefore Royal Mail lost the ability for those services to be paid for at a Post Office counter.

Another mad government move. And yet they can't understand why post offices are not making money any longer and need to be closed. It drives me mad!

A central single place handling all of these services, which is what Post Offices were until recently, was the perfect setup. Now we have all of these services scattered around with you having to either pay for things online or find some random shop that handles them. Just mad!
[Reply]
J T 17:52 21st May 2008
Actually, paying for car tax online is great - having it delivered to you is brill (especially as it's not always easy to get to a post office, and having to remember all the insurance/V5/MOt forms).

Agree with most of the other points though
[Reply]
Harrison 18:01 21st May 2008
I do actually agree with you about car tax. I did it online myself last time I had to renew it and it was very quick and simple. Which actually surprised me a lot considering it is the DVLA we are talking about here!
[Reply]
Stephen Coates 18:28 21st May 2008
Some interesting points here.

The staff they employ could also cause problems. On the front page of our newspaper on friday was

'Prison for Pilfering Posties'
They were taking parcels from the Rotherham delivery office and selling the contents on ebay. Over 12 months they made £37924.
And one of them was the supervisor who was told to keep an eye out for people stealing things. He got 3.5 years and the other one got 2.5 years.
[Reply]
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