Royal Mail - How Will Privatisation Affect Its Services?
Business secretary Vince Cable has confirmed the government's intention to float the Royal Mail on the London Stock Exchange, making it a privately-owned company after some 20 years of discussion and almost five centuries under the state's watchful eye.
Britain's postal service is now all set to join the short yet illustrious list of companies that have moved from the state-owned model to become a private enterprise, including British Gas, British Airways and British Telecom (BT).
The proposed sale has attracted a great deal of controversy over claims that privatisation will lead to a deterioration in services and poorer working conditions for workers, many of whom could lose their jobs.
Although Mr Cable has moved to assure regular customers that the Royal Mail would maintain all of its services, there is a degree of scepticism as to whether this really will be the case.
The picture elsewhere
The main opposition to the plans comes from the Communication Workers Union (CWU), which has used examples of other postal services going private to explain how this will impact the Royal Mail.
The group highlights that after both Austria and the Netherlands privatised their postal services in the past two decades, only businesses have benefited from the change.
CWU members say that companies as well as those placing bulk orders have been able to slice their delivery costs at the expense of domestic users, who have ended up paying higher prices for their letters and contending with an array of postmen delivering their mail. Thus, everyday customers are likely to be hit by the change.
Increased focus on parcels
The number of letters delivered by the Royal Mail dropped by eight per cent in the year leading up to March 2013. However, the service managed to achieve a £403 million profit for this period by increasing the number of parcels delivered.
Online shopping is now huge business for mailing companies, so the Royal Mail is likely to place an increased focus on its UK parcel delivery service when it does turn private.
Initially, regular customers have been told not to expect anything fundamentally different in the way the service is run. There will however be some radical changes conducted later down the line, especially in regards to delivery times.
It used to be that everyone would wait until around half past nine in the morning before deciding that no more mail would arrive through their letterboxes. Now, the Royal Mail is expected to follow its competitors by extending its delivery hours with the hope of making savings.
And the Post Offices?
The Royal Mail becoming a privately-owned company will have no effect on the Post Office. That Mr Cable can guarantee, as the two parties are now separate from each other. In fact, the government is looking to invest more money into the Post Office in order to prevent branch closures. However, even with the branches currently available - is the service of a sufficiently high quality to retain customers?