The permanent fragmentation of the postal system was in prospect last night after the Government threatened to suspend the Royal Mail's monopoly on delivering letters for up to four months unless strikes are called off.
The announcement could also resurrect calls for the privatisation of the whole system - a policy abandoned after a revolt among Conservative MPs.
As peace talks continued at the conciliation service Acas, the Department of Trade and Industry disclosed that private operators could be allowed to enter the market for an initial period of a month from next Friday when the Communication Workers' Union plans a serious escalation of industrial action.
Amid accusations that they were inflaming the dispute over "team-working", ministers proposed a suspension of three months if the disruption continued. Sources believe the Cabinet could come under considerable pressure from private operators and backbench MPs to lift the monopoly permanently allowing couriers to deliver letters for less than pounds 1.
The monopoly was last suspended 25 years ago when postal workers went on strike for several weeks. Unlike the Royal Mail, the private sector would have to charge 17.5 per cent VAT on letters under European law. Customs and Excise said however that most VAT-registered businesses using the service would be able to claim the tax back.
The political furore over the dispute continued with Ian Lang, President of the Board of Trade, urging shadow ministers to "come off the fence" and denounce the strikers, while Labour accused him of "playing politics" with the conflict.
The union has so far staged three 24-hour stoppages, the last on Thursday. The strike next Friday will last 36 hours, to be followed by a 48-hour walkout from 31 July and another day-long stoppage on 6 August.
Mr Lang said, "Post Office employees will know that it's their bone- headed union which is responsible for the loss of the monopoly".
Alan Johnson, general secretary of the Communication Workers' Union, said he was astonished that the minister should make such a "provocative and inflammatory" decision when both sides were seeking to arrive at a settlement.
At London Underground management said there was little point in the unions' suggestion that the drivers' dispute should be taken back to Acas. The unions plan eight further strikes up to 9 September in support of a one-hour reduction in the working week.Reuse content