Sell Royal Mail, says watchdog

The regulator claimed in a report to the government that the service's letters business would decline without a "radical transformation" and a "partnership" with big business.

It called for an injection of private finance through the sale of 49 per cent of stock in the state-owned company.

The regulator pointed to postal services in Denmark and Sweden, where the state and employees own part of the company, as possible models for Britain.

Chairman Nigel Stapleton said: "Postcomm wants to see government and Royal Mail embrace a partnership approach with the private sector to secure a universal service valued by all users and provided at least cost, without public funding."

However, Mr Hayes retorted that this was another bad decision by Postcomm, whose many previous bad decisions had led to the problems in the industry.

"They have consistently been obsessed with the drive to develop the competition model and calling for privatisation is another step from an organisation that is ignoring their public service obligation," he said.

Mr Hayes added: "There is currently no political support for this and privatisation has been regularly opposed by Parliament.

"All industry experts agree that the postal market needs a strong and healthy Royal Mail. The company needs investment and it needs to use it wisely.

"At the end of the day, this is only Postcomm's opinion and it is the opinion of the review team and, ultimately, the government that will count."

Trade Unionists Against the EU Constitution spokesman Brian Denny pointed out that the EU has already demanded the full-scale privatisation of postal services by the end of 2010.

"Postcomm is also recommending private investment because it knows that, under strict EU public spending limits, the government cannot pay for a universal postal service," he said.

"However, the private sector simply will not be able to deliver such a service, just as the private sector cannot deliver a decent rail service without public subsidies."

Communist Party of Britain general secretary Rob Griffiths added: "What's being proposed are further steps towards the destruction of our postal service as a unified public enterprise which serves the public interest.

"The hiving off of profitable operations to the private sector and the huge post office closure programme have already threatened to take us towards the model of essential services being run for private greed, not the public good."

Scottish Socialist Party leader Colin Fox said: "Two things are sure to happen if the fat cats get their hands on the post - mega pay and profits for them and more price hikes and cuts for everybody else.

"It's like giving Jesse James the key to the bank vaults."