The sale of a big stake in the Post Office is now said to be unlikely - although a final decision will not be taken until autumn.
In its manifesto Labour pledged more commercial freedom for the Post Office, whose future was unresolved after an abortive attempt at privatisation by the former President of the Board of Trade, Michael Heseltine. A full- scale privatisation, worth up to pounds 4bn, or the sale of a majority stake has, however, been ruled out, with ministers re-iterating that the Post Office will remain a public body.
In April the DTI confirmed that the sale of some shares was still being considered as part of a review expected to be completed in the autumn.
That left the possibility of a sell-off of as much as 49 per cent of the company. Yesterday one senior government source said that a sell-off of that magnitude was unlikely, although Mr Mandelson has not yet made a final decision on the issue.
The new minister last week went out of his way to court the unions and to distance himself from his image as a hardline moderniser. On Friday he met John Edmonds, the general secretary of the GMB union who is also president of the Trades Union Congress.
The Post Office will, however, be one of his hottest potatoes, with the Treasury thought to favour some sort of revenue-raising sale. Margaret Beckett, Mr Mandelson's predecessor, is thought to have opposed any direct sell-off of part of the Post Office. But the Treasury is much keener on some form of partial privatisation which, in addition to its revenue- raising benefits, might help the Post Office to compete with overseas competitors.
Mr Mandelson's caution over privatisation is likely to be bolstered by the views of the new Minister of State at the DTI, Brian Wilson, who was a fierce opponent of the Tory plans for a sell-off.
Yesterday Alan Johnson, MP for Hull West and Hessle and former general secretary of the Union of Communication Workers, said: "I don't believe Peter Mandelson's appointment is bad news for those who support public ownership of the Post Office. He is bound to review all the options, but that is what is needed to ensure that the Post Office gets genuine commercial freedom."
The amount of cash the Treasury extracts from the Post Office through its External Financing Limit is due to rise from pounds 330m in the current financial year to pounds 335m next year and pounds 345m in 1999-2000. But the Post Office has warned that if the Government continued to milk it for profit without granting more commercial freedom, the value of the business would halve from its present level of pounds 3.25bn within five years.
The Post Office is pressing for the right to enter joint ventures with private partners, raise funding on the private market and offer a wider range of services, such as insurance, across its counters network.
It is also interested in a joint venture to secure the next National Lottery franchise.Reuse content