The Rt Hon Michael Fallon MP

Minister of State for Business and Enterprise

Department for Business, Innovation and Skills

1 Victoria Street

London SW1H 0ET

Date: July 30^th, 2013

Dear Michael,

I am writing to you to express my opposition, and that of my constituents, to the Government’s decision to sell-off Royal Mail. This is on the grounds that privatisation could have negative consequences including price rises, poorer services, closures and job losses, as well as the loss of an irreplaceable part of our heritage.

The plans also pose a threat to the Post Offices network, which many older people, families and vulnerable people, not to mention small businesses, rely on to make contact with others, fill out essential Government forms and access key services. As there has been no assurance that a privatised Royal Mail will use the Post Office for business, I am concerned about the long-term future of Post Offices up and down the country. According to the Communications Workers Union, over 1,000 UK post offices were either closed or put up for sale in 2010.[1] In my constituency local closures and relocations have already left hundreds without adequate access to this vital public service. This is a trend that Government should be working hard to reverse so at the very least will BIS make using the Post Office a condition of sale?

I am aware that the privatisation will initially guarantee the current universal service provision, but I am concerned that over time a privatised Royal Mail will prioritise increasing shareholder profits. This could not only put the universal service provision at risk but also result in cuts to the pay and working conditions of Royal Mail employees. I am also worried that services to rural areas will be reduced or made more expensive, if a private owner is allowed to cherry-pick those services which are cheaper to provide and to abandon others. As there will no longer be price controls on unregulated services, it is possible that these services might increase in price, a rise that UK people and businesses can ill afford.

I fail to understand why Royal Mail, which is currently making a profit, is to be sold, resulting in a short-term gain but a long-term loss to the Exchequer. I am aware that the reasoning behind this is to allow private investment, but I am concerned that, rather than investing in Royal Mail, shareholders will strip profits out of the company. Does the Government plan to put in place any regulations stipulating that a certain proportion of profits must be invested back into Royal Mail, or guaranteeing a certain amount of investment? If not, how can the Government guarantee that any investment at all will be made in improving Royal Mail?

There have been many examples of privatisations of state-owned assets going disastrously wrong, resulting in increased costs to the taxpayers who are forced to pay to pick up the pieces, and effectively giving private businesses an indirect subsidy. It has been widely pointed out that it makes very poor financial sense to privatise the profits of Royal Mail yet nationalise its debt. As you will be aware, the profits made by the Government on the sale are expected to be in the region of £3bn, while the Royal Mail pension deficit swallowed by the Government is £12bn. The banks orchestrating the sale are expected to make a profit of around £30m, or ten per cent, on the sale of this part of the UK’s heritage. I and many others feel that this figure is grotesquely high, particularly in the current time of austerity.

I am also concerned that the privatisation is being pushed through too quickly, and the wishes of Royal Mail service users ignored. A survey by the Conservative think tank the Bow Group found that just 53% of the public are aware of the sell-off, of whom 67% are against the move. Only 4% of people strongly back the sell-off, with another 16% broadly backing it.[2] This is hardly a ringing endorsement, or even consent, from the British people who currently own Royal Mail.

Unless the Government takes decisive action to halt the sale, or at least put in place conditions that will protect core elements of Royal Mail, this looks set to be a move that will benefit private shareholders alone – and at great expense to all other current stakeholders. I therefore urge you to reconsider and look forward to receiving your response.

Yours sincerely,

Caroline Lucas, MP, Brighton Pavilion