Postmasters in talks to buy out PO network

The Postmasternetwork is understood to have been negotiating with the Department of Trade and Industry and a number of United States investors, with a view to buying up the postal service's network of 14,500 sub-post offices for around 150 million.

Since the advent of direct transfers of benefits payments, the network has lost 40 per cent of its business and has been running at a loss of 110m.

Gary Coyle, head of the Postmasternetwork, claimed the post office network would face more commercial discipline if it was split off and controlled by private investment.

He said: "Post Office Limited could be better run. If it were to be sold, we are confident that we would raise the money."

The organisation has emphasised its interest in running the network, although it would require backing from the Government for about two years, as the future of the postal service is being examined.

A full review of the Royal Mail was promised in Labour's election manifesto and is being seen as a platform for debating the ownership of the group.

Royal Mail chairman Allan Leighton wants staff to have a stake in the business, although the final structure for such a plan is undecided.

Mr Coyle complained that while the future of the parent group is being debated, and as Postcomm prepares its final pricing proposals, the post office network is "like a forgotten cousin".

However, the Postmasternetwork plans could encounter political difficulties. More than 160 MPs have signed an early day motion making clear their opposition to any form of employee ownership. They fear that such a move could be a precursor to full privatisation.

Recently, the postmasters' group and Royal Mail have clashed over the contract that postmasters have to sign to run a postal facility. The Postmasternetwork has argued that this does not allow sufficient commercial freedom and that postmasters are not paid high enough commission rates for the Royal Mail work that they undertake.

It is understood that the body will this week meet potential US investors to try to secure up to 150m worth of funding.

In July, Royal Mail warned it would have to axe 40,000 jobs if the postal regulator pressed ahead with its plan to impose price controls on stamps. In a report, Mr Leighton told Trade and Industry Secretary Alan Johnson the proposed prices would result in "unrealistic" cost cutting and could only be achieved by massive job losses.

Royal Mail claims it needs to raise revenue for investment because, from next January, it will face full competition in all of its markets. At the moment, it only has rivals for the business part of its service.