Privatising the Post: Too Much Too Late

Of all institutions of modern times, there is, perhaps, none so pre-eminently a people’s institution as is the Post Office … Its services are claimed exclusively by no one class; the rich, the poor, the educated, and the illiterate, and, indeed, the young as well as the old,—all have dealings with the Post Office.[1]

By taking the UK Post Office[2] as an example of free market logic pervading discussions in the public sector, this paper seeks to investigate the socio-economic problem of liberalisation. Centred on the period either side of postal markets being opened up to competition, this study will consider the commissioned research that has dictated the terms of the debate while introducing some of the major players in the process. But, before addressing the specific factors impacting upon social researchers studying in the field, it is necessary to take account of the background to contemporary discussions. The Government first organised a postal service around 1516, early in the reign of Henry VIII, whereby a ‘post’ was laid by stationing horses and post boys at intervals along busy routes.[3] Landmark reform of this service was brought about by an obscure pamphleteer named Rowland Hill. His self-printed 1837 publication, Post Office Reform: Its Importance and Practicability,[4] proposed the consolidation of a fractured and overpriced service into a more universal one, known as the Penny Post, in which the sender would pay for postage. Inciting public opinion with his pamphlet, he sought to convince the Lords of the Treasury that implementation of this service would generate additional revenue and justify reduced individual costs.[5]

The first major alteration in the relationship of Post Office to Government came in 1969,[6] largely for pragmatic reasons – that a Government department was ill-equipped to run such a large organisation with an eye on the future. The Post Office became a public corporation, with the Government as its sole shareholder, employees relinquishing their civil servant status, and a Minister for Posts and Telecommunications being appointed – a short-lived role that devolved to the Department of Trade and Industry (DTI). In the process, the Post Office maintained an obligation to undertake daily collections and to deliver mail to every address in the United Kingdom, however remote, for the same price. In order to fulfil this universal service obligation (USO), the Post Office retained the exclusive privilege of delivering letters which, as we shall see, has been fiercely contested.

For the next thirty years, the Post Office continued its operation on this basis, surviving as the last nationalised industry, with targets for profit being set by Westminster. In 1997, the European Commission issued a Directive to establish a single market for postal services in Europe. This specified that all European Community residents were entitled to access a universal service at an affordable price that reflected costs. On an interim basis, as part of the ‘gradual and controlled liberalisation of the market,’[7] the Directive allocated a reserved area – of items up to 350g and five times the basic tariff, expected to be reduced to 100g after January 2003 and to 50g after January 2006 – for providers of the universal service.

In the UK, a White Paper was published in response, outlining the many benefits of competition to the Post Office, and detailing changes which ‘should ensure that high quality postal services are offered at a reasonable price and that a universal service under a uniform tariff structure can be provided without direct public subsidy.’[8] While simultaneously reducing the percentage of profits withdrawn by the Exchequer, this document proposes halving the Post Office letter monopoly to fifty pence whereby, from 1 April 2000, anyone may provide a rival service to deliver items above this price and weighing more than 150g, significantly reducing the reserved area proposed by the European Commission. The White Paper also proposes transforming the public corporation into a public limited company[9] with all shares owned by the Crown, ostensibly maintaining a commitment to keeping the Post Office in the public sector while opening up its market to competition.[10] Whether the provision of the universal service will be viable under competitive conditions remains to be seen, but this shift in policy away from a public sector monopoly prompts an examination of the factors which informed this change and which continue to impact upon the ways in which the sector is being studied.

In considering the research that has been undertaken in the field since the Post Office gained relative autonomy from the Government, a consistent voice – becoming increasingly shrill over the decades – is that of Ian Senior, who began his career as a civil servant at the Post Office.[11] In a background memorandum published a year after the 1969 Postal Act was effected, he concluded that:

The change of the PO’s status has simply given the postal service the same monopoly privilege with less accountability than before … what is needed is the creation of an environment which gives to PO managers not only the freedom to manage with more efficiency, but also the incentive to do so … to counterbalance the enervating effect of past monopoly … for it is widely accepted that competition coupled with free consumer choice creates the best environment for productive enterprise.’[12]

This led him to argue that the letter monopoly – which had been subsidising less profitable areas of the corporation, including the collection from/delivery to rural areas as part of the USO – was unjustifiable and should be removed, and that the universal tariff for letter delivery should be revised. The rationale behind this was that ‘a newly profitable PO postal service would be able to provide better service for money. The more profitable the service, the more private entrepreneurs would be attracted to offer competing services. The sharper competition would encourage PO managers to tailor existing services to users’ needs and to offer new ones.’[13]

