Minister heads of strike threats by denying Post Office sell-off

THE GOVERNMENT will today seek to head off a threat of strikes by Post Office workers by promising that it does not intend to privatise the business.

Trade union leaders have warned MPs that plans to turn the Post Office into a plc, to be unveiled in a White Paper today, threaten to "plunge us back to the bad old days of industrial strife". But Stephen Byers, the Trade and Industry Secretary, will announce safeguards to make it difficult for the Government to sell off the Post Office after giving it more commercial freedom in the public sector. His White Paper will include a firm "guarantee" that further legislation would be needed before any sale of Post Office shares. The aim is to allay union fears that the Treasury will order a step-by-step privatisation of the new company to raise revenue.

"We will not be selling the Post Office," a government insider said last night. "Any sale of shares would require a further Act of Parliament." The White Paper will confirm that the Post Office monopoly on letters costing under pounds 1 will be cut to 50p, allowing rival firms to enter the market. The company will hand over much less of its profits to the Treasury and will be allowed to invest up to pounds 75m a year, but further spending will need government permission. The legislation to implement the White Paper will also enshrine in law for the first time the guarantee of a universal delivery service to all homes in Britain from Monday to Saturday.

But the unions may still have doubts about the Government's proposals. In a letter to MPs, Derek Hodgson, general secretary of the Communication Workers Union, warned that cutting the monopoly could cost the Post Office pounds 100m a year and endanger the universal service. "This is not the way we expected a Labour government to keep its promises to create a world- class Post Office," Mr Hodgson said. "We believe very strongly that a Labour government, if it is to be taken seriously and respected, must not give promises in opposition only to break them when coming into power." He warned that the White Paper would bring "uncertainty and difficulties for the Post Office and its long-suffering staff which could have adverse effects on industrial relationships."

Nick Hawkins, a Conservative frontbench spokesman, said the "extraordinary" letter showed that Labour's union paymasters were now flexing their muscles. "Despite Tony Blair's changes, the militancy remains just beneath the surface and we face further winters of discontent," he said.

The Government denied reports that its blueprint for the Post Office had changed since Peter Mandelson, the former Trade and Industry Secretary, unveiled them in December.