As soon as it makes a profit, sell!

[crockers]

If it had been privatised 20 years ago *we* wouldn't have had that pension liability.

One way or another precisely because it has been in public ownership *we* carry that £9 billion deadweight.

I don't think you will find that is really true. You can't blame the lack of being privatised for the pensions deficit.

This has occurred due to short sighted vote catching policies with no cares about the countries future. This is not political as both parties have to carry some of the blame.

Firstly - (now Saint) Margaret Thatcher. She introduced the ability for people to opt out of Corporate pensions. Of course all the youngsters thought wow thats a few extra beers for me at the weekend and took her up on it. This slanted the age profile of pensions to the older members and therefore greatly increased the funding rate needed.

Secondly - St. M.T. allowed pension funds (when in surplus due to fantastic fund performance) to take pension holidays. Therefore no money was invested into the funds. Oh of course she like a lot of people assumed that morkets can only go up and not down..oeerrr

and..

Thirdly - Gordon (no more Boom and Bust) Brown decided that he wanted a slice of the profits and therefore taxed dividends going into the funds whereas before they were tax free.

Add those three together and the final salary pension schemes were doomed to die..

 

[Dryce]

My experience of delivery of online purchases has been the Post Office has never failed to deliver in reasonable time. Private delivery companies such as DHL or DPD or "anonymous subcontract white van man " as they should be more accurately described have on several occasions managed to deliver my parcel through a wormhole to another dimension from where there is no return and their much lauded tracking systems seem incapable of following.

I think if I clocked up the delays / debacles of stuff over the years I've worked with various companies then the difference between RM and the private sector would be negligible.

RM took its eye off the ball in the late 80s and the private delivery companies got more than a foot in the door for parcels / packets.

In terms of the last 10 years it's been more even. But I know plenty of small businesses that are still wary of RM because of issues in the past. Some of RM's better services today tend to be overlooked as a result.

Where RM tends to consistently win out is in the ability to reach peripheral parts of Britain reliably at flat cost.

 

[Dryce]

You can't blame the lack of being privatised for the pensions deficit.

I don't care about the reason for the deficit.

I just care that HMG and the taxpayer ended up taking the hit for it.

 

[Dryce]

The return to profit following last year's leap in prices disprove your theory.

It doesn't.

Revenue from letters has increased by significantly less than the increase in stamp prices. So presumably margins up against a large drop in volume.

The profitable area seems to be packets / parcels.

But behind that is presumably the taxpayer propping up the liabilities on the balance sheet that would have undermined any profitability.

So it's 'profit' rather than profit.

 

[Scott_F]

It doesn't.

Revenue from letters has increased by significantly less than the increase in stamp prices. So presumably margins up against a large drop in volume.

Figures out today report an 8% drop in volume of letters but a 3% increase in revenue. So clearly the divsion can withstand price increases and the increased profit that has resulted disproves your "Letters are becoming redundant" statement.

 

[jonthetourist]

Figures out today report an 8% drop in volume of letters but a 3% increase in revenue. So clearly the divsion can withstand price increases and the increased profit that has resulted disproves your "Letters are becoming redundant" statement.

Presumably you don't run a business? A hike in prices tends to have a short-term positive impact on profit because your customers pay more for the same service. What is not measured is the impact on decision-making as those customers cast around for more attractive alternatives, after the shock of paying the hiked price. If nothing else changes I reckon RM will be back to losing money within 2 years.

Personally I don't see any problem with having mail delivered every other day. If you offered a choice of more of the same, or 3 deliveries a week and a 40% price cut, what would other people choose?

Jon

 

[Dryce]

Figures out today report an 8% drop in volume of letters but a 3% increase in revenue. So clearly the divsion can withstand price increases and the increased profit that has resulted disproves your "Letters are becoming redundant" statement.

The coincidence between the price increases and the reduction in letter volumes is unlilely to be a coincidence.

The increase in letter profits is small. A further reductionn in volumes will presumably wipe that out. Worse as volumes drop then the fixed costs effectively weigh higher.

As a business we've seen a large drop in inbound mail since the price increase. Companies are consolidating multiple mail items or eliminatig paper mail completely. There had been a gradual downward trend but this took a major step down and is accelerating.

Even minor legal documents are now being handled increasingly using emailed scans of documents. We're seeing scanned PDFs being used where first class post would be used.

Letters are becoming redundant and the price increases jolted many into rethinking the value of letters.

I give first class mail 5 years to live. After that it will be a courier based premium service.

 

[grober]

How long after privatisation will the "Royal Mail" name be sold to the newly privatised headquarters based in a cupboard in Liechtenstein. But fear not the Royal Mail will not disappear from our streets it will licenced back to the UK branch at an annual fee that will be spookily close to the Corporation tax that might have been paid to the exchequer.

 

[Scott_F]

Presumably you don't run a business? A hike in prices tends to have a short-term positive impact on profit because your customers pay more for the same service. What is not measured is the impact on decision-making as those customers cast around for more attractive alternatives, after the shock of paying the hiked price. If nothing else changes I reckon RM will be back to losing money within 2 years.

Your presumption is incorrect.

But as you say, it will take several years to see if last year's huge price increases will help lead to a sustained return to profit. So why don't we wait before handing over the whole service to private profiteers ?

Personally I don't see any problem with having mail delivered every other day. If you offered a choice of more of the same, or 3 deliveries a week and a 40% price cut, what would other people choose?

