The government has indicated that it will be pushing on with plans to privatise Royal Mail, either through an IPO or by selling to a partner or investor.
The news comes following an 18 month review of the postal service, and the problems facing it, such as falling mail volumes, a pension deficit of around eight billion pounds and competitors who have modernised quicker and more successfully.
To help counter these problems Richard Hooper, who conducted the review, proposed lighter regulation, which should be handled by Ofcom, rather than Postcom, the taking over of the pension deficit by the government and the injection of private capital.
Privatisation he said would give Royal Mail the finances it needs to fund modernisation and would also bring private sector disciplines, greater focus on customers and would help reduce political interfering.
Vincent Cable, the Business Secretary, said, "This update reaffirms the findings of Richard Hooper's original report and the views he has given me during the course of the summer. He paints a very clear picture - Royal Mail is facing a combination of potentially lethal challenges - falling mail volumes, low investment, not enough efficiency and a dire pension position.
"We are determined to safeguard Royal Mail for the future and help it tackle these challenges. We will come forward with new legislation in the autumn. It will draw heavily on Hooper's analysis and recommendations and the Government's wider objectives, including the need for employees to have a real stake in the future of the business."
Mr Hooper said, "If all the recommendations in my updated report are implemented without further delay, and Royal Mail modernises to best in class with management, workforce and unions working together, then despite the very real market difficulties the company has a healthy future. Building on its unique ability to visit 28 million addresses on a daily basis, it can aspire to be the delivery company of choice for a wide range of physical mail from letters to parcels".
The Communication Workers Union has opposed the plan however, saying that a recent YouGov poll found that only 15 per cent of voters wish to see Royal Mail privatised and a majority want it kept public
Billy Hayes, General Secretary of the CWU, said, "Privatisation is old politics. It's the failed politics of history which brought disruption to Britain's utilities and railways and astronomical prices for consumers. Dangerously in this case, we fear the government may also be plotting to seize the pension assets.
"Privatisation would be devastating for Royal Mail and the whole country's postal services. The universal service has been a key part of the UK post for 170 years but because it isn't the profitable element of mail, the privatisation will put it at risk. This could damage the service for all customers including millions of small business and potentially harm the UK economy. Privatisation will also mean separation of Royal Mail and the post office network, putting the very existence of many more post offices that play such a key role in Britain's communities at risk.
"Closures, cuts and profit will rule while customers, small businesses, communities and tax payers lose out. This report is politically motivated to please the ideology of the coalition. People who work in the industry know that privatisation has no positive role in this public service. Richard Hooper's report of 2008 was flawed and his vision was proved to be unachievable. He still doesn't have the answers to the challenges facing the postal service but faithfully trots out what his political masters request.
"Royal Mail has always been a privatisation too far and there is a public majority out there who will vote this government out for flogging off our national assets and breaking our public services."