Tuesday, February 24, 2009


Oh, Lord Mandelson, Give Us Post Office Privatisation – Or Not – But Not Yet

The Labour Party is in revolt this morning over proposed part-privatisation of the Post Office, complicated by news that the pension fund is apparently in crisis, and by signals that, if Labour MPs don’t vote for the Labour Government’s proposals, Tories and Lib Dems will. Now, I’ve written before that I’m agnostic on Post Office privatisation; I’ve always been economically pragmatic rather than ideological, looking at what works. Where there is privatisation, I instinctively favour increased competition and decentralisation, which it strikes me would make a bigger difference than painting the words ‘under new ownership’ onto a big state monolith.

All this means I find myself sceptical of the Labour Government’s sudden headlong rush into another privatisation. On first hearing the way this was reported, it sounded like a partial sell-off. Well, I thought, show me why that would work, but for goodness’ sake don’t do it now. We all know of several privatisations in the past that have got a very bad deal for the taxpayer – rail, in particular, was both grossly undervalued at sell-off and has consumed even more state subsidy since, a Tory tax double-whammy at one remove – and it seemed crazy that you’d think of floating part of another big state-owned outfit when the market’s in a ditch.

But no, I discovered as I listened to more of the story, this won’t be a matter of shares being available to the public, but of one private ‘partner’ being invited to take partial ownership. Uh huh? I thought. This doesn’t sound like a massive increase in competition to me. What sort of competitive bidding will there be, at least, to see who offers the best deal? Ah. Apparently, the Labour Government really hasn’t got the hang of this competition thingy. When they say they’re interested in one private sector partner, they really do mean one. They’re planning to just bring in TNT. So, an effective reduction in competition; no decentralisation; everything decided at the most top-down level; no searching around to find the best deal for the taxpayer; and no private company is going to be asked to underwrite the pension fund anyway, so that threat’s pure spin (either way, if it crashes, we taxpayers foot the bill).

So, remind me – what exactly is this part-privatisation supposed to achieve? Because it sounds precisely like that sort of stitch-up where a big state corporation and a big part-private company are indistinguishable, except that some of the profit can be siphoned off by a private company no doubt grateful for the gift in an economic downturn. How does this work better, and how does it make a difference to either the taxpayer or the customer? Because it sounds like the very definition of just painting a different name on the door. And if so, why support it?

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I'm less agnostic about it: you can't improve the system by selling off the profitable bits. My own post on the post.
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