No one is offering a price cut. We've already had a huge hike and more will surely follow in years to come. The very best we can hope for is to end up paying a lot more for the same service although it remains to be seen whether existing service levels will be maintained. And based on the experience of other privatised industries that doesn't look likely.

 

[Scott_F]

The coincidence between the price increases and the reduction in letter volumes is unlilely to be a coincidence.

It's no coincidence at all but let's wait and see if the return to profit is sustainable

As a business we've seen a large drop in inbound mail since the price increase. Companies are consolidating multiple mail items or eliminatig paper mail completely. There had been a gradual downward trend but this took a major step down and is accelerating.

Even minor legal documents are now being handled increasingly using emailed scans of documents. We're seeing scanned PDFs being used where first class post would be used.

Letters are becoming redundant and the price increases jolted many into rethinking the value of letters.

Not everyone who uses the service is a business user.

 

[Dryce]

Not everyone who uses the service is a business user.

A substantial amount of mail is sent by businesses.

But it's not just businesses that are affected. This year we saw a reduced number of Christmas cards and several that reported that cards would no longer be sent in future and the money otherwise used given to charity.

I have sympathy with what the position of RM. It provides a UK wide service and its performance is publicly reported and it comes under scrutiny and criticism for just about every action that it makes.

But a reality check is in order. I think they made a mistake with pricing and the 9% reported reduction in mail volumes is one thing - but a 3% increase in profit on the increased margins does not look promising - in fact it looks ominous. The cost of 1st class went up 30% and cost of second class went up by over 50%.

So profits? Well simplistically a 9% reduction in volume should imply an 18% increase in profits based on just a 30% price increase.

Actual increase figure 3%.

WTF?

Well it might just be misreporting or over simplification. Maybe the costs have gone way up.

Or alternatively costs are being reattributed within the business. And that doesn't look good for letters based on these numbers.

 

[nick mercedes]

Actual increase figure 3%.

WTF?

Is it not a useful public service?

Does everything *have* to make a profit?

If schools don't make a profit does that make educating kids a waste of money?

 

[jonthetourist]

Is it not a useful public service?

Does everything *have* to make a profit?

If schools don't make a profit does that make educating kids a waste of money?

Why not turn that question round?

If something is a useful public service, should we stop caring what it costs to deliver?

To all those who believe private delivery of public services is inherently bad, compare supermarkets with state food shops in countries which operate them. There is nothing more fundamental than food, but I know where I prefer to get my supplies.

Jon

 

[Dryce]

Is it not a useful public service?

It may be useful but if its cost exceeds its actual value?

20 years ago first class mail was indispensible. So even if the cost was high - the value was also high.

Now its value is diminished. What about the cost now?

If it costs more than it's actually worth then you're depriving some other part of the economy to pay for it.

Such as paying for schools.

 

[nick mercedes]

It may be useful but if its cost exceeds its actual value?

20 years ago first class mail was indispensible. So even if the cost was high - the value was also high.

Now its value is diminished. What about the cost now?

If it costs more than it's actually worth then you're depriving some other part of the economy to pay for it.

Such as paying for schools.

It costs a fortune to post a letter because the government in their wisdom allowed private companies to pick off the most profitable parts of the business - bulk business mail.

For some reason many govenment depts seem to use foreign owned mail providers rather than the one they own.

 

[Deleted member 37751]

Hmmm...

BBC News - Royal Mail stock market flotation set to go ahead

 

[Stratman]

Does it matter who employs the people who process the mail? Once I put it in the letter box I'm not really bothered how it reaches its destination, only that it does.

How would the 'keep it in public hands' lot feel if the government decided that not only the processing of physical mail should be in government hands, but email too?

 

[markjay]

Selling state-owned companies and services is indeed a political rather than commercial decision.

But you can't really sell a loss-making company or service... no one would buy it.

So the government works hard to turn around the failing company or service, make it profitable (or at least make it seem prifitable), dress it up nicely and sell it for a good price.

To the untrained eye this may seem like typical British incompetence, but it actually makes perfect sense.

It's a bit like a car that gives you grief - you can't really get anything for it as a non-runner, so you fix it and quickly get rid of it before it breaks down again. But of course once you got it running, doubt strikes - it's finally running OK, so why sell now...?

 

[markjay]

....For some reason many govenment depts seem to use foreign owned mail providers rather than the one they own.

Government departments communicate with the public, so thank heavens they are not using the Royal Mail.

RM lose about 10% of my post - letters and parcels that disappear without trace.

They also regularly deliver to my home and office address large volumes of post that isn't addressed to us - I chuck it back into the local red box but it's anyone's guess if it actually reached its intended destination.

The other day it was a large envelope that I recognised as the results of an NHS 'smear test' - I dread to think what the outcome might be if the result was positive and the letter got lost.

This is not a political statement regarding 'Soviet-era inefficient dinosaurs' - both British Telecom and British Gas were privatised eons ago and they are still operating like a low-level life form comprising of a collection of local reflexes and no central brain.

 

[AMG-Al]

It's a bit like a car that gives you grief - you can't really get anything for it as a non-runner, so you fix it and quickly get rid of it before it breaks down again. But of course once you got it running, doubt strikes - it's finally running OK, so why sell now...?

That is true if you feel it is properly repaired. If you have got it running with two old sticks and some chewing gum you keep the test drive short....