The essence of this position – that competition necessarily yields efficiency and customer satisfaction, and that the postal market should be opened up to such positive forces – has been sustained throughout Senior’s extensive commentary on the subject, and is strongly echoed in recent policy on postal reform. In 1999, the DTI under New Labour wrote ‘Competition encourages innovation, productivity and growth. Where there is competition in postal markets, and where it is anticipated, here and abroad, it is already leading to a diversity of products, tailored to meet consumer needs.’[14] It is compelling to note that Senior’s research was commissioned by the Institute of Economic Affairs (IEA), one of Britain’s oldest think tanks, acknowledged by Margaret Thatcher as having fuelled her programme of economic liberalism.[15] This dovetailing of the views of Thatcherite ideologues with those of more recent policy-makers immediately suggests a tangible political obstacle for those researchers hoping to influence postal policy in other directions.

This becomes clearer if we examine some of the research commissioned into the economics of liberalisation. In 1998, in the wake of its first Directive on postal services, the European Commission approached National Economic Research Associates (NERA), ‘an international firm of economists who understand how markets work,’[16] to undertake an analysis of the cost to each of its Member States of the USO. It was understood that the results of this study would assist the Commission in determining how much (if any) compensation would be needed by universal service providers, and whether cross-subsidy from a reserved area or compensation from an independent fund would be the most appropriate way of securing continued provision. Using the Net Avoided Cost (NAC) methodology – which subtracts the losses made in unprofitable parts of the business from the net profits – NERA concluded that the cost of providing the USO is negligible (£22.6m) and that, rather than offering compensation to providers, the imposition of universal service should be reconsidered in a liberalised environment.[17]

In 1999, the Post Office refuted the use of the NAC method – on the basis that, in considering a stable market, it fails to take account of competition – and responded with an evaluation using the Entry Pricing Approach, developed by PricewaterhouseCoopers ‘to provide a framework for producing estimates of the cost of the USO in a liberalised environment where the scope of the monopoly will be reduced.’[18] Mapping different scenarios – from initial liberalisation with a reserved area of 150g to full liberalisation of direct mail and a reserved area of 50g – the Post Office concluded that between 24% and 90% of normalised profits (up to £750 million a year)[19] could be lost, considerably higher than the losses calculated using the NAC method.

In a modest paper by a three-man research team at the University of Zurich, these two methods of evaluating USO are compared and the NAC method dismissed as having little relevance to a competitive situation. By contrast, the Entry Pricing method produces a more reliable model of the cost of USO in a competitive environment, assuming that the universal service provider has already maximised efficiency; otherwise, the cost of modernising the service in order to compete diminishes overall profits and increases the relative cost of USO. This means that, while compensation calculated according to this method would secure continued provision of universal service, it does not represent the actual cost of USO under competition. A more accurate measure, Profitability Cost, takes account of:

[…] the additional costs a service provider in a competitive setting incurs due to the provision of universal service. It equals the compensation necessary to allow a universal service provider to fulfil the universal service obligation in the long run … the Profitability Cost approach is highly attractive from a theoretical perspective. However, from a practical perspective, the data required for an operational model is difficult to obtain: In addition to the costs, the expected prices and demand functions for all services must be estimated.[20]

This suggests a two-fold economic impediment to social researchers – in convincing policy-makers that an alternative form of modelling needs to be used, and in the prohibitive costs of adopting this methodology.

Returning to the research elicited from NERA by the European Commission, the published report cites as part of its project team none other than Ian Senior, self-declared ‘special adviser in the London office of NERA,’[21] who subsequently re-iterated their flawed findings to justify market liberalisation.[22] This begs questions about why a consultancy with a pronounced pro-market stance would be commissioned to undertake research for the European Commission in the first place. The main protagonist responsible for postal reform in Europe is Charles McCreevy, Commissioner for the Internal Market and Services portfolio since 2004. Charged with the duty of creating a single market within Europe, he is widely known as a free-marketeer.[23] Giving a speech in London in 2006, then-Chancellor of the Exchequer, Gordon Brown, heralded a new wave of liberalisation across Europe and announced that the Treasury was working with McCreevy to achieve this.[24]

