Anthony Hilton: Privatised Royal Mail set to follow a wasteful trend

Prime sites will be stripped out for development and the operations side will go to hell

Last year the Royal Mail sold a site in Rathbone Place, just off Oxford Street in the West End, for £130m. Then on Monday of this week came news that it is planning to put houses and flats on another, less expensive central London site: Mount Pleasant, the sorting office on the Camden-Islington border which we see on television every year in news reports on the build-up of Christmas post.

While Rathbone Place was small, the 12-acre Mount Pleasant project will be one the biggest in years in the heart of London. Its supporters hope it will net the Post Office at least £1bn. But will it? Successive governments since Margaret Thatcher's time have wanted to privatise the Royal Mail, and this time it looks likely tohappen, now that one of the major hurdles has been removed with the transfer of the costly pension scheme back to the taxpayer. A sale in the next couple of years looks likely.

So don't you just know what's going to happen? The Government will sell the business to a private equity company for a depressingly small sum which it will justify by saying that the business loses money. After a depressingly brief period the buyer will home in on all those other prime sites which, like Rathbone Place and Mount Pleasant, the Royal Mail owns in most of our major cities and towns. It will then strip these out and sell them for development, making vast profits in the process. Meanwhile, the operational side of the business will continue to go to hell in a handcart.

It has happened before – with the privatisation of British Rail, the water companies, with dozens of MoD sites – where privatisation failed to reflect the value of the land being sold. The redevelopment of Royal Mail sites in the coming years could make a lot of money and it could be used to finance a postal delivery service fit for the 21st century. Unfortunately, experience suggests that that is not the way to bet.

a.hilton@independent.co.uk