Seems I don't own the Royal Mail - but soon might have the chance to...

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Today, something that has been pretty inevitable since the 1980s will take another step towards happening - the government will agree to sell the Royal Mail. This has, perhaps inevitably, been greeted by lots of people (mostly left-wing people) talking about the evil Tories selling off something they "own". Here's a good example:

It's been nice owning a part of the Royal Mail. Pitty, without asking me, they're selling my bit to some rich dude.
— Adam Ramsay (@AdamRamsay) September 12, 2013

There you have it folks! Except I know that I don't own the Royal Mail, not even a little bit of it. Let me explain. I own a bit of Barclays Bank (just a tiny bit that's not worth as much as it once was). And I can sell this and will get a nice cheque, real cash money I can spend. The same goes for my car, the table in the dining room and the wine in the cellar.

But it doesn't go for the Royal Mail. When that's sold I won't see a penny of the value realised, which tells me that I have no stake in the business, I do not own it. The government owns it and the government will get all the money from selling it off (and, in the manner of governments everywhere will probably waste that money).

Once it is sold, I might get a chance of own a little bit of the business. It just might be possible for me to buy some shares, to invest a little bit of my money in the business. That - not some sort of nebulous and collectivist wibble - is what we mean by ownership.

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More unintended consequences: killing off the Royal Mail

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One of those little regulatory changes (from last year’s Budget as it happens) that rather sneaks up on us arrives on 2^nd April this year. The Government has extended to application of VAT to cover “bulk mail” and related services:

Changes to VAT law and the way in which our services are regulated have affected the VAT status of a number of our products.  A limited range of our services became subject to VAT through 2011, and this will extend to all bulk mail services from April 2012.

Now the government suggests that, because businesses are VAT registered they’ll be able to reclaim this and it won’t be noticed. But think for a second of the big users of bulk mail:

• Local government – all those Council Tax bills and other official bulk communications such as electoral registration forms
• Utilities – water, gas, electricity are all subject to a lower VAT rate or exempt
• Financial services – no VAT is charged on banking, insurance or related services (now there’s a blessing)
• Charities – direct mail is a central tool for charities to raise funds and keep their supporters informed
• Publishing – magazines, journals and so forth again carry no VAT

Now I don’t know about you but it seems to me that the big loser in all this will be the Royal Mail. The 20% increase in mailing costs will accelerate the move to paperless billing and statements for utilities, banking and other businesses. It may even prompt local government to look at the mail they send – perhaps consolidating or moving to electronic means.

One hidden effect of this change will be that some businesses – and especially those unable to claim back the VAT – will stop using targeted direct mail preferring to use cheaper mass leafleting. Meaning that rather than a personalised, specific appeal, we will receive general literature targeted using geodemographic profiling rather than real information.

That and it will cost local government a load of money that might have been spent on front-line services.

And, without a doubt, hammer another nail or two into the coffin of the Royal Mail.

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A reminder why the private sector is better than the state

In a recent post Tracey Cheetham takes to task a business that wrote to her regarding the delivery of wine and the postal strikes. Now I could take her to task over the position she took - business should use the post office because of its social mission. Sod whether or not that business gets a decent service from said business.

But what really struck me was the nature of the response Tracey received from the business - they'd taken the trouble to read the letter, consider the point she made, examine their business practices and respond accordingly. It looks likely that, through this action, that business has a friend and advocate (albeit not sufficiently for them to be named in Tracey's blog-post) - someone who'll buy some of that there wine!

Does Tracey think that a similar letter to a nationalised industry, a government department or one of those myriad agencies of the state that she loves so much would get such a positive caring response? Does she think that a random e-mail raising a slightly critical point to - say - the Royal Mail would get that kind of response? Somehow I very much doubt it - what Tracey would get (eventually) is a series of excuses wrapped around with a half-hearted apology. The person answering the letter doesn't give a monkeys whether Tracey is happy with the response or not -it's just another letter off the pile or e-mail from the box.

For me, Tracey's post is a timely reminder of why private business - and certainly small business - delivers so much better service than we get from the state. And the reason? Because - unlike the government - they care about having our business.