The Rosewall affair signifies everything that is wrong with Royal Mail. The two-and-a-half ton Rosewall sculpture by Dame Barbara Hepworth was acquired by the Ministry of Works and the Post Office in 1963 for a new Post Office Pension Fund building in Chesterfield, where it became a landmark — until last October, when it took a trip to the Bonhams saleroom in London. Royal Mail announced that Rosewall was no longer part of its ‘cultural heritage’, which of course had nothing to do with the £620,000 it was expected to raise at auction. But after much protest it was withdrawn from sale and repatriated to Chesterfield, presumably along with a very large haulage bill.
The whole saga is characteristic of a state-owned near-monopoly obsessed with quick financial fixes and unable to find an economic model that works. Last week it resorted to begging the government for a state-funded rescue package: chairman Allan Leighton and chief executive Adam Crozier wangled a market-distorting £3 billion to pay for ‘modernisation’ costs as well as plugging part of a £5.6 billion pension fund gap. But handouts like this are never the answer. The Royal Mail’s problem lies in its culture of inefficiency and resistance to change. Leighton and Crozier will receive handsome bonuses for achieving a record £355 million operating profit last year — but this performance had a lot less to do with management brilliance than with service cutbacks.
Post offices have been closed, deliveries and jobs (30,000 of them) axed, while our mail continues to disappear. If the Hepworth sculpture had been returned to Chesterfield by Parcel Force it would probably still be lost in a London sorting office, or in small pieces. Last year 14.6 million letters and parcels handled by Royal Mail were lost, stolen or damaged. In my experience in south London, postmen deliver other people’s letters or none at all. Last month one of them delivered a note to my flat saying, ‘we tried to bring you a package while you were out’. I watched as he walked away without bothering to ring the bell. Meanwhile, we can expect even lower levels of service if the government adopts an Audit Commission suggestion that postmen, along with dustmen and street cleaners, should help fight crime by devoting part of their time to reporting antisocial behaviour and low-level offences.
There are solutions, however. A quick fix occurred to me when I went to Clapham sorting office to collect the undelivered package. There was a strong whiff of drains, and the aggrieved staff explained that the smell was a ripe Camembert which a customer had failed to collect. So if you want guaranteed fast delivery, post a cheese with every letter. For the longer term, privatisation is the only way forward — and there are signs at last that this is back on the agenda. Only if Royal Mail faces the rigour of real competition against the likes of Deutsche Post or the Dutch TNT will the billions spent on modernisation have any real impact.
Likewise, the privatised water companies would benefit from the bracing effects of greater exposure to market forces. Years of under-investment before privatisation means that companies such as RWE, which owns Thames Water, and United Utilities already spend a substantial chunk of their income, which is set by the regulator, on capital investment in pipes and reservoirs. But not enough to avert the threat this year of severe water shortages and ‘drought orders’ in London and the south-east. We need to incentivise the companies to solve their inherited infrastructure problems more quickly by moving to a system where their profits are directly linked to consumption. Water companies are rewarded from a basket of targets largely unrelated to how much water is actually consumed. Only 30 per cent of homes will be fitted with water meters by the end of 2007. Something has gone drastically wrong in one of the world’s leading capital cities if water chiefs are considering towing icebergs from the Arctic.
There is no shortage of water at the RAC in Pall Mall, either in its Edwardian swimming-pool or in the Great Gallery restaurant, where staff have been topping up whisky tumblers for almost a century, and which remains a firm favourite among City grandees who lunch — benefiting from a diaspora of captains of industry who never quite recovered from the modernisation of the Savoy Grill. But the RAC has been undergoing changes of its own. For years it held fast to a strict dress code of ‘tailored jacket and trousers … collared shirt and tie at all times’, with women dressed in ‘commensurate formality’. Not any more. In an attempt to win over a younger clientele the RAC has pronounced that business suits can be replaced at certain times of day, in certain rooms, with certain alternatives. In fact the new dress regulations are so complicated that officials have produced a booklet so ‘members and their guests can be confident of meeting the dress code at all times’. Smart casual dress (there is a definition) may be worn in the Brooklands Room from 6 p.m. on Fridays until 10 a.m. on Mondays and blue denim may be worn when going directly to or from the sports area. Tailored shorts may be worn in the Lounge Bar at Woodcote Park, the RAC country club in Surrey, but only until 6pm, and if you are a lady golfer at the country club ‘shirts should be tucked in or … long enough to avoid showing midriff’.
But what has caused most hilarity in the past week is the dress code for the newly introduced mixed Turkish bath sessions, another development aimed at attracting a more liberal-minded membership. The club has decreed, on a gold-embossed lacquered wooden notice, when it is appropriate for members to expose themselves. ‘During mixed access days to the Turkish Baths, all members and their guests are required to wear a wrap, swimming-costume or towelling robe when entering, leaving or resting in the Frigidarium area. Please also wear a wrap, or swimming costume in the Tepidarium, Laconicum and Caldarium areas, but it is acceptable for all bathers to be naked in the steam room, plunge pool and showers.’ Fortunately, suits and ties still rule the roost in the Great Gallery restaurant; only the crab is undressed.
Rupert Steiner is City editor of the Business.