The “independent” enquiry into postal services led by businessman Richard Hooper published its report on 16 December with an announcement in Parliament by Labour Business Secretary Peter Mandelson.

Hooper’s report recommends more “modernisation” – a code word for cuts and closures – and part-privatisation to end the crisis in Royal Mail and support the Universal Service Obligation (USO), the company’s commitment to deliver to every address in Britain 6 days a week.

The government and Hooper state this crisis is due to falling mail volumes – with 5 million letters less sent in 2007 than the year before. In reality Labour’s opening of the postal market to private companies in 2006 has seen them cherry pick the profitable big business contracts while using Royal Mail to deliver the mail under “Downstream Access” regulations, where Royal Mail remains saddled with the cost of maintaining the USO. In other words, the postal market is rigged by government regulation against Royal Mail and in favour of TNT, DHL and the other private firms.

As a result Royal Mail’s profits fell by one third last year - to “only” £233 million, while the pension deficit has nearly doubled because it is linked to the stock market and with the credit crunch the stock market has crashed – in other words the market is the problem once again, not the workers!

Hooper and Mandelson’s solution to the crisis in Royal Mail is not to close this rigged market but privatisation, selling-off a minority of Royal Mail shares to a private company. The Report says this is so that Royal Mail can gain the ‘confidence, experience and capital” of the private sector – the same one responsible for the current recession destroying workers’ jobs, wages, pensions and homes!

Business benefits not the public

Hooper’s final report flatly contradicts his initial report in May this year, which showed that the opening of the postal market and modernisation had created the crisis in Royal Mail and delivered a worse service to the public, with only big business benefiting! In this report he states that the decision to open the postal market to full competition and “grant alternative carriers “access” to Royal Mail’s delivery network has had benefits for customers.”

Hooper claims the answer to Royal Mail’s profits crisis lies in more modernisation, with the closure of up to half the current mail centre closures and massive job losses. Peter Mandelson agreed in his speech that “the status quo is not sustainable” and the solution is to “drive down costs”, meaning the focus will be on swingeing cuts.

Hooper also demands an end to the “spectre of political intervention” and for “management to make decisions about modernisation entirely on a commercial basis” - in other words, there will be no more government money. This slaps down the CWU tops who have been holding out for the government to subsidise Royal Mail’s USO and underwrite the pension scheme (as it does for all other public sector workers). The government just bailed out the banks to the tune of $500 billion, but there will be no bailout for Royal Mail despite billions for the big banks, just “commercial” solutions. It is one rule for big businesses and banks like HBOS and RBOS, another for public services.

However this is not the only government double-standard that Hooper represents. While ruling out a bail out for Royal Mail, the report states that the government should take on Royal Mail’s pension plan with its potential £7 billion deficit, in order to attract private capital that otherwise wouldn’t touch Royal Mail with a barge pole – what a swindle for the public! As Billy Hayes, CWU general secretary has rightly noted, this means Labour government will be “nationalising the debts and privatising the profits”. Postal workers should not that this will not be a bailout of the pension plan or reverse this year’s pension cuts, but rather provide a sop to big business. So much for Hooper’s “commercial basis”!

A third Hooper hypocrisy is that it says nothing about the bloated bonuses for Royal Mail executive Adam Crozier, who got £3 million this year on top of his pay for running Royal Mail into crisis. However Hooper zeros in on workers' being paid too much, "between 6% and 25% above median base pay in comparable roles across all sectors". Wages will most likely come under attack too.

What the businessmen and bureaucrats on the Hooper commission mean by the phrase "commercial basis" is for the public to pay for the privatisation, while modernisation is driven forward by the whip of the private sector’s relentless search for profit falling on the workers’ backs. Hooper sees the private partner installing management down to “the junior level” to push through this new vicious regime of attacks. In a last slap in the face to the union, Hooper demands “modern” industrial relations with the CWU helping to discipline those workers who refuse to play ball and continue to “obstruct” these commercial policies.

Hooper is demanding that the government not pick and mix on these proposals but that to work they must be implemented as a whole. The government has not waited for consultation with the union or consumer bodies but over the weekend of 20-21 December has appointed the investment bank UBS to help find an investor. Dutch multinational TNT, the British parcel company APC and private equity group CVC are all circling like vultures.

