Mandelson 'won't privatise Royal Mail'

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The Government is ruling out any moves to privatise the Royal Mail, days before the publication of a long-awaited review into the future of the postal group.

An independent study by Richard Hooper, a former deputy chairman of media watchdog Ofcom, was being studied by ministers over the weekend and is expected to be made public in the coming days.

It is expected to recommend modernisation for the service in order to maintain a "universal service" and letter deliveries across the country six days a week.

The report will also warn of the Royal Mail's pensions deficit, which was £3.4 billion in 2006 but is likely to have doubled when a new valuation is made next year.

There has been speculation over whether the service could be broken up or even privatised, but a source close to Business Secretary Lord Mandelson said: "Our concern is to save the Royal Mail and secure its future, not privatise it. We have a manifesto commitment to a publicly-owned Royal Mail and we will not be setting that aside."

The Royal Mail is facing competition from a number of rival firms as well as changing communication trends because of modern technology.

Initial findings from Hooper's review published in May this year said the Royal Mail faced "radical" changes.

The report said there was a "substantial threat" to the financial stability of the Royal Mail and the universal postal service from issues such as industrial action and the multi-billion pound pension deficit.

"We have come to the conclusion, based on evidence submitted so far, that the status quo is not tenable," said the interim report.

A Business Department spokesman said yesterday: "We have received the final report and we are carefully considering it this weekend. It will be published in due course."

The Communication Workers Union would welcome assurance on the continued public ownership of the Royal Mail as well as any Government moves to help ease the pensions deficit.

The union is pressing ahead with a strike this Friday by up to 2,000 of its members at a number of mail centres, mainly in the North West, in a row over office closures.