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
- The government didn't pay into the pension scheme for 10 years leaving a large shortfall in the pensions funds
- Due to a shortfall in pension funds pensions are switched from a final salary to an average salary scheme
- The government opened the mail service to tender, losing Royal Mail their only profitable customers
- Royal Mail still sort and deliver the mail for the opposition companies
- Royal Mail are fined 1 million per day for not meeting targets, but the opposition are not.
