Royal Mail sell-off plan shelved

Author: Press Association

Lord Mandelson told the House of Lords that there was “no prospect”
of the sale going ahead in the current economic circumstances.

A delay in the controversial sell-off, which is opposed by many Labour MPs,
had been expected after Lord Mandelson said on Monday his Postal Services
Bill was being “jostled” for space in the legislative programme.

He told peers that the state of the economy made it “impossible” to
obtain value for money for the taxpayer.

But he claimed: “When market conditions change, we will return to the

Ministers had argued that private sector money was needed to secure the future
of the Royal Mail, which is facing a pension deficit of up to £8 billion.

They hoped to find a private partner willing to take a stake in the company to
fund much-needed modernisation. But the plan ran into difficulties when the
main suitor, Dutch postal operator TNT, indicated that its interest was
cooling over the valuation put on Royal Mail.

Meanwhile, ministers faced bitter opposition from the Communications Workers
Union (CWU), which threatened to vote on disaffiliation from the Labour

And Prime Minister Gordon Brown was facing the prospect of large-scale
rebellion at the second reading of the Postal Services Bill in the Commons
after 150 of the party’s backbench MPs signed a parliamentary motion
opposing the sell-off.

CWU general secretary Billy Hayes said: “The Government has not only
looked at market forces but has listened to the British public.
Privatisation was a deeply unpopular suggestion from day one.”

“Privatisation was a deeply unpopular suggestion from day one.

“We now look forward to resolving issues which remain around pensions,
regulation and modernisation.

“The CWU is as committed as anyone to improving industrial relations in Royal
Mail. Now that this uncertainty has been lifted, there is a great
opportunity to step up a gear in modernising Royal Mail in the public

Lord Mandelson told peers that the Government remained “convinced” that the
partial sell-off proposed in Richard Hooper’s report into the Royal Mail
“offers the best chance for securing the universal postal service while
protecting Royal Mail pensions”.

But he added: “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 that we would only do a deal with the private sector
if it represented value for money for the taxpayer.

“Our market testing has shown now is not the time to sell a minority stake in
Royal Mail.”

Conservative business spokesman Lord Hunt told peers that by putting the
part-privatisation into “cold storage”, the Government was “putting the
trustees of the Royal Mail pension plan in an impossible position”.

Liberal Democrat business spokesman John Thurso said: “This is an humiliating
climbdown for the Government. It is quite clear that Gordon Brown no longer
has the political will to fight the unions and opponents on his own

“The Government first told us that the plans were being postponed because
there wasn’t time to debate them. Now we hear that market conditions are the
reason. They really should make up their minds.

“Starting this process without being able to finish it has left Royal Mail in
limbo, the regulator stranded and caused a lot of unnecessary damage.

“The result of this dithering is regulatory hiatus, uncertainty over pensions
and stalled modernisation. These issues will not go away and Lord Mandelson
must now explain how the Government will deal with them.”

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