The beleaguered post office network was thrown a £1.3bn lifeline by ministers last night in an effort to prevent a repeat of mass branch closures under Labour.
New deal: Newe cash should protect branches.Unveiling details of the controversial Royal Mail sell-off yesterday, Business Secretary Vince Cable said he was determined to protect the future of branches, which will not be included in the sale.
Mr Cable added that ministers are looking at plans to turn the network into a John Lewis-style mutual company in which staff, sub-postmasters and communities have a share.
But he revealed the Treasury has also approved a £1.3bn subsidy package to prop up and modernise it over the next four years. He added the package, which effectively doubles the level of subsidy to the network, meant there would be no repeat of the mass closure programmes forced through by the last government.
The Business Department said the money would be used to modernise and improve services, including extending opening hours and reducing queues. But it will not prevent the closure of individual post offices which go out of business.
Mr Cable told the Commons that the cash would 'reverse the years of decline and secure its long term future. There will be no programme of closures under this Government and the Post Office will be able to invest, improve its offer and win revenue streams.'
The universal service provision, which guarantees postal delivery to every home, would also be 'gold-plated' as part of the sell-off.
Mr Cable warned that without private investment, the Royal Mail would continue to lose ground to competitors.
Labour warned privatisation left an 'axe of uncertainty' over the future of thousands of post offices as there was no guarantee that the Royal Mail would continue to use them forever under a new owner.
Labour business spokesman John Denham said the legislation surrounding the sale 'provides no mechanism to ensure that the continued long-term use of the Post Office network is an integral part of any sale of Royal Mail'.
'This would be a disaster for non-profitable post offices in rural and urban areas alike,' he added. But Mr Cable said the Royal Mail and Post Office were 'bound together by an overwhelming commercial imperative'.
A long-term commercial deal between the two organisations will remain in place after the sale.
He also revealed that the Queen will be given a permanent veto over the design of stamps, amid fears the Royal Mail could be 'abused' by a foreign owner.
He said ministers were in talks with Buckingham Palace to ensure 'protections' of historic royal connections. Mr Cable confirmed that the Royal Mail could be sold to a foreign rival. Dutch firm TNT and German postal giant Deutsche Post are expected to bid.
Mr Cable said: 'As far as the Royal Charter is concerned, it is clear that the association with the monarchy is probably the most powerful brand it could possibly have. 'There will be every interest in the new owners continuing to maintain it. We need to be careful they don't abuse the royal association.'
But Tory MP Roger Gale questioned whether the Queen's interests could be safeguarded. 'It is difficult to see how the royal connection, proudly maintained for over a century, can be maintained if the Royal Mail is sold to a Dutch, German or other non-UK buyer,' he added.
Labour, which abandoned plans to sell off the Royal Mail last year following a backbench rebellion, said it would oppose the sale.
Public ownership is the 'ultimate safeguard of the public interest', added Mr Denham. About 8,000 sub-post offices closed under Labour, leaving the network with 11,500 branches.