Royal Mail is in crisis – and there are no easy answers

Margaret Thatcher famously left the Royal Mail out of her privatisation sights in the 1980s. She felt its monarchical connections and distinguished history going back to the creation of Master of the Posts in 1516 gave it a unique position. It had been in public ownership since 1635 and possessed a Royal Charter symbolic of its national importance.

The nettle was finally grasped with privatisation 10 years ago, just as letter writing was in steep decline and competition to deliver parcels was growing rapidly. Royal Mail, still required to deliver a letter at a uniform price anywhere in the country, is projected to lose more than £350 million for this financial year mainly because of strikes. The business says modernisation is essential to improve its parcel service.

The price of a first-class stamp will rise above £1 next week and most of the letters Royal Mail delivers comprise promotional literature. Latterly, it has been beset by a series of industrial disputes over pay and conditions that has left the company on the brink of collapse. The board is threatening to put the firm into administration, which may then force the Government to take it back into public ownership, thereby playing into the hands of the unions.

Is a Conservative government prepared to preside over the insolvency of such an august institution? Should taxpayers sustain a business that relies upon a means of communication that is in decline? Arguably, the Royal Mail is a utility, insofar as it delivers letters to remote parts of the country that would not be served by commercial operators. The arguments joined in Mrs Thatcher’s time may be about to be replayed.