The title above refers to this article on Labourlist which is about the sell off of Royal Mail that has been criticised for not achieving ‘value of money’. I find this line of attack somewhat annoying. Labour put up a very weak opposition to privatisation at the time (because they wanted to do the same thing), so has instead now resorted to saying the privatisation was ‘botched’.
The argument that the Government’s mistakes have ‘cost’ the taxpayer millions is based on some quite dodgy thinking. It assumes that in terms of the sale price, the higher the better because the Government can then spend the proceeds, and that if it doesn’t achieve the highest possible price, it has ‘lost’ money. The Guardian has a story up today detailing what an extra £750m of ‘taxpayer’s money’ could buy. This is not how government spending works though. If the Government wants to spend an extra £750m, it can just soak up some of the private sector’s excess saving by issuing some gilts, or it can – horror of horrors – just create the additional £750m through its agent the Bank of England.
In a lot of ways, having made the decision to privatise Royal Mail, it would have been better if they had just given shares – for free – to each household in the UK. This would have generated some much-needed economic stimulus as people sold their shares and spent the proceeds. As it is, selling Royal Mail for less than it’s ‘worth’ doesn’t impact the Government’s ability to spend on what it wants in any way.
The argument then should be over a nationalised or privatised Royal Mail – basically, is Royal Mail better off in public or private hands? Here are a few genuine questions we need to know the answers to to know if the privatisation was/will be a success:
Will prices now be lower or higher?
Will the service be better or worse?
Will Royal Mail’s staff have better or worse pay and conditions?
Who ultimately now owns Royal Mail?
What returns are they making?
Are those returns the result of productive investment, or rent-seeking and abuse of a near monopoly?
Will any assets be sold off? Who benefits from that?
Those are some real questions. I’m sure there are plenty of others!