History repeats itself as tragedy and farce

19 October 2010
Lindsay Clark, international news editor, Supply ManagementOver the past 30 years, the UK has seen several waves of privatisation, starting with that of previously state-owned telecoms supplier British Telecom in the 1980s. Soon gas and electricity followed, creating greater competition in the supply market for business. The second wave did not go so well. The privatisation of the rail network in the 1990s created Railtrack, which became a behemoth supplier to the newly privatised rail service companies. It ended in administration, requiring a government buy-out in 2001. Now we’re set for another wave of privatisation, as the public sector looks to companies to come in and run many of the services hitherto provided by public bodies. The headline-grabber among these will be the Royal Mail, whose privatisation will be greeted with a great deal of gnashing of teeth and public debate. Today, the Royal Mail announced it was upping its prices to businesses to secure its long-term future. Buyers may well be seething, as they either bite the bullet on increased distribution costs or look for other vendors. If they do the latter, procurement teams are likely to find increasingly competitive offerings from the likes of Home Delivery Network and others. So this early move could drive buyers into the hands of other suppliers, thereby lowering the value of the Royal Mail when it, or part of it, is privatised. Either way, the move could mean a better deal for buyers. But whether the price the public purse gets for the Royal Mail offsets the postal service’s huge pension deficit is a moot point. I just hope that, given the uncertain state of the stock market and the current economic climate, the Royal Mail sell-off does not end in farce.
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