The Post Office: The Services: Expansion is one aim of commercial freedom

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THE Post Office is fond of reminding the nation about its commitment to the island of Barra in the Outer Hebrides. The state- owned corporation flies letters and parcels into and out of the island at what it descibes as 'huge cost'.

But if the Government decides to privatise the Post Office, it could trigger big changes to the way the Post Office delivers the nation's mail and open the question of who pays what for their service. Yet yesterday Michael Heron, Post Office chairman, said the idea would 'deliver greater commercial freedom, unleashes our energies for the future . . . and, most importantly, gives the opportunity for all our people to have a real stake in our future success'.

The Post Office supports partial privatisation because it may then gain access to private sector finance to fund expansion abroad and the construction of large, highly automated sorting offices at home. It already has 'letter factories' capable of sorting 30,000 letters an hour in Vauxhall, south London; Croydon, Surrey; and Swindon, Wiltshire.

This year the Post Office will spend pounds 290m on capital projects. It wanted to spend pounds 80m more, but its plans were cut by the Government anxious for the cash. This year the Post Office will invest pounds 226m in government securities - gilts - payment to a Government anxious to cut its borrowing.

Last year was a similar story. The Post Office paid pounds 181m to the government and pounds 66m the year before that. Meanwhile next year's spending bid has already been cut by pounds 90m so far, with plans for 1996- 97 cut by some pounds 100m.

Private ownership will bring wider change. The Post Office wants freedom to link up with printers, stationery companies and airlines to offer companies one- stop services, running mail shots on their behalf to their customers.

Less clear is whether other companies will be free to offer a low- cost letter service to the public. At the moment the Post Office has a monopoly in the letter service below the pounds 1 tariff. Yet there are already about 4,000 companies offering other types of delivery service, ranging from courier services to parcel companies. The Government is keen to reduce that tariff, allowing the public more choice in letter services, but says also it wishes to maintain the uniform letter price and delivery service. In other words, the islanders of Barra will still be able to have their letters delivered at the price of a letter in the City of London.

Will deregulation bring different coloured post boxes and competing postmen dressed in different uniforms? Almost certainly not, because the infrastructure needed to run a national service is too great. Pat Howes, chief executive of the parcels division of Securicor, said: 'We have never said we want to compete against the Post Office by offering a nationwide letter service. The resource is too colossal for that.'

Mr Howes plans to work with the Post Office, offering business customers the chance of having letters picked up long after the last general collection, sorted and injected into the Royal Mail system.

The public may be less concerned than many believe. According to a survey carried out in 1992 by the Consumers' Association, the public is not frightened of choice. What does cause concern is standard of service. Nearly all those surveyed, more than 1,000 people, wanted quality standards laid down for deliveries.