They will come begging to the government for investment, just like the privatised rail companies do now.

But on the plus side, Royal Mail profits won’t be wasted on the NHS where it’s ‘hardly noticed’, so it’s not all bad news.

Maybe you should read up on the history of the royal mail prior to the Rowland Hill reforms instead of cherry picking the victorian golden era

So the Royal Mail wasn’t state owned for 500 years ?

Is that why it only doubled its profits to £400 million last year ?

Well they’ve got to acceptable levels after a poor period – kinda needed to do that for privatization. They have it tough though and I don’t agree with the changes to the market so that over companies can cherry pick – Labour did that though right?

kinda needed to do that for privatization

It was fatten up for privatization ? No …… really ? 🙂

Which just goes to prove that a nationalised industry is perfectly capable of making a profit.

Well IMO companies tend to do a lot better in the private sector, whether it’s better for society for them to be that way is a different issue.

dragon – Member

That’s why nationalised business don’t work, you are stripping out profits that should be used for investment to waste it on the NHS, MOD, etc. where it would hardly be noticed.

You’re right, it’ll be far better for us to not have that money 😕

Am I right to say that the privatised RM won’t be required to provide downstream access at a loss? That’ll do some interesting things to the mail market, all that fake competition that up til now we’ve had to pick up the tab for goes away…

Well IMO companies tend to do a lot better in the private sector, whether it’s better for society for them to be that way is a different issue.

If we look at nationalised industries as a whole, they were usually nationalised because they were failed private companies. British Leyland, British Steel, National Coal Board, British Rail, Network Rail etc, etc…

Then there’s Northern Rock, Lloyds TSB…

when the plebs are allowed to start trading the ar5e will fall out of it

The plebs can trade.

Not yet they can’t

from BBC website:
‘Royal Mail shares rose more than 38% to 456p at the start of conditional dealings on the London Stock Exchange.

The hugely oversubscribed sale was priced at 330p per share at the top of its expected range and valuing the near 500-year-old company at £3.3bn.

After an hour into trading, the price had eased back to 444p. Private investors received 227 shares each.

The shares are listed officially next Tuesday, but City institutions began conditional dealings on Friday.’

Well IMO companies tend to do a lot better in the private sector

Any evidence for that? Also, better for who?

Well IMO companies tend to do a lot better in the private sector

When you say “do a lot better” do you really mean bigger profits ?

A nationalised Royal Mail could choose to cut costs drastically and massively increase prices, the end result might well mean huge profits of say £1b. Or it could choose to slash prices increase staffing levels and possibly make just a £1m profit.

Cheap efficient service, or expensive commercially attractive business ? Which would the customer prefer ? Which would represent doing a lot better ?

thestabiliser – Member
when the plebs are allowed to start trading the ar5e will fall out of it

The plebs can trade.

Not yet they can’t

from BBC website:
‘Royal Mail shares rose more than 38% to 456p at the start of conditional dealings on the London Stock Exchange.

Well how come I sold my GF’s at 08:11 this morning then?

“
Trade Date/Time: 11/10/2013 08:11:49
Execution Venue: LSE
Settlement Date: 16/10/2013
Transaction Reference: 3xxxxxxx2
Order Type: At Best Sell
You have sold:
Stock Name Stock Details
ROYAL MAIL PLC ORD 1P (WI) RMG – GB00BDVZYZ77
Quantity Price £ Consideration £
227 4.45225 1,010.66
Commission: £ 0.00
Total: £ 1,010.66

Looking foward to your answer 😆

A private company cares most about the NPV of future profits – with a lean towards a short-term view due to pressure from share holders. Would cutting costs and raising prices dramatically really increase profits? People would do anything to avoid using them. A company should do whatever results in the best profits as mostly cares about it’s owners – shareholders.

Is it better for companies to be privately owned? Well, depends on the controls and competition levels. Despite complaints we don’t do too badly when it comes to energy costs. I would have preferred the Royal Mail to have stayed a monopoly due to the loss making aspects of the business – letters to remote places – they could cut them and be more profitable but would that be a better service?

As for private v public companies, just look at how the value of privatised companies has changed since they became privately owned.

But even that is a circular question: before most (all) of the privatisations, the “bad” bits of the enterprises were carved off or wrapped up in order to make the good bits saleable.

This is going to go the same way as privatisation of the railways.

