Will the Royal Mail sell-off deliver better service or quick profits?

Even though the government's plans to sell Royal Mail are flawed (Royal Mail sale is a sign of Conservative desperation, says Labour, 6 May), privatisation is decades overdue. While previous UK governments bottled out of reforming the state mail monopoly, others like Sweden, New Zealand, Germany and the Netherlands have liberalised theirs. So they have been able to access new capital for modernisation, work with strategic partners and develop fresh concepts.

Meanwhile, the UK's over-regulated state delivery service stood still while its market was lost to email and ecards. It's good that 10% of the shares will go to Royal Mail workers. Mail businesses are highly dependent on their staff and need them to be incentivised and committed. But privatisation should have been an opportunity to end the delivery monopoly. Monopolies, public or private, have a poor customer service record.

The government should also revisit the universal service obligation, under which letters from and to remote places must cost the same as those sent round the corner in cities. While private carriers would probably preserve this flat-rate pricing – which is far easier for them and their customers – we should not close off the possibility of innovative pricing/delivery options.

Genuine open competition and the new ideas it brings would probably revolutionise the whole delivery sector in short order.
Eamonn Butler
Director, Adam Smith Institute

• The proposed privatisation of Royal Mail is yet another indicator of the shift of wealth to the rich. The public, by shouldering substantial increases in letters and parcel prices, have contributed to the softening up of Royal Mail for privatisation, yet it is the City that will earn hefty fees from the flotation.

There may be an initial public offering but, to make this politically successful, the shares would have to be attractively priced and that would only be a trigger for small investors who can afford to buy shares to make a quick profit. As for about 10% of shares going to Royal Mail workers, in these straitened times, many may prefer to make a quick windfall by selling. Thatcher envisaged a wider share-owing public, but statistics suggest otherwise. In 1981 28% of shares were held by private individuals and yet, in spite of many privatisations, only 10% by 2011. Public companies do not like small shareholdings as it only adds to their costs, hence the promotion of free share-selling services.
Alistair Gregory
Burton in Lonsdale, Lancashire

• What may, to Michael Fallon, seem "practical, logical and commercial" in the proposal to privatise Royal Mail to others will appear dogmatic, divisive and, on the evidence of gas and electricity privatisation, doomed to lead to higher prices and worse services. There would also be a real risk of Royal Mail ultimately falling into foreign hands. It is to be hoped that this proposal will be resisted, starting with the refusal of Royal Mail employees to accept so-called shares offered to them. Unfortunately we cannot look to the Labour party to come to the rescue of a much-valued public service since it was complicit some years ago in a similar privatisation plan.

http://www.guardian.co.uk/uk/2013/may/07/royal-mail-selloff-service-profits