Ministers plan to end post monopoly

The postal workers' dispute entered a far more serious phase yesterday when the Government disclosed that it was preparing to suspend the Royal Mail's monopoly on delivering letters.

The news came amid attempts to start fresh peace talks after the Communication Workers' Union ordered a considerable escalation of the action on Thursday with four new strikes.

In a letter to the Post Office, Ian Lang, President of the Board of Trade, set in train the consultation process needed to lift the Royal Mail's sole right to deliver letters for less than pounds 1.

It was not clear yesterday how long the period of consultation or any possible suspension might last, or which parts of the mail might be up for grabs.

Alan Johnson, joint general secretary of the union, said it was "very unlikely" they would change the system just for the period of the dispute. It could lost "years rather than months".

Ministers have warned that the Government could come under pressure to allow private companies a permanent right to handle letters once the monopoly has been suspended. The union fears it could lead to renewed calls for the privatisation of the Royal Mail.

Mr Lang's letter asks Sir Michael Heron, chairman of the Post Office, to evaluate the impact of a suspension, which is most likely to affect bulk mailing by businesses. Mr Lang has the right to allow private firms to deliver letters under the British Telecommunications Act of 1981. The monopoly was last suspended a quarter of a century ago when postal workers went on strike for weeks on end.

A spokesman for the Post Office conceded that Mr Lang's plans were of "great significance" to its business and they would be treating the matter "very seriously".

The Direct Marketing Association, which represents companies which sell products through bulk mailing, said the Government's decision had followed intense lobbying by its representatives. The association estimated the industry would lose pounds 11m a day if disruption was prolonged.

The Government has so far acquiesced over the "restriction on trade" in order to stop companies "cherry-picking" profitable bulk mailing business.

The move by Mr Lang comes after the union - which has already led two day-long stoppages - announced strikes ranging in length from 24 hours to 48 hours. Some 130,000 sorting and delivery workers are to walkout for 24 hours from 3am next Thursday; 36 hours from 10am on 26 July; 48 hours from 3am on 31 July and 24 hours from 3am on 6 August.