Packaged up and shipped off…

Image credits: didbygraham

Now that Royal Mail has largely been transferred into private hands, Alexander Bonner evaluates the realities of the Great British letter industry.

 

It is important to refer to Vince Cable’s justification behind the choice to sell the shares at £3.30 each. Cable, who argues that the ‘threat of industrial action by Royal Mail’s staff had influenced the price-setting process’; meaning the decision to sell was perhaps warranted in these troubled conditions. If such a risk of striking was in the equation, the decision to sell at £3.30 per share would not seem as foolish as initially envisaged, as a strike would have had adverse effects on the share prices. However, industry experts, particularly those involved in the investment banking industry, valued the shares of the Royal Mail as 50 per cent higher than at which they were sold, clearly indicating that the timing of the sale could have come as a surprise to some.

Selling 62 per cent of the company’s shares provided a perfect opportunity for investors to take a risk on the company’s share prices. A rise of £1.70 per share suggests that such a risk was warranted, and would have resulted in a tidy return for those willing to take the risk. As a wannabe investor myself, I studied the rising share prices with interest.

The decision to sell such a large proportion of the Royal Mail could have greater symbolism than foreseen, as the sale could represent a much wider decline in the industry. The technological age has been around for a number of years and has subsequently replaced the older forms of communication, mainly the form of letter communication. Sites such as Facebook, Hotmail and Twitter now provide a form of instant communication without the need to take time to gather the required resources to compose a hand – written letter. Using social media is also free, so there are also cost based factors that could explain the decline in letter – writing. I myself have not sent a letter in a considerable period of time, as the likes of Facebook and Twitter are now all too accessible and convenient. I would wager that you are of a similar vein.

The rapid decline in the postal industry means that the government’s decision to sell that 62 per cent share of the Royal Mail should have come to no surprise to industry experts. For example, in 2011, global domestic mail volumes contracted by 3.7 per cent, a 1.2 per cent decrease from 2010. Such a trend is apparent within the British postal industry, providing a justification for the government’s choice of action. It came as no surprise to me, as the letter industry in particular had been facing a sharp decline since the early 2000s. What surprised me in this saga, however, was the timing of the decision, especially as forecasts had predicted shares to rise substantially from the base price of £3.30.

What now lies ahead for the future of the Royal Mail and its customers? Following the sale, the boss of Royal Mail appeared to pave the way for increases to the price of first-class stamps as the newly-privatised company’s soaring shares valued it at nearly £5 billion. Such a decision is a controversial one as consumers, already burdened with rising costs in other industries, will now be even less inclined to purchase stamps. Such a decision is likely to adversely affect the letter industry, as people, when one considers the accessibility of social media, will probably be much less willing to send letters as a result of a price increase.

Image credits: EEPaul

Privatisation is not a new phenomenon and has been subject to substantial debate in recent years. The Royal Mail, now with such a clear majority not owned and controlled by the government, may go down a similar route to previously privatised companies. No one would argue that the privatisation of British Rail in the 1990s was a bad move, as such a decision led to an improvement in railway efficiency and railway standards. It is not yet known whether the government’s decision to sell of a majority of the Royal Mail will lead to such an improvement, although what I can tell you is that efficiency within the Royal Mail needs addressing.

There will always be critics over government policy and decisions, that’s what makes a modern day democracy tick over. Such criticism is no different with this case, despite some criticism being unfounded. It should come as no surprise that the government chose to sell a majority share hold in the company; the industry has been declining for many years and the company needed to improve its efficiency. Critics will tell you that the rise in share prices meant the government sold their shares too early on, and I will have to concur with this assessment. Such a decision means the future of the letter industry remains in the balance. If efficiency is improved, its future could be restored. However, actions to improve the Royal Mail’s efficiency could be seen as counterintuitive. The decision to raise stamp prices illustrates this point, meaning a resurgence in the art of letter writing is unlikely to come about.

Alexander Bonner

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Oliver Cary: Has the coalition achieved its aims for education?

In the first of his column posts, Oliver Cary reviews the coalition’s progress on its aims of 2010.

The recent Mid-term review represents a chance to evaluate how far the coalition government has come to achieving its aims of 2010, and Michael Gove’s significant changes in Education have been hounded by criticism. Although much of this has centred on his proposed ideas to improve our system, there is understandable criticism of his policy that had already seen tangible changes.

Attempts to make more university places available may be possible, but raising fees to £9,000 has caused public protest and there are still vacancies at a quarter of Russell Group universities this academic year. The government’s aim for prospective students to have access to data of student satisfaction, costs and graduate salaries appears promising, but success for the institutions is measured by league tables.

Increasing university contact time, a common occurrence for students this academic year, is supposed to justify the increasing fees. How useful is this extra contact time? Many university standings come from postgraduate research results, as each institution has to meet its quota of outputs. David Priestland suggests that universities attempt in ‘gaming’ the system gain better standing in league tables, rather than giving more constructive contact time.

Photo credits to Babro Uppsala

Various changes to schools have also taken place, and the introduction of free schools and academies since September 2011 has also been criticised. Taxpayers have been sceptical of funding new Maharishi schools that teach transcendental meditation as part of their curriculum. New academy parents appear to appreciate their 5 year old children learning basic Mandarin, but there are still places not being filled at these schools.

