Deliver us from the Post Office monopoly: Keith Joseph, who privatised Britain's telephones, argues for introducing competition at the letterbox

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IT WAS artful of the Union of Communication Workers to commission Mori to confirm what it hoped: 68 per cent of people questioned are opposed to privatising the Post Office. So am I.

If it had asked more subtle and more accurate questions - such as 'Would you like to see the price of posting a letter cut to 10p?' or 'Do you think it should be a criminal offence to compete with the Royal Mail?' - I am confident the answers would have been more subversive of UCW's instinct to do nothing.

The Post Office management is motivated by different thoughts. They are akin to those of executives in British Gas at the time it was privatised with its monopoly intact. A statutory prohibition on alternative suppliers is a scandal. It can survive only because the Royal Mail enjoys a residual affection in our hearts.

Ministers will wobble and whips will quail at the Mori figures, but the creative political opportunity is to allow competition in letters, just as we did in telephones.

I was told that privatising our telephone service would be impossible, for reasons that now seem risible. The sheer size of BT's assets would give the stock market indigestion. It would be fruitless to denationalise, as a succeeding Labour government would take it over again. Remote communities would be left without phones, as capitalists are noted for their heartlessness.

We held firm to the simple principle that competition has to be better than monopoly. Now I pay tribute to the huge improvement in performance by BT's employees. I cannot judge the electronic wizardry, but in the range of services, price and courtesy, this is barely recognisable as the grumpy, lumbering creature that lay before me in 1979.

The key ingredient in this liberalisation was not the reconstitution of BT as a company with critical shareholders. It was the authorisation of competition. The arrival of Mercury, and now other rivals, brought daylight where there had been technical rhubarb. The old Post Office - telephones were deemed to be postal - had said, for example, that itemised bills were not possible, or too expensive, or unwanted. Mercury proved the opposite.

I fear Michael Heseltine has been advised into a corner over the state's residual monopoly in delivering letters. Fretting about the wisdom of privatising it as a monopoly is an error. Competition ought to be permitted. The fax is already a sort of competition, though not in price.

He will also have been advised that any reform of the antique letter monopoly will need valuable legislative time. My hunch is that the Secretary of State already has the discretionary powers to liberate the letter. At the moment, anyone is free to compete with the Royal Mail, provided they do not charge less than pounds 1. Not surprisingly, no market emerges to compete with the state at five times the price. The Secretary of State could alter the price threshold to, say, 5p.

To recommend this simple reform is not to insult the postal authorities. They seem to have enhanced their efficiency and trading profits. Now they want to be privatised - but with a monopoly, precisely the error committed with British Gas. The parcels market was opened up and the Royal Mail's courier service has flourished without any privileges. People on Bodmin Moor or in Strathnairn still receive deliveries. The same would be true if we had rivalry in letter delivery.

The Department of Trade and Industry searches for a second single competitor. Companies such as TNT are cited as possible Mercury-like challengers to the nationalised giant, but a second carrier with nationwide depots and staff is not the answer.

Direct marketing, unkindly called junk mail, is becoming ever more refined. It represents as large an expenditure as broadcasting and newspaper advertising. In a free postal market, I predict, direct marketing would flourish further, and the advertising industry might evolve a structure of agencies that traded letters between certain communities.

The notion that remote corners of the nation would go unserviced seems foolish. Perhaps Fair Isle or Uist or a cottage near the top of Snowdon would not receive daily deliveries. The nation's milk and newsapers get to almost every doorstep in the kingdom without us needing a royal milk service or a royal newsagent. Mail may be a different kind of service, but my point remains true: Mr Heseltine need only release the magic of competition for us to learn what potential there is.

A 5p post would be a huge boon for our commerce. Larger postal users, such as the banks or insurance companies, would enjoy huge savings. Their silence on the matter is not proof that no reform is needed. No business group ever lobbied to liberate telephones.

If Mr Heseltine feels that I may be omitting an aspect of the story, he could allow a local experiment. The anomaly that Hull's telephones were never part of the Post Office's network was a useful debating point for me. If, say, the Isle of Wight or Anglesey were to reduce the letter threshold to my favoured 5p, we could see what emerged.

Since I had the good fortune to guide telephones into the marketplace, a new force has loomed into politics. The European Commission wants to obliterate postal competition and merge the 12, soon 16, state postal agencies into a single European carrier. The prospect of this tyrannosaur seems to add urgency to breaking the state's ancient monopoly.

Lord Joseph was Secretary of State for Trade and Industry from 1978 to 1981.

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