Before considering how these political forces are impacting on the recent research carried out in relation to postal reform in the UK, it is worth mentioning that, in 1998, Royal Mail, together with several other national postal operators, sponsored a piece of research by the Institute for the Future. The subsequent report speaks of liberalisation as an inevitability, and considers strategies of survival rather than reversal. Tracing contemporary emphasis on efficiency to the Chicago School and IEA, it offers a laudatory account of the history of deregulation in the US, the UK and Chile. Projecting ahead to 2010, the report finds that ‘posts are privatized; the monopoly is ended; more prices are determined by market forces; regulators ensure the interconnection of all players; universal service is achieved by the whole sector.’[25] Little wonder, then, that the Royal Mail offered little resistance when confronted with a near-reality formulated by serious researchers. Little wonder, also, that these were the conclusions drawn by the Institute for the Future. Based in Silicon Valley and ‘founded in 1968 by a group of former RAND Corporation researchers with a grant from the Ford Foundation to take leading-edge methodologies into the public and business sectors,’ it would seem that the Institute is no stranger to nefarious political interventions.[26]

Under the provision of the Postal Services Act 2000, a new Postal Services Commission (Postcomm) was set up ‘to provide for the licensing of certain postal services and for a universal postal service.’[27] This delegation of powers by Government – akin to the Bank of England being charged with determining interest rates – also conferred on Postcomm the responsibility of protecting consumers. In the seven years of its operation to date, Postcomm has been the major commissioner of research into the postal sector – allocating over £17 million to  ‘outside consultants, lawyers etc.’ up to the end of the 2007 financial year, with a further £3 million earmarked for 2007-08, which warrants further scrutiny here.[28]

In what has become a familiar strategy, intended to denote transparency, Postcomm immediately launched a consultation process,[29] which sought responses from public and private sectors about how it could best promote effective competition between postal operators. At the same time, Andersen was commissioned to undertake a costing of the USO using the NAC method,[30] which was calculated at a mere £81 million per year.[31] While Royal Mail’s response to the consultation showed Postcomm’s economic modelling[32] and analysis to be deeply flawed and the protection of the USO to have been subordinated to considerations of competition,[33] it nonetheless supported ‘the gradual and controlled approach to the introduction of competition’ advocated by the European Commission.

During the final phase of the consultation process, Postcomm received the results of research it had commissioned from Frontier Economics,[34] into the relationship between liberalisation and efficiency, which asserted that ‘the proposition that competition leads to improvements in efficiency can be supported empirically. Numerous studies point to the efficiency benefits of liberalised competitive markets.’[35] At the same time, the National Audit Office published a report into postal operations, portraying an obstinate universal service provider unwilling to increase efficiency without the incentive of private shareholders. Acknowledging the potential risks to USO and customer satisfaction, this report nonetheless adopts Postcomm’s conviction that ‘competition delivers greater benefits than regulation in terms of the price, quality and innovation.’[36] This tacit confirmation of Postcomm’s strategy – with increased efficiency certain to guarantee Royal Mail protection from liberalisation – set the tone for ongoing research initiatives. And, while Royal Mail did its best to counter such suggestions,[37] without directly commissioning its own research, it failed to influence the policies determining its fate.

In May 2002, Postcomm pre-empted the European Commission’s June revision of its 1997 Directive,[38] which called on Member States to provide a timetable for the opening of their postal markets. Placating concerns about rushing the competitive process, Postcomm announced that liberalisation would be an elongated three-phase process – taking place at 1 January 2003, 1 April 2005 and 1 April 2007. The decision document paraphrased the findings of Frontier Economics, that Royal Mail’s ‘ability to meet its universal service obligation is more at risk from a failure to become efficient than from a loss of volume under competition.’[39] Despite the Treasury expressing concerns about threats to the USO in a competitive environment, scepticism about Postcomm’s economic modelling and disapproval that ‘Postcomm have made use of expert consultants, but [that] these are no substitute for in-house expertise,’[40] the regulator continued in its trajectory.

Over the next four years, Postcomm commissioned research from The Future Foundation, NERA/RAND Europe, Frontier Economics (twice), Roland Berger Strategy Consultants, Arthur D Little, LECG (twice), NERA/Accent, Europe Economics and NERA (again).[41] The Berger report surveyed 549 business postal users (domestic customers having ceased to be important) to conclude that ‘full market opening should be assessed as an option for Phase II of market liberalisation,’[42] while Arthur D. Little[43] examined the barriers to entry for postal operators. Concerned that competition was not happening at the rate and intensity it desired, Postcomm undertook a Competitive Market Review[44] – proposing that cross-subsidy be eradicated and Royal Mail be stripped of its VAT-free status, further handicapping the universal service provider in the face of competition. In a direct example of research influencing policy, Postcomm also followed the advice of Roland Berger and Frontier Economics to launch a consultation into a Revised Market Opening Timetable,[45] which proposed that full market opening be brought forward from 1 April 2007 to 1 January 2006, with the intermediate step being eradicated, a move which was later condemned by the Trade and Industry Committee.[46]

