Ministers have signalled they could allow Royal Mail to transfer shares to its employees, following a government review into the future of the state-owned postal services operator announced yesterday.

The government has decided against setting up the widely expected independent review of Royal Mail's future once the postal services market is opened up to full competition on January 1. Alan Johnson, the trade and industry secretary, told MPs yesterday he had decided instead to appoint Sir George Bain, the former head of the London Business School, to work with him in examining these issues.