Labour and privatisation

Labour has driven this free-market process along in the postal sector for the entire twelve years of its government. It appointed the Leighton-Crozier management to wield the axe, and set up the pro-privatisation regulator Postcomm. It fought for European legislation to open up postal markets to full competition and then jumped the gun and opened Britain’s early in 2006.

Mandelson’s aim is to not just turn Royal Mail into a profitable company ripe for full privatisation, which as he openly admits is his long time goal, but to make it a “a real player in the European and international postal markets”. Royal Mail is to serve not just as a source of more profit for British capital, but to become a rapacious British multinational like TNT that is capable of squeezing profit from markets abroad at other countries’ expense – this is the real goal of the Labour government and the millionaire City interests that it represents. Royal Mail will take its place among the other global companies of British Imperialism such as HSBC and BP.

Against all this, the CWU stands for the post run as a public service, with decent conditions and wages for its workers. The two visions are completely incompatible. In the union’s response to Hooper’s report, Dave Ward, the CWU postal deputy general secretary, correctly recognised that it would not stop at a joint venture but “would open the floodgates for full-blown, damaging privatisation.” So how should the union respond?

The CWU and Labour

The CWU leadership have fought to keep the union affiliated to Labour, based on its promise in the “Warwick II” agreement earlier this year of a “wholly publicly owned" Royal Mail. It will surprise no one except that the Labour government is seeking to break this as they have so many other promises and Labour Party conference decisions, it is time for the unions to break from them!.

The government is trying to hide behind the figleaf that the company will still technically be publicly owned, since they intend to start out with one third of shares being sold off, ie the government will still control a majority stake. However Royal Mail's management will be led by the private partner, and under much more vicious profit-making lines. As Dave Ward says it will lead to full privatisation, possibly after the general election when the CWU’s services in funding Labour and getting the vote out for it are no longer required.

Ward has since stated that “the Government's announcement to privatise Royal Mail now means the stakes are even higher” and the union wants “the public to join with us in a nationwide campaign to defend a vital public service." This is the right direction, but such a campaign must go beyond a lobbying campaign among Labour MPs and toothless Early Day Motions – the focus of this year's CWU campaign aimed at the Hooper commission which plainly has not had an ounce of influence on the outcome. This approach has clearly failed.

Instead postal workers must build a real campaign drawing in allies like pensioners groups and anti-privatisation campaigns. As Billy Hayes states, the public is sick of privatisation, and in the context of a recession and massive bank bailouts, postal workers have a strong argument against the cuts and closures being put forward - where will the 50,000 get jobs? The CWU can win the public to its side with a national campaign that is aimed at the working class and action such as mass protests and demonstrations.

However this must be backed by national strike action to really block this final stage in Labour’s privatisation offensive. That is why the CWU leadership’s decision to drop the 19 December strike, rather than use it as a springboard to a national all-out strike against cuts and closures, was wrong, both for the workers and the character of the movement against privatisation that we need.

Who will lead the fight?

The current leadership under Hayes and Ward are not likely to lead such a campaign. Their acceptance of the postal market and support for the Labour government mean that they have pursued a timid policy so far despite opposition and warnings. Their “campaign” has run entirely through Labour, with a focus on lobbying MPs and toothless Early Day Motions, while avoiding any confrontation that might damage the Labour government.

As a result their track record is one of failure. Ward, Hayes and the Postal Exec did not campaign against the 2006 opening of the postal market, and then banned strikes against efficiency cuts. They dropped the magnificent strike of 2007 again and again for fake talks, then refused to build on the mass walkouts which could have seen a great victory, instead leading the union to defeat. This year they signed off on flexibility without a fight and have dithered as Hooper and mail centre closure plans proceeded.

Now postal workers face the last fight to save their industry. There is too much at stake to leave the anti-privatisation campaign in the hands of the current CWU leaders.

Instead postal workers must make sure that they are organised to directly control the campaign against privatisation. Mass meetings in workplaces and local areas need to discuss the workers' response to privatisation, demand a national strike, and elect committees to kick off a mass movement against Labour’s attacks on the ground. The CWU must end its funding for Labour immediately - it has wasted £5 million since 2001 - and instead pour the funds into building a new party that will fight for workers’ interests, against those of big business.

See also...

CWU: How to fight Privatisation

Predictions of privatisation become reality