Having studied the impact of Ian Senior and his cohorts at various think tanks, it is clear that individuals can have a great impact on the nature of research being undertaken. With this in mind, it is possible to examine the personnel governing each of the organisations central to the postal debate in the UK. The pro-market stance evinced by Charles McCreevy in Europe and Gordon Brown at home is consolidated at the Government department formerly known as Trade and Industry,[47] where the Select Committee is chaired by Conservative MP Peter Luff. In 1999, when Chair of the Commons Agriculture Select Committee, Luff came under pressure to resign due to his undisclosed links to PR and lobbying company Bell Pottinger, advisors to biotech giants Monsanto.[48] Interestingly, there is a direct link between Bell Pottinger founder, Lord Tim Bell, and the DTI via Lord Young who, when DTI secretary, was advised by Peter Luff, a service financed by Bell Pottinger.[49] The DTI is responsible for appointing the boards of Royal Mail Group and Postcomm[50] and the Chair of Postwatch,[51] each of which will now be examined in turn.

Royal Mail Group Chairman, Allan Leighton, was appointed to the post by Tony Blair in 2002, at a time of strained relations between Royal Mail and Postcomm.[52] Former Chief Executive of Asda,[53] Leighton was cited in 2001 as ‘the biggest new name among business leaders backing Labour.’[54] In a board wholly comprised of notables from the business world, fellow Labour Party donor, Stephen Carter, ‘Group Chief Executive of Brunswick Group LLP, a privately-owned corporate and financial advisory firm,’[55] stands as its Non-Executive Director, while Adam Crozier, former Saatchi and Saatchi Joint Chief Executive, holds the post of Chief Executive at Royal Mail Group. This configuration goes some way to explaining the complicity of Royal Mail when confronted with liberalisation proposals.

The picture at Postcomm is markedly similar, with pronounced business interests among its constituents. Its Chair, Nigel Stapleton,[56] is Non-Executive Director of both the London Stock Exchange and Reliance Security Group. Beneath him sits, among others, Commissioners Tony Cooper (Non-Executive Director of the Nuclear Decommissioning Agency) and Stephen Littlechild, described as ‘an international consultant on regulation and privatisation’[57] who declares no potential conflicts of interest on the Postcomm website. However, in 1981, Littlechild was commissioned to write an article for the in-house journal of the Institute of Economic Affairs, entitled ‘Ten Steps to Denationalisation’. Unequivocal about the need to introduce competition into nationalised industries, Littlechild tempers Enoch Powell and Milton Friedman’s calls for ‘immediate and wholesale denationalisation’ to suggest a significant movement towards it, citing former Post Office chairman, Sir William Barlow, as concurring with his view.[58] The postal service forms the tenth step in his proposed denationalisation programme, beginning with a sale of the profitable (non-rural) parts of the business.[59] In what would appear to be a self-fulfilling prophecy, this man is now responsible for introducing competition into the postal sector.

Finally, what of Postwatch, the body set up to protect postal consumers? Notable on its committee is the Chair for Scotland, Alan Alexander. Chair of Scottish Water from 2002 to 2006 and current Emeritus Professor at the University of Strathclyde, Alexander has been a council member of the Economic and Social Research Council (ESRC) since 2003, where he also chairs the Audit Committee.[60] Professor Alexander would, therefore, be well placed to review any applications for funding to research the postal services, with a view to improving conditions for the consumers Postwatch ostensibly represents. However, in UK academia, research generally consolidates the neoliberal consensus outlined above. In a dissertation for the University of Durham, for example, Nick Steven-Jones heavily relies on Ian Senior’s arguments to summarise ‘it can be seen that with effective introduction and regulation a market is almost always vastly improved by the introduction of competition and subsequently most problems relating to the requirement for a the [sic] universal service become insignificant.’[61] Research conducted at the self-styled ‘independent and politically neutral’[62] Centre for the Study of Regulated Industries, University of Bath School of Management, which lists NERA as one of its sponsors, offers an overview of the various roles and responsibilities of the relevant parties to the postal debate without critical commentary. Similarly, research commissioned at the University of Warwick by the National Audit Office attempts an empirical analysis of the economic models used to cost USO by the European Commission, Postcomm and Royal Mail but fails to add anything significant to the discussion.[63]

