Is its value worth protecting?

Price is what you pay. Value is what you get” - So said the Sage of Omaha, Warren Buffett.

An observation and truism that fits many situations. To take one currently in the news and causing inconvenience and genuine difficulties to individuals and many businesses I offer the situation of the Royal Mail.

Royal Mail is more than a brand of a private courier service. It is not an other Evri or DHL. It is the the expression of a history that can be traced back over 500 years to 1516 and the establishment by Henry VIII of a "Master of the Posts".

It is the public identity of a business that matters. One that for most of its history was a public service, with a social mission. One operating as a government department or public corporation with a clear responsibility and duty that was backed by the force of Parliamentary legislation. It is the postal service with sole responsibility and duty to deliver mail, at a uniform cost within the boundries of the United Kindom and Northern Ireland regardless of distance, to collect mail from every post office and post box in the land (over 115,000 of them) and to deliver that mail to every postal address (over 29 million of them) every working day of the year.

Be the delivery journey measured in yards from the post box to to your neighbour's letter box or involve a journey of hundreds of miles by road, rail and air the same payment applies. In short Royal Mail is a business with a clear and easy to defined value to every person in these Islands and Isles.

For 499 years the Royal Mail was about more than its share price and profit. It was a service delivered with equality through out the land. But this is changing.

Change started with the assent of the Postal Services Act 2011,[6][7] . An act of Parliament which resulted in a majority of the shares in Royal Mail being floated by our then Government on the London Stock Exchange in 2013. The rational for this was the same as it had been for Water, Gas & Electric – the need for major investment. A need that as with the utilities in large part caused by years of governmental under investment and profit taking, the lack of will to take that necessary investment onto the national debt and, the opportunity for HM Treasury to capitalise on the price the Company would sell for and bank a short term financial windfall.

Whist initially retaining a 30% interest in the new plc company by 2015 our political geniuses had sold the balance of the State holding so bringing to an end 499 years of state ownership and opening fully the door to this keystone of national service been apprised as to its worth not by its value to the population but by its price. A price set by the financial markets.

You may not think this matters? Believe me it does. It matters a lot as it is a perfect example of how the divide between the haves, wants and needs of urban and rural communities is widening. Urban dwellers with gigabit broadband, 5G mobile and access to the tools to access these delivery technologies may feel that a physical mail service is passed its sell by date. But to many living in rural areas who lack these facilities, who have already lost their emblems of inclusion and access to services urbanites take for granted - banks, building societies, cottage hospitals, public transport - from within their communities; each sacrificed to the gods of “progress” the value and symbolism of inclusion that the daily visit of the uniformed postman or women matters. For many the daily post delivery is a social event - often the postman or women is the only face seen daily by the elderly or infirmed of our rural communities and the one who raises the alarm if they have problems.

The existence of a reliable postal service is a keystone of any developed nation – such a service , where ever it exists, is a community assert as much as a business and it is a central role of government to deliver and protect the keystones of society; Health, Defence, Transport Infrastructure and a Universal Postal Service. All of these keystones support social cohesion.

Even the USA, the home and high priest of free enterprise, holds to this truth. The US Constitution recognises many keystone rights; rights that include postal services which are guaranteed within the American Constitution by the Postal Clause in Article I, Section 8 which to this day empowers Congress "To establish Post Offices and Post Roads" and “To make all Laws which shall be necessary and proper” for executing this task. A duty Congress has never sought to disinherit.

In short the Royal Mail has a value that transcends price and its fate since 2015 gives a further illustration of the failings of our elected politicians and governments of all stripes to understand the difference between price and value – something that the current owners of Royal Mail understand only too well.

It should be obvious to all that the mail franchise requirement to collect from every post box and Post Office and deliver the post to every address, every working day 52 weeks a year at a standard price of postage is not a simple commercial profit opportunity. It is a duty that can never be profitable outside the confined geography of urban centrers. In much of the UK’s geography and rural demography it is a public service, not a profit opportunity.

So two questions:

1. Can it be protected?

2. Is the current postal workers dispute killing it?

My answer to these questions is; “Maybe” and “No”.

It may be preserved and protected if our political leaders and representatives recognise its value is not purely monetary. As with the NHS it has a value to all of us.

Ultimately this is not a debate or argument about who provides the service. It is a plea for its existance and the protection of the populations right to universal delivery of mail at a universal single price; something that can only be guaranteed by Government and protected by Parliament as any commercial operator will focus on achieving profit above any commercialy intangible value of service.

The current ownership and management of “Royal Mail” makes this crystal clear – its focus is on profitable parcel business in easy to service urban geography's. The activity that accounts for the vast proportion of their profitable trade. The universal mail franchise is a storm anchor they would cut free without hesitation. With a principal shareholder who is a Czech national with no links to the UK, a CEO who has no meaningful history in postal delivery, his CV records roles as; managing director of the NHS test and trace programme (remember that value for money success story ) chief product officer at Ocado. (home grocery delivery in urban settings) and roles at Apple, HSBC, lastminute.com, Morrisons – to my mind roles that in no way equip him to run Royal Mail as it should exist or justify a remuneration package in the last year that between annual pay and perks produced a package worth £753,000; a x30 multiple of the average postman/women; and, a business plan that has already broken the company into operating units, rebranding Royal Mail plc as International Distributions Services PLC (retaining the name Royal Mail as a trading as “brand”) and establishing a holding company to overlay the trading units the direction of travel seems clear.

Indeed the executive management have stated it print;

“Our intention is to have clearer financial separation with no cross subsidy, reflecting the increased importance of GLS to the group and our position in the wider logistics and distribution markets”

So, how does this sound as a bullet point summary of their direction of travel:

• Isolate the 6 day delivery and collection franchise. Once all profit has been squeezed from it hand it back to the State as “unprofitable” for government to preserve or end as they see fit (think railway franchise)

• Ignore the opportunities for innovation and growth in digitalisation & security of mail under one of the worlds oldest and most recognisable postal service brands

• Maximise parcel business profits by reducing costs and moving to a low overhead workforce

• Break up the domestic and international activities (and sell off?)

• Take the money and move on ….

Basically the standard lesson of market price valuation …. read into the current industrial dispute and you will see this is the crux of the issue with the workforce and CWU who understand the need for change, development and growth but also the need to protect the mail franchise.

My closing question is simple:– do we care enough to pressure our politicians to take action to preserve the true measure of the Royal Mail’s worth, to secure its value to us, the people of Great Britain & Northern Ireland who it has todate served with equality to all regardless of location or destination?

If we do not value this universal service enough to demand its protection then I ask a subsidiarity question:- will we prove able to argue the value of the next public service that, as has been the case with Water, Electricity, Gas and now Royal Mail, our political leadership will (rightly) hold to be in need of reform and then argue (wrongly) that privatization provides the correct and best answer to that need .

Next on the list will be the NHS; can we argue with enough force and conviction to prevent it being sent down the same slipway to privatisation and a price based engineering of its future value?

If we do not it will be a value set by the financial markets who, as proven with the already privatized utilities will simply present us with the price we have to pay for a service we need but no longer value enough to own and protect as a national asset. One from which we have an expectation of receiving service and value on demand regardless of where we may live on these Islands and Isles or the complexity of its delivery.

Compared to the fate of the NHS the future of the Royal Mail and the postal franchise may seem a minor issue –I think history may well judge it otherwise.

Place your bets…..