Tory blow to Royal Mail shares plan
Royal Mail’s hopes of giving shares to its employees looked doomed last night after the Conservatives told The Times that they had misgivings over backing the necessary legislation (see Commentary, facing page).
If the Tories oppose the plans, defeat in the House of Commons appears inevitable because of the huge opposition to the plan from Labour backbenchers. Some 186 Labour MPs have signed an early-day motion opposing any issuance of shares, out of a total of 198 signatures against. Nick Brown, the former minister and ally of the Chancellor, is the latest big name to join the opposition. The number backing the motion is more than half of the parliamentary party and is the majority of those Labour MPs eligible to sign, given that members of the Government and their parliamentary aides are not free to back such motions.
Allan Leighton, the chairman of Royal Mail, has championed the plan to give employees a stake in the business. He had also wanted a stake to go to outside investors but that has been ruled out by the Government. Labour backbenchers are opposing the current plans for a 20 per cent stake because they believe it is a precursor to privatisation.
A spokesman for the Conservatives said the party was concerned that there were no plans to bring outside money into the company via the shares and that the assets would not be transferable. Although the issue would be a matter for a new shadow cabinet under a new leader, the spokesman said that there were concerns that “if you are offering shares in a company like this then it should be for the benefit of the company”.
John Grogan, Labour MP for Selby, who tabled the motion, said: “This is very bad news for Allan Leighton’s plans. If he can’t persuade the Conservatives to back it, it is hard to see it going through the House of Commons, given the extent of opposition on the Labour backbenches. Alan Johnson (the Trade and Industry Secretary) told MPs last week that he wasn’t committed to the plan. He would be well advised to distance himself further if he doesn’t want defeat in the Commons.”
Billy Hayes, general secretary of the Communication Workers’ Union, said: “The shares issue has always been an irrelevance. I hope the Government is realising that these plans must be shelved so that we can concentrate on the real concerns such as future investment, the price control and the market opening to competition.”
The Liberal Democrats are likely to support the Government, although they are revising their policy on Royal Mail. But Norman Lamb, their trade and industry spokesman, said: “Any idea of 20 per cent going to the employees is only half of the solution and has got to be seen in that light.”
The Government is expected to outline plans for the structure of Royal Mail following the industry regulator’s new pricing plans, due in the next few days.
