Another dark day for Gordon Brown

Author: By Nigel Morris, Deputy Political Editor

The fresh setbacks came after he endured bruising clashes with David Cameron
over spending plans and faced ridicule from Tory MPs after he spoke of a
?zero per cent rise? in budgets.

The retreat over part-privatisation of the Royal Mail was blamed by Lord
Mandelson, the Business Secretary, on the struggle to attract buyers in the
recession. But the opposition parties claimed the climbdown had been forced
by the growing opposition to the sale among Labour MPs and trade unions.

It came a day after Alan Johnson, the new Home Secretary, watered down the
Government?s plans for identity cards and a fortnight after Mr Brown
performed a U-turn over holding the Iraq war inquiry in public.

Had ministers pressed ahead with the Royal Mail part-privatisation, which was
opposed by more than 140 Labour backbenchers, they would have been forced to
rely on Tory support to get the measure through the Commons.

The announcement was a personal embarrassment for Lord Mandelson, who had
argued the sale was essential to revive the fortunes of the troubled
business and tackle its crippling deficit pension scheme deficit.

Although he had repeatedly warned that the issue could not be ducked, he
finally scrapped attempts to sell the stake in a brief statement to peers.

He said: ?We have thoroughly tested the market to see who is interested in
partnership, but economic circumstances, I need hardly point out, are
extremely difficult.

?I have always been clear we would only do a deal with the private sector if
it represented value for money for the taxpayer.?

Lord Mandelson insisted he would revive the sale when market conditions
improved, but his move effectively killed off the prospect of
part-privatisation before the general election expected in the spring.

Only one potential buyer, the private equity group CVC Partners, had made a
formal bid for the Royal Mail stake. It is thought to have offered about
£1.9 billion for a 30 per cent share in the business.

Kenneth Clarke, the shadow Business Secretary, said: ?This Government is in a
state of paralysed indecision on every difficult issue.?

John Thurso, the Liberal Democrat business spokesman, said: ?Gordon Brown no
longer has the political will to fight the unions and opponents on his own

A source close to Lord Mandelson conceded the Royal Mail sale had always been
controversial. He added: ?The difficulty around the bidding process makes it
even more so. It would be time-consuming and would completely dominate the
Government?s political agenda over the summer when we knew we would be
unable to implement it in the immediate future.?

Two hours after the announcement, the Government suffered a surprise defeat to
the Parliamentary Standards Bill, which had been rapidly drawn up in an
effort to rebuild the reputation of the Commons.

By a majority of three, MPs defeated a clause that would have allowed
Parliamentary debates to be used in court as evidence. Malcolm Jack, the
Commons clerk, had warned that the move would have had a ?chilling effect?
on MPs? freedom of speech.

Former Cabinet ministers John Reid and Margaret Beckett were among 25 Labour
backbenchers to rebel against the Government.

Jack Straw, the Justice Secretary, said he would ?respect? the result.

It was Mr Brown?s second major Commons reverse as Prime Minister after his
defeat in April over residency rights for Gurkha war veterans.

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