Post Office plans held back as DTI battles with Treasury

PLANS FOR a White Paper this week setting out how the Post Office will be given more commercial freedom have been delayed by continuing dispute between the Department of Trade and Industry and the Treasury.

Stephen Byers, the Secretary of State for Trade and Industry, had intended to publish the long-awaited proposals this Thursday. But he has been forced to postpone the White Paper because of Whitehall wrangling with the Treasury over the extent of the freedoms the Post Office will be given.

The White Paper will propose a halving in the Royal Mail's letter monopoly from pounds 1 to 50p, the creation of a new regulator body to police the Post Office, and plans to beef up the consumer watchdog, the Post Office Users National Council.

In return, the Post Office is due to gain greater freedom to enter into joint ventures with commercial operators and to buy overseas companies.

The sticking point appears to be the rules under which the Post Office will be allowed to exercise this freedom. At present, it has to seek government approval for any investment of more than pounds 5m. The Post Office and the DTI are pressing for that limit to be lifted to pounds 50m-pounds 100m.

The White Paper will also need to clarify how long it will take ministers to give their approval for investment plans involving larger sums. The Post Office's first big acquisition - the pounds 300m purchase of German Parcel - was approved during Peter Mandelson's tenure at the DTI.

The delays in sorting out the PO's freedom are causing growing frustration. "This Secretary of State backs down every time the Treasury shouts at him," said one executive.