But Tony Blair refused to give a guarantee last night that the Government would not sell its shares in the Post Office, sowing confusion among trade unions, and fuelling suspicions that there is a hidden agenda to privatise it.
Mr Byers spent the day reassuring the unions that the Post Office would remain in public hands, after being converted into a public limited company, giving it greater freedom to meet commercial competition.
Mr Blair later refused to give any assurance that the shares would not be sold off by the Government. "I am not giving that guarantee - I am saying we are not privatising it," he said on BBC's Question Time. He said any sale would require primary legislation, but refused to rule that possibility out for the future.
The Post Office's monopoly over mail delivery is to be cut from next April, with the Royal Mail's exclusive right to deliver letters and parcels reduced from those costing pounds 1 or less to those 50p or under. It will also come under a tough new regulator, the Postal Services Commission. For the first time the Royal Mail's obligation to deliver letters to all addresses at a uniform price will be enshrined in law when a Post Office Bill is introduced in the next Parliament.
Mr Byers hailed the plans, set out in a White Paper, as an opportunity to unshackle the Post Office from past restrictions, allowing it to borrow more and pay less in dividends to the Treasury. He said greater commercial freedom would inject pounds 175m into it this financial year and pounds 600m over the next three years.
But Post Office chiefs said the changes would reduce profits by pounds 300m a year. The reduction in its monopoly will cost an estimated pounds 100m alone and pounds 107m will be lost in interest earned on the Post Office's reserves when its balance sheet is restructured in 2002.
The decision to phase out benefit payments through Post Offices in 2003 could cost pounds 100m and "seriously threaten the income streams of many post offices, especially in rural areas", the Post Office said. The National Federation of Subpostmasters also said it remained concerned about the loss of business after 2003 when benefits will be paid through bank accounts.
Ministers said that a pounds 1bn investment in automation systems would bring in new business. But courier firms said the mail monopoly move would open up only about 5 per cent of the market.
Hidden agenda denied, page 8 Business Outlook, page 19
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