Within the European context but from a vantage point outside the EU, the aforementioned Swiss team is working on a research project, scheduled for completion in December 2007, which challenges the notion that market liberalisation alone stimulates innovation, to undertake a comparative study of regulatory methods[64] and their effects on innovation: ‘Contrary to conventional wisdom, our model predicts that postal monopolists have very strong innovation incentives and that market liberalization may result in lower levels of innovation.’[65] Also in Switzerland, the Universal Postal Union,[66] which considers itself a non-political organisation yet is often cited by the European Commission and undertook a collaborative study with the World Bank, is avowedly pro-globalisation.

In fact, when we consider the field as a whole, the lone dissenting voice in the UK has been that of the Communication Workers Union. While the work of its research department is largely centred on industrial relations, it has been unambiguous in its response to Postcomm’s proposals: ‘From the outset we would like to emphasise our fundamental and overriding opposition to Postcomm’s approach. Since its inception, we have remained consistently opposed to Postcomm’s liberalisation agenda and have explicitly stated this opposition in response to the regulator’s various competition-related consultations.’[67]

This brief overview of the research commissioned into the postal sector since 1970 demonstrates that its findings have overwhelmingly consolidated the logic of economic liberalisation. Couched in empirical terms, reports disseminated by the Institute of Economic Affairs initially established a directly proportional relationship between competition and efficiency which led, throughout successive Conservative Governments, to calls for the Post Office to be stripped of its monopoly and subjected to market forces. By the second half of the 1990s, this seemingly causal relationship between competition and efficiency readily entered the rhetoric of the European Commission and New Labour to justify liberalisation. This, in turn, gave rise to a new tranche of research, with Ian Senior as a constant figure from IEA to NERA.

In what may retrospectively be regarded as part of a deliberate and sustained attempt to privatise postal markets, the European Commission, Royal Mail and especially Postcomm, commissioned research to reinforce the consensus around liberalisation. Given that this research was largely solicited from right-wing think-tanks and market-friendly consultants, it may be argued that its findings were biased from the outset. Nonetheless, this overwhelming body of work has created a seemingly insurmountable ideological barrier to those seeking to contribute to the discussion in terms other than those of the free market. Combined with politicised appointments in the main organisations responsible for formulating and executing postal policy, researchers wishing to introduce other approaches into the public domain would undoubtedly encounter significant resistance.

While apparently having devolved direct responsibility for postal decision-making, the Select Committee tellingly renamed Business and Enterprise continues, under its Conservative Chair, to be influential through its appointments of personnel at Royal Mail, Postcomm and Postwatch, and in its continued role as sole shareholder. By opening the postal sector to competition and significantly reducing the Royal Mail’s market share, the Government has effectively privatised the postal sector without yet reaping share dividends. In December 2007, the Secretary of State for Business, Enterprise and Regulatory Reform, John Hutton, appointed businessman Richard Hooper to undertake a review of the postal services sector since liberalization, due to report in autumn 2008. Deputy Chairman of Ofcom (the telecommunications equivalent of Postcomm) between 2002 and 2005, Hooper is being advised in the review process by Taylor Woodrow’s Ian Smith and by Dame Deirdre Hutton, a shareholder in some of the UK’s major companies and advisor to pro-market think-tank, the Social Market Foundation.

The review team’s interim report, published in May 2008, acknowledges the threat to the universal service under the current conditions, but rules out a return to statutory monopoly under EU rules to broadly consolidate the benefits of market opening.[68] Postcomm has seized upon the review’s ethos to recommend the de-coupling of the letters business to facilitate the entry of outside capital, effectively privatising Royal Mail.[69] In its role as regulator, Postcomm has the task of devising the regulatory framework that will take effect when the last remaining price controls are lifted in April 2010, and already envisages that this ‘could include considerable reductions in the scope of price and service quality controls’.[70] Regrettably, it seems that, as the seemingly irreversible process of liberalisation continues unabated, continued provision of the universal service at an affordable and geographically uniform price, once identified as ‘an overriding or paramount duty’,[71] has been placed under serious threat. Letters may soon be charged by the distance they travel, repealing Rowland Hill’s radical reforms of 1840.

An edited version of this research was published by Mute in July 2009.

[1] Hyde, J.W. (1885), The Royal Mail: its curiosities and romance (Edinburgh: William Blackwood and Sons), p. ix.