Although many would argue that Mandarin in primary schools, and meditation that keeps students balanced through secondary education are unnecessary, Gove, however, seems to be too radical in his efforts to maintained a tight curriculum. His proposed Ebacc, an English Baccalaureate to start in 2015, has already been petitioned against. Those from the National Union of Teachers and the National Association of Head Teachers petitioned against marginalising subjects which do not form part of the Ebacc, and the petition gained 20,000 signatures in its first two weeks. Stephen Fry, who gave his support to the petition, stated via Twitter that the Ebacc would ‘pose a real threat to the status of creative subjects and vocational education.’

Michael Gove’s policy may cause our next generation to become more disenfranchised from education than our own, and his policy has extended to teachers as well. Plans to introduce ‘performance-related pay’ schemes are intended to raise the quality of teaching, and whilst this is hugely desired, it puts further pressure on teachers. Additionally George Osborne’s plans to give head teachers full responsibility for distributing pay amongst staff have created controversy. Head teachers, with this increased responsibility, and little experience with finance, could lead to chaotic administration in schools.

The intentions of educational policy are always to raise standards of education, enthuse and re-engage society’s youth and justify government spending. Gove’s intentions are no different, but he has undoubtedly made himself unpopular. In recent polls by YouGov for the National Union of teachers, only 13% thought the Government were taking education in the right direction. Teacher morale has decreased over the last year and Christine Blower, chair of the NUT, believes this is the result of ‘continual criticisms and undermining of pay and conditions’.

Michael Gove’s plans and policy for changes in education are perhaps too radical, and attempting to achieve quick changes without proper consideration and review of results. In attempting make improvements at university, school and teaching levels he has created three separate avenues of criticism, and has lost considerable support for his policies in the process.

Halfway there: the Midterm Review of the Coalition

Dominic Madar looks back at the past two and a half years since the Coalition came to power, and reminds us of how far it has come and how far it has to go until it’s time for us to hire or fire them.

Coalitions aren’t really Britain’s thing. We normally leave that kind of horse-trading and cooperative style politics to our neighbours on the Continent. It was to everybody’s surprise therefore when Nick Clegg and some very reluctant Liberal Democrats cozied up with Cameron and his Conservative Party back in May 2010. Considering that and the enormity of cuts proposed to take place it’s a minor miracle in itself that the government is still standing (just about) and Labour hasn’t already sewn up a 2015 election victory.

Photo credits to The Prime Minister’s Office

The backdrop of 2010 was very simple: the UK had been left a gaping budget deficit thanks to a combination of the 2008 global financial crisis and Labour’s profligacy. After five years of fiscal prudence Gordon Brown ditched the stereotypical reputation of a stingy Scot and set off in 2002 on a disastrous spending rampage that would later come back to haunt him. The Tories (and Lib Dems) were voted in to do what they do best: clean up the economic mess left behind by a financially irresponsible Labour Party. Looking back over the last two and half years, a few successes stand out amongst the general doom and gloom. The most significant of these include raising the threshold at which income tax is paid for the lowest earners and maintaining a triple A credit rating amidst the chaos experienced by many other EU members.

The first major incident came in the shape of a much publicised broken promise: If sharing a bed with the Tories was treacherous enough for the Lib Dems, then propping up their trebling of university tuition fees – akin to sleeping with the devil himself – was electoral suicide. Although hardly a supporter of paid higher education, the money has to come from somewhere and just maybe university graduates should contribute more to a system that gives them a good shot at significantly higher earnings in the future (I’m still glad I don’t have to pay those astronomical £9,000 fees though).

As time has gone on it has become increasingly evident that Cameron and Clegg are both at odds with plenty within their own parties. The Lib Dems have recently been overtaken by UKIP in recent opinion polls and look set to experience political wipe-out in 2015. They face a no win situation: heavy scrutiny for supporting any unpopular Tory-led policy and minimal credit for anything vaguely in the realms of success. Clegg may even be overthrown before we get that far, leaving the coalition in mass disarray.

The Tories meanwhile are clinging on by the skins of their teeth to Labour’s coat tails, in the hope that a more sizable gap doesn’t open up in the polls. For Cameron the major dilemma lies in whether to take the easy path and lurch to the right in a bid to silence UKIP and satisfy his far more conservative backbenchers, or take the bolder and more difficult route and stick to the centre-right to keep the Labour Party at bay. Tony Blair had the guts, arrogance and audacity to take his own party on, stick by his convictions and win three elections on the spin. The political climate is far tougher for Cameron but to have any hope of winning and keep what remains of his tarnished reputation he shouldn’t give in to growing party pressure.

Ultimately, how much of the deficit can be slashed (with as little impact as possible) and how much the economy will grow will have a pivotal impact on the 2015 election. Unfortunately for Cameron much of that depends on the global economy and in particular what shape the spluttering EU is in. Those on the left should give Cameron more credit for continuing to take strong stances in favour of socially liberal issues such as gay marriage against the wishes of most of his party. With his (relatively) pro-business mantra, cautious approach to an overbearing and increasingly dictatorial EU and recent support of free press (unlike Clegg and Miliband), Cameron could arguably be the most liberal mainstream party leader. I fear at this moment in time however that a combination of Western economic sluggishness, coalition infighting and Tory backbencher rebellion will leave him as a one-term PM.