Post Office take increases

The Government will slash the amount of money it takes from the Post Office every year andgive it more commercial freedom to invest and expand. The decision follows the collapse last year of plans to privatise the Royal Mail and ParcelForce while keeping the post office counters in public control.

The move came as the Post Office revealed a price freeze on first- and second-class letter post until March 1996 or beyond. A spokesman said it had to be competitive to fight the threat from fax and telephone.

The relaxation on rules governing the Post Office come after many months of concern over its future. Its management has been lobbying fiercely against the "crippling" external finance limit - a seemingly arbitrary amount taken by the Treasury each year.

The EFL absorbed £182m of £306m pre-tax profits in 1993/94 and rose to £226m last year, for which profits are yet to be announced. The Government will in future set the EFL at about half projected profit after tax, allowing the Post Office to plough more back into the business.

Michael Heseltine, President of the Board of Trade, said: "While no responsible government could undertake to ring-fence the Post Office entirely from the pressure on public spending, I am prepared to agree that in future we will aim to set the EFL at about half the Post Office's forecast post- tax profit." He also said that formal restrictions on Post Office investment and detailed scrutiny by the Treasury of individual projects would be replaced by a "more strategic corporate plan".

The statement was attacked as "a modest step and pathetically slow in coming" by Dr Jack Cunningham, shadow secretary of state for trade and industry.

He called for the Post Office to be established as a public limited company within the public sector and to be freed from the constraints of the public sector borrowing requirement. "That would end for once and for all this nonsense. There is no doubt that to safeguard the future of the Post Office we would take such a major step," he said.

"What the Government is doing is no great leap forward. It does not go nearly far enough."

Mr Heseltine also said the Post Office might in future have more freedom to form joint ventures and to move into new markets related to its existing business.

He would "consider" requests but would want to see these related to making much more use of the Government's private finance initiative.

He stressed that funds for any expansion must come from increased efficiency and not higher prices. "There must be real pressure on the efficiency of the Post Office. I am about to appoint consultants to carry out a performance review of the operations of the Post Office."

Mike Heron, chairman of the Post Office, gave a guarded welcome. "After more than 30 months of government uncertainty over the future of the Post Office, which has benefited no one except our foreign competitors, the door is now ajar," he said.

Start your day with The Independent, sign up for daily news emails
News
peopleNational cycling charity CTC said he 'should have known better'
News
i100
Life and Style
The fashion retailers have said they will now not place any further orders for the slim mannequin
fashion
Arts and Entertainment
Ugne, 32, is a Lithuanian bodybuilder
tvThey include a Lithuanian bodybuilder who believes 'cake is a sin' and the Dalai Lama's personal photographer
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Research Associate / Asset Management Research Analyst

£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Ashdown Group: Finance Accountant - Financial Services - Central London

£30000 - £35000 per annum + benefits : Ashdown Group: Finance Accountant - Fin...

Ashdown Group: Chief Technology Officer (CTO) - Glasgow

£90000 - £98000 per annum + benefits : Ashdown Group: A truly exciting opportu...

Day In a Page

Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash
I would never quit Labour, says Liz Kendall

I would never quit party, says Liz Kendall

Latest on the Labour leadership contest
Froome seals second Tour de France victory

Never mind Pinot, it’s bubbly for Froome

Second Tour de France victory all but sealed
Oh really? How the 'lowest form of wit' makes people brighter and more creative

The uses of sarcasm

'Lowest form of wit' actually makes people brighter and more creative
A magazine editor with no vanity, and lots of flair

No vanity, but lots of flair

A tribute to the magazine editor Ingrid Sischy
Foraging: How the British rediscovered their taste for chasing after wild food

In praise of foraging

How the British rediscovered their taste for wild food