[2] For purposes of clarity, ‘Post Office’ refers to postal operations before the Postal Services Act was enacted in 2000, and ‘Royal Mail’ to the period afterwards; all references to the organisation’s Consignia guise have been omitted from the body of text.

[3] Robinson, H. (1948), The British Post Office: A History (Princeton, NJ: Princeton University Press), p. 7.

[4] Hill, R. (1837) Post Office Reform: Its Importance and Practicability (London: privately printed by W Clowes and Sons).

[5] Daunton, M.J. (1985) Royal Mail: The Post Office since 1840 (London and Dover, NH: Athlone Press), pp. 5-35.

[6] It is said that one of Tony Benn’s first suggestions upon assuming the role of Postmaster General in 1964 was that the Post Office should become autonomous from the Government, but that this idea can be dated back to Clement Atlee when he was incumbent in the post shortly before the Second World War. See Senior, I. (1970), The Postal Service: Competition or Monopoly? Background Memorandum 3, (London: Institute of Economic Affairs), p. 5.

[7] Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market of Community postal services and the improvement of quality of service, p. 1.

[8] Department of Trade and Industry (1999), Post Office Reform: A World Class Service for the 21st Century, Cm 4340, Presented to Parliament by the Secretary of State for Trade and Industry, July 1999, p. 4.

[9] Ibid, pp. 5-6 & 10.

[10] HM Treasury (2000), Public Private Partnerships: The Government’s Approach, (London: The Stationery Office), p. 23.

[11] ‘After leaving Oxford he spent four and a half years at Post Office HQ, latterly as private secretary to the last Assistant Postmaster General’ (Senior, I. 1996), Post Office Reform: Its Importance and Practicability, (London: Adam Smith Institute) [introduction updated (2000)]).

[12] Senior, I. (1970), op cit, p. 10.

[13] Ibid, p. 30.

[14] Department of Trade and Industry (1999), op. cit, p. 5.

[15] Sharon Beder (2002), Global Spin: The Corporate Assault on Environmentalism (Totnes: Green Books), pp. 80-81.

[16] See the NERA report. The website continues:
NERA’s European Postal Practice has experienced economists and a network of leading academics and industry experts who help the postal industries around the world develop and implement economically sound policies. Our team combines rigorous economic thinking and the highest calibre of econometric analysis with practical experience gained from applying these tools to a wide variety of business problems.

[17] National Economic Research Association (1998), ‘Costing and Financing of Universal Services in the Postal Sector of the European Union’, October, p. vi.

[18] Liddiard, P, Robinson, R and Rodriguez, F (1999), ‘Estimates of the Cost of the Universal Service Obligation Using the Entry Pricing Approach’, p. i.

[19] This figure is re-iterated in HM Treasury (2002), ‘Treasury Minutes on the Thirty-first to the Thirty-fifth Reports from the Committee of Public Accounts 2001-2002’, Presented to Parliament by the Financial Secretary to the Treasury by Command of Her Majesty, July, p. 5.

[20] Dietl, H., Grütter, A. and Lutzenberger, M. (2007), ‘Methods of Estimating the Cost of the Universal Service Obligation’, University of Zurich, p. 4.

[21] Senior, I. (2000), op. cit. revised intro.

[22] Senior, I. (2003), ‘A Penny on the Post: Too little, too late, too intrusive’ (London: Institute of Economic Affairs), p. 4.

[23] Mahony, H. (2004), ‘Free marketers in top commission posts’, EU Observer, 13 August.

[24] HM Treasury (2006), ‘Check against delivery’, Speech by the Chancellor of the Exchequer, the Rt Hon Gordon Brown MP at the Mansion House, London, 21 June.

[25] Hanley, P. and Schmid, G. (1998), ‘Surviving Deregulation: A Postal Scenario for 2010’ (Silicon Valley: Institute for the Future), p. 64.

[26] See Institute for the Future website. For a discussion of the negative implications of RAND, Ford and covert foreign policy, see Brandt, D. (1996), ‘Philanthropists at War’, NameBase NewsLine, No. 15, October-December.

[27] Postal Services Act 2000, Chapter 26 (London: The Stationery Office), p. 1.

[28] These figures, found in Postcomm’s annual accounts, show that a total of £17,240,000 was spent on ‘outside consultants, lawyers etc.’ in the years 2000-2007.

