Post Office parcels service to be sold off

THE GOVERNMENT is to privatise Parcelforce, the parcel delivery arm of the Post Office.

Announcing the intended sale yesterday Michael Heseltine, President of the Board of Trade, said he could see no reason why Parcelforce should remain in public hands when most of its work was targeted at business users.

Parcelforce, with a workforce of 13,500, delivers 750,000 parcels a day and has a turnover of pounds 500m. It has lost pounds 155m over the past two years, though it recovered to operate profitably in the second half of the last financial year.

In a Commons statement Mr Heseltine said an essential requirement would be a continued universal parcel service at a uniform and affordable tariff.

'This is not negotiable,' he told MPs. But in subsequent exchanges he suggested the responsibility could be passed to the Royal Mail.

Pressed by opposition parties over the future of services to uneconomic rural areas, Mr Heseltine replied: 'I don't say Parcelforce will have to provide a universal service. What I am saying is that the Government will ensure there is a universal service.'

The Royal Mail already supplies a support service for Parcelforce in many areas.

Doug Henderson, a Labour trade and industry spokesman, condemned the move as privatisation for its own sake and accused Mr Heseltine of threatening to undermine more than 100 years of a universal delivery service to every home and business.

Tony Benn, a former postmaster general, said Mr Heseltine was 'presiding over a piece of loot and plunder of the public service in favour of his grubby little friends who financed the Tory party success at the last election'.

Legislation will not be required. Mr Heseltine said he had not yet asked the Post Office Board to launch the sale and first wished to take advice on the best means of transfer to the private sector.

Parcelforce has just 2 per cent of the lucrative 'next day' market and a 34 per cent share of the 'later than next day' market. Only 5 per cent of its business deals with parcels sent from one person to another, while more than half the remainder consists of large mail order contracts.

Mr Heseltine said he would ask the Post Office to help management and employees put together a bid for the business.

DHL International, the air express company, said privatisation would prevent the Post Office cross-subsidising its parcels service with profits made by Royal Mail and would produce a fairer, more competitive environment.