View from City Road: No red letter day at the Post Office

For all his fulminating against the Government yesterday, Michael Heron, the chairman of the Post Office, must know perfectly well that privatisation is off the political agenda. The only reason we are still awaiting an announcement is that the alternatives are scarcely more palatable for ministers.

Having instituted his Post Office review and raised expectations, Michael Heseltine, President of the Board of Trade, must do something to avoid appearing namby- pamby. But what? Pressing ahead with the trade sale of Parcelforce while perhaps bringing the Royal Mail's letter monopoly down to 25p would not constitute a new policy, since both proposals were already on the table before the review.

Nor would they address the nub of the complaint levelled by Mr Heron - that the dead hand of the Treasury and the straitjacket of the external finance limit deny the Post Office commercial freedom.

In the absence of full-blooded privatisation as a single entity, the Post Office wants freedom within the public sector to expand into products and services from which it is barred, such as insurance. That would make the state-run business even more efficient and highly profitable.

Mr Heseltine could shut Mr Heron up tomorrow by delivering those freedoms. But in doing so he would also be expanding the frontiers of the state sector - a betrayal of party faith at least on a par with jettisoning privatisation.