The Government may be forced to suspend the Royal Mail's monopoly on a permanent basis if industrial action continues, according to senior Whitehall sources.
As 134,000 postal workers began their second 24-hour stoppage at noon yesterday, Government sources warned that the Cabinet could be under considerable pressure to allow private companies to continue to provide a mail service after the present dispute was over.
Pressure on ministers will come from the companies themselves, but also from backbench MPs, the source said. It is also thought Michael Heseltine, the Deputy Prime Minister, may add to the clamour because of his enthusiasm for privatisation. The sources stressed ministers had no immediate plans to allow the private sector to handle letters for less than pounds 1 per item - the cut-off level for the Royal Mail monopoly. There was no enthusiasm to end the monopoly, but the present system would be endangered by further action, the sources said.
The warning came as hopes rose of a settlement to the dispute over a pay and productivity package. Contrary to expectations the postal executive of the Communication Workers' Union refrained from naming a date for a third day-long strike and registered its intention to resume negotiations next Monday.
The union is also to conduct a consultation exercise among its branch representatives and decide whether to continue the dispute later next week.
The new mood among CWU leaders followed a letter from Richard Dyke, managing director of the Royal Mail, declaring that he was prepared to be flexible over demands for greater productivity. The union is particularly suspicious of management's insistence on teamworking.
It was likely that most households would not receive mail today, but the backlog should be cleared by tomorrow.
Meanwhile, millions of travellers and commuters in London had their journeys disrupted yesterday when Tube drivers staged the first of a series of day-long walkouts over working hours.
London Underground said that it was able to run about one in three of services, but the train drivers' union Aslef estimated that the figure was nearer one in four at best.
A second one-day stoppage is planned for next Wednesday.
Lew Adams, leader of the union, said all his members obeyed the strike call. The trains which ran were driven by members of the rival RMT union or by non-union employees, he said.
Ann Burfutt, personnel director at London Underground, said she was pleased so many services ran and added that few travellers would sympathise with the "well-paid" strikers who earn pounds 24,500 a year.
The Aslef executive is unlikely today to agree to a management request to take the dispute to the industry's wages board because it would mean the suspension of disruption. The Aslef leadership may favour talks under the auspices of Acas, the conciliation service.Reuse content