How to save the Royal Mail – find out where their profits disappeared to


It’s a commonplace to say now that the government got it all wrong when it tried to demonise strikes and strikers – that the public mood was misread and in fact people across the UK know exactly why strikes are happening, and they agree with the reasons behind industrial action.

But there is another reason. The trades unions have played a blinder.

In tactics, strategy, argument, presentation and discipline the union case across public services has been brilliantly made.

Has ever a union leader made the impact of the saintly Mick Lynch? But in terms of another, equally important dispute, another union deserves appreciation.

The Communication Workers Union represents the 158,000 workers who make up Royal Mail. The union has organised 18 strike days since October in support not just of pay claims but also in defence of the public institution that is the Royal Mail.

The union is anxious about the moves to a gig economy, about the trashing of the Universal Service Obligation – getting the post to the whole of the UK at the same costs and with the same timings – and about the weird disappearance of a healthy profit into dividends, share buyback, and gross remuneration for senior management.

This Royal Mail senior management is not doing well at resolving the dispute.

This week the Business, Energy and Industrial Strategy parliamentary committee summoned the CEO, Simon Thompson, back for a second roasting after apparently getting mountains of evidence from postal workers across the country, that the evidence the CEO had given to the committee the previous week was flawed.

In particular, the accuracy of his evidence on productivity tracking devices, whether workers are indeed instructed to prioritise parcels over letters, and on sick pay, have all been challenged by Royal Mail and Post Office workers.

The committee said grimly this week that “giving inaccurate information to a parliamentary committee, whether by accident or otherwise, is taken very seriously”.

So we are in own goal territory here. A mistake the CWU hasn’t made. This week it did an extraordinary thing. It arranged a webinar with shareholders and investors in Royal Mail.

The meeting covered the reasons for the strike which include:

  • Unagreed 2 per cent pay award imposed = a real terms pay cut of 9.1 per cent against RPI/7.0 per cent against CPI.
  • Changes to terms, conditions and the wider service, including:
    • The company walking away from the Pathway to Change Agreement 2021.Cutting 10,000 jobs while introducing a new resourcing model which brings in agency workers and owner-drivers on contracts worth 20 per cent less and with longer hours.
    • Starting delivery up to three hours later in the day, therefore abandoning the morning delivery period and deliberately undermining the universal postal service.

Then Dave Ward, the union’s general secretary and the acting deputy Andy Furey, turned to the odd case of the disappearing profits.

There was the record £758 million profit announced by Royal Mail Group last year: the fact that, even with international division GLS removed from the equation, Royal Mail UK still made £416m and that, last May, the company forecast that profits would fall slightly in 2022/23, but still remain at a healthy £303m.

But that profit forecast fell in October to a predicted loss of between £350m and £450m – a sharp drop which followed a £567m giveaway in dividends and a share buyback during the 2021/22 financial year.

The CWU also highlighted the astonishing remuneration received by Royal Mail’s CEO and CFO – £753,000 and £1.3m respectively. These totals included bonus payments of £142,000 (to the CEO) and £847,000 (to the CFO), despite missing important quality of service targets.

The meeting went well. In fact, one shareholder asked directly: “What is it that you think we can do? What do you want from us that can help to come to a resolution?”

The General Secretary thanked him for his question and replied: “We would want you to raise concerns, do everything possible to get the company to reach a settlement.”

The Royal Mail is 500 years old. It is a great British institution. It fulfils a major part of the social contract, as well as the economic infrastructure, of the UK.

It is in danger of being tossed into the toxic environment of profit driven organisations, its posties consigned to the gig economy, its profits being enjoyed by the Czech billionaire who is now the Royal Mail’s largest shareholder.

Is this what we want? If not, then the industrial action being carried out by the smartest of unions is our best defence.

This post first appeared on the New Weather blog.

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