The ‘good’ bits make profit for private capital, the ‘bad’ bits (i.e. the actual infrastructure and its associated fixed costs) remain as public entities that drain the public purse.

Electricity, telecomms etc were privatised in the late 80’s – but these were largely ripe for it as they have a far smaller % of their cost base as fixed infrastructure. This is why, very broadly, there can be some claim that they have ‘worked’.

The railways, on the other hand, have been a complete disaster as the upkeep of the actual infrastructure is so costly and onerous no one wants to really tough it with a barge pole.

Some things should not be privatised solely out of dogma. I think RM is one of them.

If privatisation is so bloody marvellous, what about the east coast mainline?

National express handed it back (after milking it) saying it couldn’t make a profit (yeah, right). In ‘state’ hands it increased its turnover and made £200 million profit. This is all of course a bit of an embarrassment for the Tories and their evangelical private good/public bad ideology. So they’re itching to hand it over to Branson or some other parasite who can then restore the natural order by then milking the taxpayer for millions in subsidies instead

The dutch privatised their mail service then had to buy back the address database at great cost.

Guess what we’ve included in the sale?

In ‘state’ hands it increased its turnover and made £200 million profit.

Is that more or less than the guaranteed annual income the government would have raised from the franchise fees and tax that would have come from a franchisee operator?

You’re RBS?

Is that more or less than the guaranteed income the government would have raised from the franchise fees and tax that would have come from a franchisee operator?

Er, no. In case you haven’t heard the “franchisee operator” failed utterly in their attempt to run East Coast Main Line successfully. Where do you think the franchise fees and tax would have come from?

The point is not only did the government step in but they didn’t run East Coast Main Line at a loss, they actually made a profit. Something which the private operator couldn’t manage to do.

You mean they couldn’t make a profit after allowing for the franchise fees that they paid to the government?

What I’m saying is that its not like the government is actually 200 million quid better off than if it were privately run, because we would have been getting a similar level of income from the franchise fees and taxes. non?

ernie – you’ve overlooked the £1Bn that National Express had to pay as a fee for operating the franchise for 8 years. The finance cost of £1Bn fully funded is close to or exceeds the £200m “profit” being currently made.

Do you know how rail franchises work? Richard Branson refers to the West Coast Mainline as ‘a licence to print money’ for a good reason. He gets to charge what he likes in his capacity as a monopoly provider (god bless the capitalist mantra of ‘choice’ and ‘competition’ eh?) while simultaneously leeching off the taxpayer for millions in subsidies. Far more than was ever spent on the railways than when they were nationalised.

Franchises operate by the operator basically taking their profits out FIRST. in the first years of th contract. They then pay the fees for the franchise towards the end of the contract. Funnily enough, this is when they invariably start pleading poverty, and walk away from the franchise, leaving the taxpayer to sort out the mess, and pay the bills

Privatisation is great, isn’t it?

The shares are listed officially next Tuesday, but City institutions began conditional dealings on Friday.’

Like Dobbo, I’ve sold mine already to cash the profit (yeah, yeah, evil capitalist and all that). There’s a bit of misinformation about this – given a normal share account you can trade in them today as an ordinary person, it’s just that the dealings are “conditional” so could be wound back if it all get’s withdrawn before Tuesday (it won’t). It does seem a popular misconception that as a private owner of shares you can’t trade yet – I saw an interview with a chap where he was talking about selling when he could on Tuesday. Unless that is you can’t trade in them today if you bought direct through the government website, so maybe the real plebs who bought that way can’t (I opened a HL account just to buy them, so it’s not like I’m special – well not in that sense anyway).

Those who tried to buy more than £10k aren’t very good students of history – given previous oversubscribed floatations I was expecting there to be a cut-off above which you’d get nothing.

So he’s not RBS?

A lesson learned, I blame the BBC. And teachers.

Applied for £10000 worth and only got £750. There was no point holding on to such a small number of shares, so just banked a tidy £265 profit. Thank you David, George, Vince et al.

The way they allowed competition has destroyed what was once a great service, the new competitors get to do all the good/cheap to provide bits.

Selling off the post office was really the only option given the dreadful state its in but the price has been a total travesty, up 40% on first day is an example of the city underwriters dong a terrible job. All the privatised industries have been sold too cheap, this has been the cheapest of the lot.

ernie – you’ve overlooked the £1Bn that National Express had to pay as a fee for operating the franchise for 8 years.

