Thursday, 26 February 2009

So That's Why Privatised Post Services Make Money

Private sector management efficiencies, cost cutting, investment in new technology.

Er, up to a point, Lord Mandelson.

Cost of a 25g first class inland letter

UK Royal Mail 36p or 40c

Netherlands TNT 88c or 78p

Germany Deutsche Post 99c or 89p

France La Poste 88c or 78p

Guess which two countries' post services are privatised. So, if you are a customer, which country would you prefer to send letters in? Why should a privatised industry with competition result in higher prices? When I read economics in the early eighties it was accepted that certain functions were most efficiently undertaken by government monopolies. The Fire Service, for example, arose as a reaction to the chaos of separate insurance companies' fire engines refusing to extinguish fires on competitors' properties. Joe Chamberlain introduced municipal socialism to improve the water and gas supply in Birmingham. What I want is the best service efficiently provided to the consumer of a product or service. Whether this is achieved by the private sector or able civil service administrators bothers me not a jot.
I just smell the stench of commercial opportunism (snouts in the trough) dressed up in the clothes of the free market. I expect that directors and senior managers of a privatised Post Office will pay themselves high salaries and perks to attract the best, while the employees will be downsized, moved and pension provisions will be cut in an effort to maintain competitiveness.
It is a topsy-turvy world when governments can write blank cheques to remedy banks' errors yet cannot invest in proper public services.


CherryPie said...

This one is slipping under the radar too!

Gallimaufry said...

I thought PFI schemes were being affected by the credit crunch - isn't the Highways Agency considering lending £400 million to PFI consortia to make up shortfalls? Call me naive, but HMG can always borrow money cheaper than private companies; PFI is just an accountancy fiddle to keep debt off the government's books.

CherryPie said...

That was the fiddle with PFI, but a new ruling means the money has to be put back on the books!