Sell the Mail, urges Blairite think-tank

The Institute of Public Policy Research, Labour's favourite think-tank, will tomorrow urge the Government to consider privatising Britain's postal service.

In a report written by Dan Corry, the one-time special adviser to former Transport Secretary Stephen Byers, the IPPR will claim that in public hands the Royal Mail may be unable to compete in the deregulated postal market.

"The question still remains as to whether 100 per cent public ownership is the equivalent of a trip to never-never land," the report will say. "Is it fair to have competition soon to be rampaging through postal services and not let the Post Office move fast to make the investment decisions and deals that it will need to survive in this world without government having to approve almost its every move?"

Mr Corry, who is now executive director of the New Local Government Network, will argue that as a first step the Government must drop its manifesto commitment to keeping the postal service in the public sector. "The manifesto strikes me as a strait- jacket," he told The Independent on Sunday.

He is also critical of the Government as the sole shareholder in Royal Mail. "Maybe government can become a better shareholder. It would help if the job was taken more seriously in Whitehall and top people were put on the case," Mr Corry will say.

The report comes at a critical time for the loss-making Royal Mail. Its chairman, Allan Leighton, is expected to announce tomorrow that planned 1p price rises on first and second-class stamps will be introduced on 8 May. Taking a first class stamp to 28p and a second-class to 20p, this will generate an extra £170m a year for the Royal Mail.

The announcement will come after a lengthy battle with the industry's regulator, Postcomm. However, Royal Mail is threatening to seek a judicial review over separate Postcomm proposals to cap the charges it levies on rival operators to use its network.

Postcomm wants to set a limit of 14p-per-item of post; Royal Mail believes that 20p is a fair price.

The IPPR report, which examines regulation under the Government, will also urge new media regulator Ofcom to consider whether to break up BT.

"The great mistake we made in telecoms was not to break up BT," Mr Corry will say. A former special adviser to the Department of Trade and Industry, he will argue that because of the consistent claims that BT is still stifling competition, Ofcom should "try and settle the issue once and for all by referring it to the Competition Commission".