[29] See ‘Promoting effective competition between postal operators: A consultation document’, 29 September, 2000. Launched in September 2000, further consultation documents were issued in June 2001 and January 2002. One of the first published responses to this consultation was that of the Association of International Courier and Express Services (AICES) ‘the trade organisation in the United Kingdom for companies handling international express documents and package shipments’ (2001: 2) who, perhaps unsurprisingly, made the case that ‘in contrast to the critics of competition who falsely claim it would impact negatively on the universal service, AICES members believe that only liberalisation can create the dynamic industry that is needed to meets [sic] the requirements of a modern society and economy.’ (2001: 4) [italics in original].

[30] See Postcomm, ‘An assessment of the costs and benefits of Consignia’s current Universal Service Provision: A Discussion Document’, June 2001 and Andersen (2002), ‘Sensitivity analysis of the impact of liberalisation on the financial performance of Consignia and its business segments: a report prepared on behalf of Postcomm’, 5 March. It will be remembered that Andersen Consulting was subsequently discredited in the Enron scandal and forced to re-brand as Accenture.

[31] This figure is re-iterated in HM Treasury (2002), op cit, p. 5.

[32] ‘Postcomm’s Proposals for Promoting Effective Competition in UK Postal Services: January 2002, Response by Consignia’, April 2002, alleges that, despite several requests, Consignia only received a copy of Andersen’s final report (dated 5 March, 2002) a few days before the end of the extended consultation period.

[33] ‘Postcomm state that they will be consulting on the extent of the universal service later in the year. They have the process the wrong way around. The restrictions on competition are designed to protect the universal service. Whereas they are proposing to introduce competition and decide what the universal service should be … Postcomm state in their proposals document that their primary duty is to act in such a way as to ensure the continued provision of a universal service at an affordable and geographically uniform price. In fact, the duty is an overriding or paramount duty rather than a primary duty.’ Ibid, pp. 10 & 13.

[34] Frontier Economics has a proven pro-privatisation agenda through the involvement of one of its senior advisers, Sir Ian Byatt, with Ofwat and the Water Industry Commission for Scotland.

[35] Frontier Economics (2002), ‘The Impact of Liberalisation on Efficiency: a survey: A report prepared for Postcomm’, January, p. 2.

[36] Comptroller and Auditor General (2002), ‘Opening the Post: Postcomm and postal services – the risks and opportunities’ (London: National Audit Office), HC 521, Session 2001-2002: 24 January 2002, p. 9. The report continues: ‘The incentive on Consignia’s management to secure efficiencies is relatively weak in the absence of pressure from the private sector.’ (p. 12)

[37] ‘The Report does not demonstrate a relationship between liberalisation per se and performance or delivery improvement … the Report also does not demonstrate that significant entry following liberalisation will not lead to a deterioration in performance and financial viability … the Report does not present data on a consistent and comparable basis and this leads to erroneous conclusion.’ ‘Consignia’s Comments on “The Impact of Liberalisation on Efficiency: A Survey – A report prepared for Postcomm by Frontier, January 2002”, April 2002, p. 1.

[38] Directive 2002/39/EC of the European Parliament and of the Council of 10 June 2002 amending Directive 97/67/EC with regard to the further opening to competition of Community postal services, Paragraph 14.

[39] Promoting Effective Competition in UK Postal Services: A Decision Document’, May 2002.

[40] HM Treasury (2002), op cit, p. 6.

[41] See Future Foundation Projects (2003), ‘The Future of the Rural Post Office Network: A Report for Postcomm from the Future Foundation’, April; NERA and RAND Europe (2003), ‘Cost-Benefit Analysis of Rural Post Office Branches: A Final Report to the Postal Services Commission’, June; Frontier Economics (2003), ‘Evaluating the format switching and price elasticity estimates used by Royal Mail in their Size Based Pricing application: A Report Prepared for Postcomm’, December and Frontier Economics (2007), ‘Retail zonal pricing: impact on Royal Mail’s volumes and revenues: A Report Prepared for Postcomm’, July; Roland Berger Strategy Consultants (2004), ‘Monitoring developments in the postal market – market survey for Postcomm’, April; Arthur D Little (2004), ‘Technology and Innovation in the Sector: A Competitive Market Review: Report to Postcomm’, 25 June; LECG (2006), ‘Future Efficient Costs of Royal Mail’s Regulated Mail Activities: Base Year and Baseline Final Conclusions’, 23 January and LECG (2007), ‘Retail Zonal Pricing Review: Analysis of Zonal Costs’, 4 July; NERA and Accent (2006), ‘Post Office Urban Reinvention One Year On: A Final Report for Postcomm’, 8 September; Europe Economics (2007), ‘Retail zonal pricing review – Analysis of forecast mail volumes and switching behaviour’, 4 July and NERA (2007), ‘Access to Postal Services: A Final Report for Postcomm’, 3 August, respectively.

