Royal Mail’s future is bleak as bosses threaten to pull the plug
As strike-ravaged Royal Mail bosses threaten to pull the plug… will Rishi allow the downfall of the postal service – founded by Henry VIII in 1516 – while on duty?
When Royal Mail was privatized in 2013, then company secretary Sir Vince Cable said the move would ‘ensure a healthy future for the company’.
Ten years later, the group is on the verge of collapse. Long-running talks between Royal Mail and the Communication Workers Union (CWU) are now at a critical stage, with the next 24 to 48 hours seen as key to resolving the dispute.
If there is no breakthrough, Royal Mail bosses at mother group International Distribution Services have threatened to pull the plug, leaving the post in some form of administration.
Such a move would be politically explosive and leave Royal Mail in unfamiliar territory. Suffice it to say that the government would be called in to ensure that some form of service continues.
Rishi Sunak will not want the demise of a postal service – whose legacy dates back to 1516 when Henry VIII founded it – to happen during his service. This can be seen by bosses as a bargaining tactic. But sources insist they are not bluffing.
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They have already changed the parent company’s name to International Distribution Services and threatened to split it up, separating the loss-making UK arm Royal Mail from the profitable European logistics arm GLS.
The company has been rocked by 18 days of strikes since August last year, costing £200 million so far.
Particularly damaging were the Christmas strikes that left piles of cars and presents undelivered. This at a time when the price of stamps is rising sharply. The cost of a first class stamp will top £1 for the first time next week, rising from 95p to £1.15 on Monday, while a second class stamp will go up to 75p.
Talks to resolve the strikes have been underway since late last year and there are signs that some wage moves may be forthcoming. But the fight is about more than salaries.
Royal Mail wants to make changes to the way postal staff do their jobs, including changes to clock-in times and sick pay. The unions continue to resist and further strikes are a real possibility.
The threat of strikes at Royal Mail is, of course, nothing new. The CWU was in danger of running out around the time of privatization a decade ago, when shares in the company were sold to investors for 330p each.
The strikes were averted and the government’s sale of Royal Mail to private ownership ensured that workers received 10 per cent of the shares.
The stock reached more than 600 pence in 2018. All the mailmen who paid out nearly doubled their money. But those who persevered lost.
The slow death of snail mail has hit the letter business hard, while the more successful Parcelforce arm faces increasingly tough competition from the likes of Evri, DHL, DPD and Yodel.
Thousands of striking Royal Mail staff and supporters attend a rally organized by the CWU in Parliament Square on December 9 last year
And there is turmoil at the top. Former CEO Rico Back left in 2020 after just two years in office, replaced by Keith Williams, a former British Airways CEO famous for settling a bitter labor dispute with the airline a decade earlier.
He has so far failed to match his BA successes. And its new CEO Simon Thompson has not been without controversy.
Earlier this month, he was accused by MPs of “an unacceptable level of incompetence or an unacceptable level of ignorance” about the company he runs.
Ten years after its privatization – and more than 500 years after its creation by Henry VIII – Royal Mail’s future has seldom looked more uncertain.