Post Office seeks taste of private sector

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The Post Office announced the search for a company to help run its massive catering operation in the first concrete evidence that ministers welcome private sector involvement in state-owned enterprises.

With approval of the Government, the Post Office-owned business, which enjoys a pounds 70m turnover and claims to be the fifth largest caterer in the country, is looking for a company to take a 49 per cent shareholding.

It is also the first indication that the Government intends to pursue its policy of granting the Post Office greater commercial freedom.

The catering division, known as Quadrant, provides services for other publicly owned organisations and it is expected that it will now seek a considerable extension of its interests elsewhere.

The Communication Workers' Union welcomed the fact that it opened up new markets and new employment opportunities for the 2,800 employees concerned, who would remain Post Office employees. Derek Hodgson, joint general secretary of the union, said: "It is refreshing to see Labour looking at ways the Post Office business can be expanded after years of restriction and contraction under the last administration."

CWU officials were, however, concerned that it may signal the beginning of a drive to "contract-out" peripheral Post Office activities or even that it could preface the privatisation of major slices of the enterprise.

Mr Hodgson gave what he described as a "cautious welcome" to the initiative. The plan would mean that his members were still governed by Post Office conditions. Nevertheless, he said he had been assured by Ian McCartney, trade and industry minister, that it would not be seen as a blueprint for how the Post Office's core businesses would be granted more commercial freedom.

Mick Linsell, Royal Mail assistant managing director, said the Post Office had chosen to keep a majority shareholding so that the business would remain "very much part of its parent company".

He said external involvement would provide additional expertise and enhanced purchasing power. Consideration had been given to contracting out catering completely but it was decided a "partnership" was the best option.

t A 24-hour strike today by postal workers is expected to disrupt severely deliveries in London's West End. Members of the CWU are protesting over disciplinary procedures taken against employees for alleged poor attendance.