[42] Roland Berger Strategy Consultants (2004), op cit, p. 6.

[43] ‘Arthur D. Little, founded in 1886, is the world’s first management consultancy. We are unique in linking Strategy, Innovation & Technology to master our clients’ business complexity to deliver sustainable solutions.’

[44] Postcomm (2004), ‘Competitive Market Review: Proposals for Consultation’, September 2004.

[45] Postcomm (2004), ‘A Revised Market Opening Timetable: Proposals for Consultation’, September 2004.

[46] ‘The evidence that liberalisation delivers an improved service for customers is compelling but we regard Postcomm’s choice of dates for the move to full liberalisation in the UK postal services market to be an untimely one.’ House of Commons Trade and Industry Committee (2005), Royal Mail after Liberalisation: Second Report of Session 2005-06 Volume I, HC 570-I, (London: The Stationery Office).

[47] On 6 November 2007 the Department of Trade and Industry was replaced by the Department of Business, Enterprise and Regulatory Reform.

[48] Barnett, A. and Morgan, O. (1999) ‘Resign call over MP’s link with GM food firm,’ The Observer, Sunday 11July.

[49] See Hollingsworth, M. (2001), ‘The PR people have flocked into Labour’s headquarters to offer their services –absolutely free’, The Guardian, Wednesday 6 June. Anthony Wright MP, another member of the Select Committee, can also be traced to Bell Pottinger via the magazine Renewal, which is produced from its offices.

[50] This point is made in Comptroller and Auditor General (2002), op cit, p. 3: ‘The Department are in the unusual position of appointing the directors of Consignia and the members of the Postal Services Commission and of monitoring the performance of both.’

[51]This point is make in Bichta, C. (2002), ‘Regulation of UK Postal Services’, Centre for the Study of Regulated Industries, University of Bath School of Management, p. 25.

[52] This tension was acknowledged in HM Treasury (2002), op cit, p. 2.

[53] A post Leighton held from 1992 to 2000 before moving to

[54] Schifferes, S. (2001), ‘Who’s backing Labour?’ BBC News Online, Monday, 14 May.

[55] Taken from Royal Mail website.

[56] Appointed by the Secretary of State for Trade and Industry, Patricia Hewitt, in 2004 and re-appointed in 2006.

[57] Stephen Littlechild bio.

[58] Littlechild, S. (1981), ‘Ten Steps to Denationalisation’, Economic Affairs, October, p. 14.

[59] Ibid, p. 18.

[60] Alan Alexander bio on Royal Mail website.

[61] Steven-Jones, N. (2004), ‘The Implications and Consequences of the Introduction of Competition into the Postal Monopoly in the UK’, University of Durham, p. 2.

[62] Bichta, C (2002), op cit, p. ii.

[63] Cave, M. (2001) ‘Cost modelling requirements for Postcomm’s regulatory purposes’, University of Warwick, August, included as Appendix 6 in Comptroller and Auditor General (2002), op cit, pp. 57-66.

[64] The four regulatory methods being studied are: postal monopoly, end-to-end competition, and access regulation with and without bypass.

[65] See

[66] ‘Established in 1874, the Universal Postal Union (UPU) with its Headquarters in Berne (Switzerland), is the primary forum for cooperation between postal-sector players and helps to ensure a truly universal network of up-to-date products and services.’ The UPU cites Great Britain’s date of entry into its union as 1 July 1875.

[67] Communication Workers Union (2004), ‘Postcomm’s Competitive Market Review: CWU Submission’.

[68] Hooper, R. Hutton, D. and Smith, I. (2008) ‘The challenges and opportunities facing UK postal services: An initial response to evidence’, May.

[69] Postcomm (2008) ‘The independent review of the postal services sector: Second submission by Postcomm, the industry regulator’, May. See also Brown, C. (2008) ‘Postcomm wants Royal Mail part-privatised’, The Independent, 15 May and Lee, K and Mitchell, P. (2008) ‘Labour prepares ground for privatisation of postal service’, Indymedia, 4 June.

[70] Ibid, p. 5.

[71] Consignia, ‘Postcomm’s Proposals for Promoting Effective Competition in UK Postal Services: January 2002, Response by Consignia’, April, p. 13.