The National Audit office reported in April that the privatisation of Royal Mail short-changed taxpayers by £1 billion. If that were not bad enough, 16 institutional investors given priority by the government in the queue for shares sold them within weeks despite having led the government to believe that they would hold their investments for the ‘long term’. As if! Such is the culture of short termism pervading capitalism in general and the City of London in particular, such understandings are worthless. Nothing gets in the way of making a quick buck.
Given this blatant rip off at the time that ‘our’ Royal Mail was sold off, who can now be surprised to learn that one of the jewels in the crown of Royal Mail, the former Mount Pleasant sorting office, is to be sold for an estimated £1 billion for luxury housing. This helps explain some, but of course not all, the jump in share price immediately following the flotation. The flotation price was supposed to reflect property development value, but the ruthless way in which this asset is to be exploited could not have been fully reflected in this price.
At a time when Londoners are being priced out of the property market, the Mount Pleasant site could have made a small but significant contribution to London’s stock of genuinely affordable properties. Royal Mail has, however, as a public company, only one overriding objective, enshrined in statute, which is to maximise shareholder value. This means minimising the proportion of affordable homes in the development – fewer than a quarter of the homes fall into this category, reflecting the minimum needed to secure Mayor Boris Johnson’s approval of the development – and maximising the interpretation of what is meant by “affordable”. A two bedroom “affordable” home in this development is currently expected to cost around £1,700 a month, or £20,400 a year. Assuming renters/mortgage payers can afford to pay no more than a third of their pre-tax income on accommodation, a couple would need a combined income of £60,000 per year to afford this “affordable” home. A couple both working 40 hours a week for 50 weeks a year for £8.85 per hour, the London Living Wage, which is better than many earn on the statutory minimum wage of £6.50 per hour, would together earn only £35,400 a year. Their mortgage or rent would consume 58% of their combined income – clearly unaffordable.
The solution? Simple! Re-nationalise our public services at no more than the prices they were sold off for; and public investment in decent homes for all.