View from City Road: Privatisation stuck in the post

If privatising the Post Office was ever a serious runner, then Michael Heseltine's unfortunate heart attack has probably dealt it the coup de grace.

It is almost a year now since the President of the Board of Trade announced his review into the Post Office's future ownership and organisation. A lot of mail has passed through the sorting office since then.

First the minister at the Department of Trade and Industry most passionately in favour of selling off postal services, Edward Leigh, has been sacked. Second, by-electionitis has made the Government more wary of pursuing such a controversial policy. Third, record profits have reminded ministers once again just what a splendid cash cow the Post Office is. Last year the Exchequer milked it for pounds 80m. This year, faced with a pounds 50bn public sector deficit, it plans to extract pounds 180m.

Even if the Government still wanted to proceed, it has been robbed indefinitely of one of its most effective operators in Mr Heseltine. It is now not so much a question of when his review will be published but whether.

Having raised expectations, however, the Government is stuck with the problem of what to do next, not least with the Post Office's top brass who have warmed to the idea of privatisation (and, no doubt, the post- privatisation pay rises that usually follow).

Michael Heron, Post Office chairman, re-iterated yesterday that he wanted commercial freedom to expand and tap new finance. That is not on while the Post Office remains in the public sector. But the longer it is denied the opportunity to widen its markets, the greater becomes the threat to the shrinking Post Office network. This quandary will still be on Mr Heseltine's desk when he returns.