£1.4B over seven years and four months actually. And no, they didn’t pay it.

National Express ‘got away scot-free’ over East Coast failure

“But instead of paying the government £1.4bn over seven-and-a-half years, it paid just £120m as the contract was terminated after less than two years”.

Interestingly one of the companies now bidding for the East Coast line is Keolis, which is majority owned by SNCF the French state rail operator.

So if they are awarded the franchise East Coast profits will be redirected away from the UK government and into the coffers of the French government to be spent on the French people, or reduce their taxes, if they so prefer.

The madness of Tory/New Labour privatisation.

It’s a nice touch for those who’ve made a nice little profit on being the middle man in handing a public utility over to the inevitable profiteering private equity firms, to come on and inform everyone. We normally have to find out about your luck at having some extra cash hanging around doing nowt clever financial acumen, bordering on genius, as you talk about it far too loudly in the pub, before moving on to such other riveting subjects, like the equity in your house, or the tough decision about which company car to choose

So thanks for that. Your a tiger!!!!! Gggggggrrrrrrrrrt!

Nothing of the sort, Binners, only trying to wind up the liberal left members on here!

Fair enough. We all know how sad and pathetic it is to believe that there is such a thing as society, and namby pamby pinko shit like that. They were bleating in the guardian this morning that the nice windfall for city institutions, and people with spare capital might have been better spent on not stopping benefits for disabled people. ****ing losers eh?!!

You carry on though. You’re clearly enjoying yourself. In a retro Harry Enfield character sort of way….

Nothing of the sort, Binners, only trying to wind up the liberal left members on here!

Why, it’s your money too – or are you a non taxpayer?

The way they allowed competition has destroyed what was once a great service, the new competitors get to do all the good/cheap to provide bits.

Damn the EU.

It’s a nice touch for those who’ve made a nice little profit on being the middle man in handing a public utility over to the inevitable profiteering private equity firms, to come on and inform everyone.

<shrugs> It’s not as if us not taking part would have made any difference to anything – even if none of the public had bought any, the institutions would have snapped them up. I see it as reclaiming money from the institutions (you’ll find the majority will be owned by those evil organisations which provide people with pensions), given the government would have got no more than they did anyway, it’s just that somebody else would have trousered the profit. Your opinion on whether it should have been privatised (I’m not convinced it should, though I’m far from hardline on the matter) has no bearing on buying the shares, and I don’t think anybody is claiming it was financial genius to buy them – a bit of a no brainer really for anybody who has £750 they could spare for a few days (I understand plenty of people don’t, but suspect that doesn’t apply to a large proportion of those on here, not even most of the left wingers).

So as RM service goes downhill… will small businesses be forced to use a plethora of local delivery services or things like myhermes

Or perhaps those small businesses might cease to exist or pass cost on to customer

…and what of those who live in places like the highlands – do they expect to get mail delivered?

Sadly the share issue is only a small part of the end of royal mail. RM staff have received 2k each in shares but cannot touch them for 3 years. Contracts and terms and conditions cannot be changed for 3 years.I’ve no doubt that in 3 years the British public will be getting mail delivered on 2 or possibly 3days per week all thanks to the current 9bn pension deficit created remember by our criminals in gov’t.

Conqueror – Member

So as RM service goes downhill… will small businesses be forced to use a plethora of local delivery services or things like myhermes

Do most of those not use RM for distribution/downstreaming?

What has privatisation ever done for us apart from the cheapest energy and telecommunication prices in Europe? Absolutely nothing.

I could see your point, if we had the cheapest energy and telecommunications prices in Europe, which we don’t.

Still going up!

Glad I hung on to them, its like they’re going to keep going up and up forever, I’ll be rich, rich I tell you! 😀

Apparently the Emir of Kuwait has made £200 million profit on his investment. Which can only be a good thing. He probably needs the money. Its like an extension of our foreign aid budget, which we all know Call me ‘Big Society’ Dave is entirely committed too. Its a sort of grand philanthropic gesture from you, the British taxpayer, to the needy around the world. I’m sure you feel as proud and worthy as I do

Anybody cashed in yet?I made £330.00 for two minutes work.Think I should send postie a Christmas card now.It might even get to him, now the efficient wealth creation sector is involved.