It has been over-pessimistic in the past in its projections for inflation it may be over-pessimistic now

It has been over-pessimistic in the past in its projections for inflation; it may be over-pessimistic now. Its warning about inflation in two years' time is as fallible as all forecasts. But at least decisions that were once taken behind closed doors in Whitehall have been brought out into the open. Greater transparency was the promise and greater transparency is what we are getting. If the Government is now preparing to renege on its commitment to low inflation, it will have to do so overtly, not covertly.Divided counsels are usually regarded as a fatal distraction, whether in warfare, politics or the running of companies But Britain's experience has tended to be the reverse. The country has suffered from too many single- minded economic policies forced through by an over-centralised state.The latest of these is arguably the inflation target itself. Set by Norman Lamont in the immediate aftermath of Black Wednesday, it committed the Government to a particularly narrow range of underlying inflation - 1 to 2.5 per cent - by the end of the parliament.

As Roger Bootle, chief economist of HSBC Greenwell, points out, this is just the latest in a succession of all-or-nothing economic objectives to which the Government has pledged undying devotion. First there were monetary targets, and then there was the exchange rate. Now there is the inflation target.As it happens, the inflation target is due to be reformulated, by simple virtue that we are now within two years of the end of the parliament. The trouble is that, given Mr Clarke's credibility problem, any reformulation may well be interpreted as an attempt to redraw the goalposts.. The Government will slash the amount of money it takes from the Post Office every year andgive it more commercial freedom to invest and expand. The decision follows the collapse last year of plans to privatise the Royal Mail and ParcelForce while keeping the post office counters in public control.

The move came as the Post Office revealed a price freeze on first- and second-class letter post until March 1996 or beyond. A spokesman said it had to be competitive to fight the threat from fax and telephone. The relaxation on rules governing the Post Office come after many months of concern over its future. Its management has been lobbying fiercely against the "crippling" external finance limit - a seemingly arbitrary amount taken by the Treasury each year.The EFL absorbed £182m of £306m pre-tax profits in 1993/94 and rose to £226m last year, for which profits are yet to be announced. The Government will in future set the EFL at about half projected profit after tax, allowing the Post Office to plough more back into the business.Michael Heseltine, President of the Board of Trade, said: "While no responsible government could undertake to ring-fence the Post Office entirely from the pressure on public spending, I am prepared to agree that in future we will aim to set the EFL at about half the Post Office's forecast post- tax profit." He also said that formal restrictions on Post Office investment and detailed scrutiny by the Treasury of individual projects would be replaced by a "more strategic corporate plan".The statement was attacked as "a modest step and pathetically slow in coming" by Dr Jack Cunningham, shadow secretary of state for trade and industry.He called for the Post Office to be established as a public limited company within the public sector and to be freed from the constraints of the public sector borrowing requirement "That would end for once and for all this nonsense. There is no doubt that to safeguard the future of the Post Office we would take such a major step," he said."What the Government is doing is no great leap forward.

It does not go nearly far enough."Mr Heseltine also said the Post Office might in future have more freedom to form joint ventures and to move into new markets related to its existing business.He would "consider" requests but would want to see these related to making much more use of the Government's private finance initiative.He stressed that funds for any expansion must come from increased efficiency and not higher prices. "There must be real pressure on the efficiency of the Post Office. I am about to appoint consultants to carry out a performance review of the operations of the Post Office."Mike Heron, chairman of the Post Office, gave a guarded welcome. "After more than 30 months of government uncertainty over the future of the Post Office, which has benefited no one except our foreign competitors, the door is now ajar," he said.. A legal bid by independent financial advisers to scupper new compensation guidelines for pension transfer victims reaches its climax today, but the IFA trade body was claiming victory last night. Garry Heath, chief executive of the IFA Association, said yesterday he was "quietly confident" a judicial review of the rules would vindicate his organisation's opposition to them. The High Court will deliver its judgement today on the guidelines, set by the Securities and Investments Board, the City's top financial watchdog.A judgement in favour of the IFAA will delay for many months compensation for up to 1.5 million people who may be entitled.A reversal for SIB would spark action against insurers, as trade unions and solicitors acting for many claimants go to court to obtain redress.The GMB union said yesterday it was planning to issue a series of writs on behalf of hundreds of members it claimed had been wrongly advised to opt out of their company pension schemes and into private ones.Mr Heath said: "I have not been given a preview of the judgement, but anyone who sat in the High Court during the hearings last month could not have come away with any other impression."His comments came as evidence emerged of the scale of support by large insurance companies for the IFAA's legal battle against the SIB.Mr Heath said insurers were funding two thirds of IFAA's £300,000 legal bill.

Donations of up to £30,000 have been made, although he declined to name any companies."There are many life companies which see the guidelines the same way we do. We have received several large cheques from those who agree with us."The judicial review, initiated by the IFAA, centres on its opposition to a requirement that independent advisers contact their clients and inform them they may have been wrongly advised to transfer out of company pension schemes.Finding and then compensating the victims could cost the insurance industry up to £3bn, with IFAs potentially liable for at least a quarter of that amount.IFAs say contacting clients will invalidate their professional indemnity insurance, which prevents them from soliciting claims against themselves.Doing so would drive them out of business in the event of successful claims not met by PI insurers.Mr Heath said: "We do not want to delay any rightful compensation for those who have been wrongly advised. If we win, we will immediately put forward a series of alternatives that the SIB can take up."A SIB spokeswoman said it was unable to discuss the case against it until the outcome of the judicial review was known.. Nuclear Electric's new £2bn power plant on the Suffolk coast is unproven and "it might be difficult to obtain full value for the station in an early privatisation", the investment bank BZW has warned Michael Heseltine, President of the Board of Trade.