The government says the Royal Mail needs both outside investment and expertise to ensure continuity of services to all.

Vince Cable was giving details of the Postal Services Bill, designed to pave the way for Royal Mail's privatisation. Mr Cable made clear that the government would not oppose a foreign company buying up the Royal Mail. Royal Mail staff will be offered at least 10 percent of the shares in the company, but unions oppose the privatisation. He called the proposed staff participation the biggest of its kind - larger than those of British Telecom, British Gas or British Airways.

"This is an important package," said Mr Cable in an official statement on the new bill. "It will secure the services that consumers and businesses rely on. "It will give employees a stable company to work for, shares in the future of the business and the secure pension they deserve. It will remove the risk to taxpayers of an expensive bailout."

He gave no timeline for the sale, but said it would not happen before next summer. He also said the government was "keeping an open mind" about whether to pursue a stock market flotation, or whether to sell the company to a strategic investor.

George Bevan, Managing Director of The Mailing Room commented; “Increased investment in the Royal Mail through privatisation will hopefully improve current services levels. This though, is likely to further increase postal prices which will put more pressure on business to find savings in their mail processes elsewhere. It remains to be seen how, if any, this will affect the licensing of new and future franking machine services given the future commercial aspirations of a newly privatised Royal Mail”

Mr Cable also announced that the Post Office network, which is not included in the sell-off, may be converted into a mutual ownership structure, and promised there would be no further closures of Post Office outlets.

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