Post Office makes bid for freedom

Record-breaking Christmas fuels demand for more leeway to take on private sector

The Post Office is lobbying the Government and the Labour Party for more freedom to take on the private sector following a record Christmas for Royal Mail deliveries.

Post Office Counters, the subsidiary responsible for Britain's 19,500 post offices, has already been allowed to sell new products and services - from National Lottery tickets to mobile phones - since Tory backbench rebels scuppered privatisation in 1994.

In 1997, it plans to move into household and other personal insurance, deepening existing ties with Royal & Sun Alliance.

With a pounds 1bn computerisation project, starting next autumn, it will also roll out full travel agency services as part of plans to lift revenue from new services to pounds 150m by the year 2000.

It resents, however, paying over all its profits in tax and Treasury levies - amounting to pounds 300m this year - while having to go cap in hand to fund investment.

The Department of Trade and Industry has complete discretion over approval of new over-the-counter services, while the Royal Mail and Parcelforce delivery arms have been held on a tight leash.

"There are major constraints on what we can do. We would like them relaxed," a Post Office spokesman said. "Look at what we've done with Post Office Counters. There's so much more we can do with the Royal Mail and Parcelforce, such as joint ventures with airlines."

This Christmas, the Post Office delivered more than 2 billion cards and letters for the first time, up from 1.8 billion last year. Some 25 million parcels were delivered, up 20 per cent on 1995.

On 16 December 128 million items were posted, the most in any day of the Post Office's 350-year history.

Last week chief executive John Roberts announced half year pre-tax profits of pounds 230m, up from pounds 170m last year, following the 1p increase in stamp prices in July.

The Post Office blames the Conservatives' cash demands for the rise and it is continuing to press for more commercial leeway.

"Lifting the burden of the cash targets would help us develop new businesses and new markets," the spokesman said. "We could raise money on the Stock Exchange to fund major investment projects, which we cannot do now."

The Labour Party would be sympathetic to helping the organisation become more competitive, but pressure on the public purse would mean it would be unlikely to relax Treasury levies if elected. Privatisation, still on the Conservative agenda, would be a dead issue.

Raising money from the markets does not necessarily mean a sell-off, industry sources stress. More innovative public-private partnerships than at present are possible.

Labour might be persuaded to remove curbs on the Royal Mail and Parcelforce, while retaining the Royal Mail monopoly on items posted for under pounds 1.

In October, the DTI threatened to suspend the monopoly after postal workers again voted for industrial action in a bitter dispute over pay, job cuts and new working practices.

Post Office Counters is the UK's largest retailer and has 150 of its offices in out-of-town supermarkets such as Tesco, Asda and Safeway.

It recently teamed up with Vodafone to sell mobile phones and offer billing services and offers travel insurance, bureau de change and Western Union international money transfer services.

With computerisation, it also hopes to offer airline ticket booking services, which are now on trial in its Trafalgar Square office. Theatre and concert tickets are also on the agenda.

The push into financial services includes health, life, accident and redundancy insurance, with products already on trial in selected areas.

Computerisation will also cut queue lengths and speed up benefit processing.