Heseltine: end post monopoly

Exclusive: leaked letter reveals Government determination to beat strikes

Michael Heseltine has ordered Ian Lang, President of the Board of Trade, to prepare for the suspension of Royal Mail's monopoly of letter delivery, in a move to counter strikes by postal workers.

The proposal to open the business to private companies, made last week in a letter from the Deputy Prime Minister, will raise the stakes in what is becoming a bitter dispute over pay and working practices.

More than 100,000 postal staff were working overtime yesterday to clear the backlog of 70 million letters after Friday's 24-hour national strike, the first in the business for a decade.

Another day-long strike has been called for Thursday and Mr Heseltine has told Mr Lang: "I hope you are preparing to suspend the monopoly in the event of this action going on."

The Deputy Prime Minister argues that, while this would not help domestic deliveries, it would be "very important" for business post.

The move was condemned by Peter Hain MP, until recently sponsored by the Communications Workers' Union which has called the stoppages. "Sabre- rattling about the monopoly simply gets in the way of promoting a settlement," he said. "Heseltine is a privatisation fanatic, and he will use any excuse to damage Royal Mail so that it can be seen to fail and therefore become a candidate for privatisation."

While President of the Board of Trade, Mr Heseltine wanted to sell off Royal Mail, but backed down in the face of a Tory back-bench revolt.

Royal Mail has a monopoly over letters that cost less than pounds 1 to handle. Private mail delivery firms have long argued that they should be allowed into this market, but the Department of Trade and Industry has refused to abolish the monopoly. It was last suspended a quarter of a century ago when postal workers went on strike for many weeks. The Post Office was given authority to waive the privilege in certain cases "on merit". Hundreds of operators were allowed to carry letters.

Post Office managers point out that, under the British Telecommunications Act of 1981, they have to be consulted before the monopoly is lifted. "The Royal Mail would give full consideration to such a request, but so far no such approach has been made," a spokesman said.

The reality, however, is that Post Office managers would bitterly oppose the suspension of the monopoly. They argue there is no need for it because the strikes are lasting only 24 hours. A request to suspend the monopoly has come from the Direct Mail Association, representing companies which deal with advertising material sent through the post.

The argument for the present law, which originated in the last century, is that it prevents private companies from "cherry-picking" Post Office business - taking the most profitable bulk business services in major cities, but ignoring the Scilly Isles to Outer Hebrides run. Breach of the monopoly is a criminal offence and can lead to unlimited fines.

Royal Mail hopes that further action could be averted by negotiations which resume tomorrow. However, management has previously warned that the pay and productivity offer may be withdrawn if action continues. The latest offer came on top of a 3.5 per cent annual increase, management said. Nearly all employees would gain from it, with the lowest paid on pounds 10,150 receiving pounds 11,000. On average, postal workers stood to enjoy a rise of up to pounds 30 a week on top of a drop in weekly working hours to 36.5.