Labour think tank urges Royal Mail sell off

By Michael Harrison,Business Editor
Tuesday 14 January 2014 02:01

Privatisation of the Royal Mail could be in the best interests of the organisation, its workforce and its customers, according to a former senior policy adviser to the Government.

Dan Corry, who was special adviser to three successive Labour Trade and Industry Secretaries, says that Royal Mail is being forced to operate with "one hand tied behind its back" as the postal market is opened to competition because it lacks full commercial freedom.

In a report published by the Institute for Public Policy Research, the left-leaning think tank with close ties to New Labour, he says that the Government should include the option of full privatisation of postal services at the next election.

"Labour at least needs to get itself off the manifesto hook this time and avoid having a policy saying that it cannot put the Post Office into the private sector even if it were best for the workforce and the Post Office itself," Mr Corry says. "Is it fair to have competition soon to be rampaging through postal services and not let the Post Office move fast to make the investment decisions and deals that it will need to survive in this world?"

Although Royal Mail has become a 100 per cent government-owned plc, it is heavily regulated and could not issue shares of its own to buy other companies without fresh primary legislation.

Mr Corry, who is now executive director of the New Local Government Network, says the system whereby the Government both owns Royal Mail and appoints a regulator to police its activities has caused intense stresses. He also says it has shackled the organisation's ability to respond to competitors because it still has the duty to maintain the universal service obligation (USO) – the guarantee of deliveries to every address in the country for the same price. The paper argues that it would have been better to allow the regulator Postcomm to introduce a USO fund financed by a levy on new entrants to the postal market.

The IPPR paper, The Regulatory State, also calls for an end to the practice of mandatory referrals of water mergers to the competition authorities. It also advocates bringing the BBC under the same regulatory framework as other media organisations rather than treating it as a special case, as happens now.

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