John Grogan: If Labour can't save the Royal Mail, it's lost a little of its soul

THE Royal Mail service was first made available to the public by Charles I in 1635 and the General Post Office (GPO) was officially established by Charles II in 1660.

Nowadays, Royal Mail Holdings plc owns Royal Mail Group Limited, which in turn operates the brand Royal Mail (UK Letters), Parcelforce Worldwide (UK Parcels) and General Logistics Systems. Post Office Limited, which provides counter-services, is a wholly-owned subsidiary.

Just before Christmas, Peter Mandelson announced that he wanted to part-privatise the Royal Mail while leaving Post Office Limited in public ownership.

The Dutch company TNT isthe favourite to take a minority stake. In 21 out of 27 European Union countries, the mail and postal services are still totally owned by the public as, indeed, is the case in the United States.

One common characteristic of all six mail services in Europe which are fully or partially privatised, is that it costs more to post a letter and the service is also less comprehensive than it is in the UK.

Generally, door-to-door delivery is only guaranteed for five as opposed to six days a week and, in TNT's home market of the Netherlands, it costs nearly twice as much to post a 50g letter as it does in the United Kingdom.

After nearly 500 years of history, we are now at a crucial moment of decision.

Does the nation part-privatise the Royal Mail in order to inject private capital and management – or do we try to make a success of the mail and postal services as an integrated public service?

If we opt for the former choice, we have to accept that private capital will demand a good return on its investment which, as elsewhere, will mean higher prices and continuing demands to reduce the scope of the universal service obligation which currently guarantees six days a week delivery.

Whoever owns the Royal Mail, it certainly needs modernisation, particularly in the sorting and delivery offices. Indeed, successive governments should have modernised the mail before opening the market to competition.

Other operators have come in and cherry-picked the more profitable mail of big business which has been the only sector to really benefit from liberalisation whereas ordinary households and small business have had to put up with later deliveries and fewer collections.

The heart of the debate is that modernisation need not mean part-privatisation. Last October, with the support of ministers, the Labour Party Conference declared that it was in favour of "a wholly publicly-owned, integrated Royal Mail Group".

As far back as February 2007, the Government agreed to a 1.2bn debt facility on commercial terms to modernise Royal Mail. Lord Mandelson, in his statement to the House of Lords on December 16, said that by March 2008 "Royal Mail had spent only approximately one-third of what it had intended to spend

in its original master modernisation plan".

The Business Secretary ascribed this to "a failure of drive, confidence and unity within the Royal Mail".

The implication seems to be that the Royal Mail chairman Allan Leighton and chief executive Adam Crozier have been sitting on the investment funds after a previous scheme they had been promoting to issue shares in the Royal Mail had been rejected by Ministers.

Now that the Government is advertising for a new chairman for Royal Mail, many Labour backbenchers would argue that it is time to have a boss who genuinely wants to make the Royal Mail work as a public enterprise, and is prepared to enter tough and constructive negotiations with the postal unions to achieve this.

Many would also believe that it is time to ask some of the private mail companies to pay a charge towards the costs of the universal service obligation, particularly as they currently use Royal Mail to deliver over the "last mile" from sorting office to doorstep.

It is not inevitable that the Post Office and Royal Mail go into decline. Some have suggested that the former becomes a People's Bank. As for the Royal Mail itself, the use of the internet and email can generate extra business with home delivery of items bought online.

The tremendous national asset of dedicated postal workers delivering to every address in the country could be used more. Why not guarantee an early delivery to every small business?

If a Labour Government cannot bring itself to promote such a vision of the future, I fear we have lost a little bit of our soul.

When Margaret Thatcher tried to privatise the Post Office, it was said to be the discreet expressions of disquiet from Her Majesty, about changing the status of the Royal Mail, which were decisive in bringing about a change in policy.

Perhaps it's time for concerned Labour backbenchers to seek an audience with the Prince of Wales.

John Grogan is the Labour MP for Selby.