Speaking at a conference in London, Mr McLoughlin said: 'We believe that private sector freedom, coupled with regulation in the public interest, is the best means of delivering significant benefits for Post Office users.'
He said that keeping the Royal Mail in the public sector would raise questions as to whether it would compete fairly with private sector rivals. A government acting as owner and regulator might find it hard to convince the industry that its decisions were impartial.
A further problem would be borrowing. The Post Office needed freedom to fund expansion and under government control the taxpayer would bear the brunt.