MPs call for Post Office plc Post Office

The Post Office should be established as a state-owned plc with commercial freedom to expand and modernise, according to the all-party House of Commons Trade and Industry Committee. The committee attacked the Government for leaving the Post Office in limbo since privatisation plans were dropped in November, and warned that without change the business faces "slow and frustrating decline".

Richard Caborn, chairman of the committee, said: "The Government has a real duty to bring to an end the continuing uncertainty surrounding the future of the Post Office. They can no longer sit on the fence and claim that there is no middle way between privatisation and the status quo." He said the committee's proposal followed models in Germany, Denmark, Sweden, Canada and Australia that could work in the UK.

Under the plan, the Post Office would no longer pay the Treasury an annual pre-set amount, which has risen to £226m from £66m two years ago. It would pay a dividend to the Government as shareholder. The Post Office has said increasing hunger for its cash from the Treasury is "bleeding the organisation dry". According to the committee, there is no reason why the Post Office should stay within the public sector borrowing requirement.

The committee says the Post Office would be able to raise money, but bearing all the risk and with no underwriting by the Government. It would have to serve the whole country but would no longer be able to subsidise business from the Royal Mail monopoly. Parliament would have the right to veto any sale of the Government's shares.

Mr Caborn said that the conditions aim to counter arguments from Michael Heseltine, President of the Board of Trade, that giving more commercial freedom within the public sector would allow the Post Office an unfair advantage over rivals.

Although the committee is unanimous in calling for a Government-owned plc, the Conservative members see it as a staging post to privatisation at a later date.