Outlook: Short changing the Post Office

STEPHEN BYERS finally delivered his long-delayed White Paper on reform of the Post Office yesterday but the chief executive was not in to receive it. John Roberts had got so fed up waiting around for the package to drop through the letter box, that he went off instead on a world cruise and was last spotted somewhere off the coast of Anchorage. The Post Office chairman, Neville Bain, only made it back for the grand announcement by interrupting his holiday after just one day to fly home from Italy.

Unlike a Christmas parcel from granny, the White Paper is not all that the posties might have hoped for. Most of its contents had already leaked out in transit - restructuring into a plc, a halving in the letter monopoly to 50p, and a measly increase in what the Post Office can spend without the cheque first having to be franked by a minister.

Mr Bain put a brave face on it and declared the White Paper to be a "decisive first step" down the road towards commercial freedom. But the Post Office top brass know that their only hope of real freedom through private ownership disappeared with Peter Mandelson's premature departure from Victoria Street.

The pale version of commercial freedom within the public sector in the shape of a government-owned plc will kid no-one. Worse, while the freedoms granted the Post Office are modest, the threats to its financial health waiting around the corner are not.

Mathematics is not Mr Byers strong point and yesterday he again demonstrated a shaky grasp of simple addition and subtraction. The DTI calculates the Post Office will be pounds 600m better off over three years as a result of paying a smaller dividend to the Treasury and being allowed to borrow more. But the Post Office estimates it will be pounds 300m a year worse off once its letter monopoly is cut, state benefit payments stop being paid through the Post Office, and it loses the interest income on the pounds 2bn of retained profits the Exchequer is already hoarding.

Full-blooded privatisation of the Royal Mail remains a tricky proposition as long as the Government of the day is wedded to retaining a universal service at a uniform price. But it would serve consumers and business better than yesterday's half-measure.