The government is to begin the process of privatising Royal Mail, raising the prospect that the "one price goes anywhere" universal postal service could be scaled back.
The business secretary, Vince Cable, has revealed plans for a bill to enable the sell-off of Royal Mail, which will include offering shares to employees. He appeared to confirm that there could be a total privatisation – going further than Labour's ill-fated attempts at a partial privatisation and previous Liberal Democrat and coalition promises. Unions have promised to fight any privatisation plans.
"We are not proposing to keep a government stake. Royal Mail will become privately owned and there will be a share for the workers within that company," Cable told BBC Radio 4's PM.
The coalition agreement promised only that the government would be seeking "an injection of private capital" into Royal Mail. The Lib Dem manifesto proposed that 49% of Royal Mail be sold off with the rest divided between employees and the state. "We are going further than that, recognising the urgent need for new capital," Cable said.
His spokesperson later insisted that although a total privatisation was the preferred course of action, all options would remain on the table, pending an enabling bill to be introduced in parliament later in the autumn. The government remained "fully committed" to retaining full ownership of the Post Office network and would take on responsibility for managing the pension fund, she confirmed.
Cable said the government would be drawing heavily on the recommendations contained in a report on the future of the Royal Mail, published by businessman Richard Hooper, who warned of the financial difficulties facing the service and said the universal service obligation could be reviewed in three to five years.
Deliveries could be cut back to five times per week, or other postal operators could be given responsibility to provide the service in different parts of the country.
Under existing legislation, Royal Mail is required to provide six deliveries per week of letters at an "affordable and uniform" price to anywhere in the UK. Hooper claims that Royal Mail will not be able to afford to carry out this service, which in remote areas is loss-making, even though overall its letters business doubled operating profits last year.
Billy Hayes, general secretary of postal workers' union the CWU, said: "Privatisation would be devastating for Royal Mail and the whole country's services."