It all started with the loss of their monopoly, the focus shifted dramatically from quality of service to quality of profits, postal staff were cut to the bone along with their pensions. So why would any Government deliberately destroy a long standing public asset?
The answer is that the EU forced them to....
From http://www.caef.org.uk/d113rylml.html
1. A 1997 EU Press Release states an EU-wide postal service would be established. This was achieved by a series of EU Directives. This 'liberalised service' allows other companies to trade in Britain. 21 companies compete with Royal Mail and take 20% of the total business. They operate only in the profitable areas whilst Royal Mail is obliged by law to provide a six day a week delivery to all parts of the country at an equal price even if it is unprofitable. The effect of this unfair competition resulted in Royal Mail's profits falling by 86% to £22 million in 2006/2007. In the following year it lost £33 million.
2. The second factor is the Amsterdam Treaty which lays down that any state aid to a commercial organisation must be approved by the EU Commission. In 2001, the Government registered Royal Mail as a public limited company. The Government holds all the shares probably to avoid the EU's right to control the use of subsidies. Then, in order to overcome the loss of Royal Mail's profits, the Government subsidised Royal Mail without EU permission with the equivalent of €2.5 billion in order to introduce improved mechanical sorting equipment into the system. Some of Royal Mail's competitors complained to the European Commission which started an enquiry. In response the Government ordered a review of the postal services sector. The Review Panel submitted its report to Parliament last December. It describes Royal Mail as 'inefficient' but fails to acknowledge that it is the EU which prevents the introduction of modern systems. Instead the report suggests amalgamating Royal Mail with one or more private sector companies.
The resent price hikes are an attempt by Royal Mail command to make the company look more appealing to potential buyers, as the one thing that makes it a 'toxic' purchase is the universal delivery service (one price goes anywhere in the UK). It would seem that the privatisation of Royal Mail is inevitable & with TNT being bought out by UPS recently, makes them the most likely candidate to run Royal Mail.
If privatisation does occur, Royal Mail will go exactly the same way as all of the utility companies that have been privatised, the net result, the customer paying exceptionally high prices for a poor service.
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