AT LAST month’s Labour Party conference, shadow chancellor John McDonnell floated the policy of a future Labour government introducing an ‘inclusive ownership Fund’ under which companies would be forced to give shares to their workers.
Yesterday, Royal Mail workers got a taste of what share owning really means. In 2013 Royal Mail was privatised by the then Tory-led coalition with all employees given about 613 free shares in the new company as part of a deal with the leadership of the Communications Workers Union (CWU).
These free shares came with the condition that if they were sold before five years after flotation, the seller would have to pay tax on the money received. After five years, any sale would be exempt from tax or national insurance.
The first date that these shares could be sold without any penalty was yesterday, the day in which postal workers discovered that the share price in Royal Mail had dropped dramatically following the company issuing a profit warning on 1st October.
In fact the share price in RM now stands just slightly above the price the shares were offered at in 2013, losing nearly 30% of their value in just 18 days. Postal workers who were promised large returns on these free shares under a dynamic new privatised postal system, woke up on Monday to discover that they had lost up to £850 as a result of RM’s announcement that company profits would not be as large as predicted in the latest financial quarter.
Understandably, this has led many of these workers to angrily accuse the company of deliberately issuing a profit warning less than two weeks before the first date they could sell without incurring tax costs, something RM vehemently denies. However, it is undoubtedly true that a large amount of share selling by employees on one day would also have been likely to depress RM’s share price, so it is not surprising that workers view the timing with extreme cynicism.
What this entire episode does demonstrate conclusively, however, is that the idea that share ownership by workers in their companies is a way of exercising some form of workers’ control or produce financial benefits for them, is nothing more than a reformist pipe dream.
All these free shares have had no effect on the cost-cutting, job losses and speed-ups that RM has inflicted on its workers since the company was privatised. While the workers have seen any gain from their free shares disappear, the same cannot be said for the corporate shareholders who jumped on the privatisation bonanza of the postal service, sold off at a cut-price by the Tories and LibDems.
In the first four years of privatisation, these non-employee private shareholders were paid £626 million, a staggering £500,000 a day, while the Tory government received £81 million during the two year transition period following flotation. At the same time, in those four years up to 2017, 142 delivery offices were closed and RM sold off more than £200 million worth of property.
Cutting back postal workers jobs, closing down offices, cuts to workers’ pension schemes and flogging off property while dishing out millions to the hedge fund shareholders, is the inevitable result of privatisation, not just of RM but of every single public service that has been looted in this way and no amount of free shares can change this reality.
The dramatic crash in the share price will be used by RM as a weapon to use against the CWU in its drive towards even more ‘efficiency savings’, pressing for even bigger cuts in the face of competitors who can cherry pick the most profitable areas of parcel delivery while RM is bound to providing a universal service.
Jobs and conditions, along with the very existence of vital public services, will never be defended by workers being given shares as McDonnell proposes. The only way to defend all public services is to demand that this Tory government be brought down and replaced with a workers’ government that will renationalise without compensation every privatised service and expropriate the bankers and bosses as part of a planned socialist economy.