Commentary: Private mail poses problem for Heseltine

Michael Heseltine did not so much light the blue touch paper as lick it with yesterday's announcement of a wide-ranging review of the future structure and ownership of the Post Office.

Shorn of Whitehallese, what the President of the Board of Trade is contemplating is the privatisation of the Royal Mail.

However, in order not to frighten too many horses, especially those of the Tory shire variety, Mr Heseltine has made explicit his 'non-negotiable' commitment to maintain a nationwide delivery network encompassing every part of the country, and a uniform price structure.

Therein lies his difficulty. There is a strong case for exposing the Post Office to more competition if that will improve standards of service and benefit the customer. But it is harder to see how this can be achieved, as far as the Royal Mail is concerned, if at the same time there is an unbreakable commitment to a universal postal service that protects the interests of customers in rural areas.

Denied the opportunity to cherry- pick lucrative business, such as letter delivery from city centre to city centre, private operators may be reduced to little more than contractors to the Royal Mail.

No doubt Mr Heseltine's review will go through the motions of eliciting private sector interest in various parts of the Post Office. A similar exercise is already taking place with its parcels division, Parcelforce. So far it has yielded two outside expressions of interest. But one suspects that Mr Heseltine's preferred solution is to see both Parcelforce and the Royal Mail privatised as employee-management buyouts.

In the case of the Royal Mail, any move towards the private sector would have to coincide with a sharp reduction in its present monopoly, which entitles it to deliver all mail costing less than pounds 1 to send.

Such a solution would do two things. It would free the Royal Mail to attract additional capital into the business and it would also open up a greater range of postal services to competition supposing the monopoly limit was set just above the price of a first class stamp.

Whatever Mr Heseltine's review yields, however, it will not amount to full-blooded privatisation.