UK MPs set to block mail equity handout

THE number of MPs to have signed an Early Day Motion opposing Royal Mail’s plan to hand a fifth of its equity to employees has reached 208.

Allan Leighton, Royal Mail’s chairman, believes the scheme is a vital incentive to motivate employees and steel the company for full liberalisation of the postal market, which begins today.

However, such widespread Parliamentary opposition – made up of nearly all Labour backbenchers entitled to sign, and a third of all MPs – means it will almost certainly be blocked.

Any transfer of equity would require primary legislation and 193 Labour MPs have signed the motion, suggesting that a vote would provoke the largest rebellion since Tony Blair came to power.

No Conservative MPs have signed the motion, but the party came out against the proposals in November, before David Cameron became leader, and a spokesman said that policy remains in place.

Last night John Grogan, the Labour MP for Selby and the motion’s sponsor, said the extent of cross-party opposition would make it impossible for the Government, Royal Mail’s sole shareholder, to force the scheme through. “Politics is ultimately a numbers game and the figures just don’t add up,” he said.

The Communication Workers’ Union (CWU), which has organised a highly effective lobbying campaign against what it sees as the stealthy privatisation of Royal Mail, said it expected the share proposals to be “kicked into the long grass”.

Leighton sees the share scheme as the best way to motivate staff, who must make rapid productivity gains if Royal Mail is to keep up with new entrants in the postal market, such as TNT, UK Mail and DHL. He insists it is not the first step towards privatisation.

Alan Johnson, the secretary of state for trade and industry, has told the House of Commons that he does not believe a staff share issue would compromise Labour’s manifesto pledge to keep Royal Mail in public hands and that he is willing to consider any plan to improve performance.

But a Trade and Industry Select Committee report last month said there were less controversial ways for Royal Mail to motivate its employees.

Royal Mail said it believed the Government would find a way of getting the legislation through if it wished.

Royal Mail is also lobbying the Government for a pounds 2bn cash injection to fund improvements to its network and to eradicate its pension fund deficit, possibly in return for a larger dividend.

Sir George Bain, the Government’s adviser on Royal Mail, is reported to consider the share issue a distraction from the key subject of funding. The Government is expected to announce its plans on both matters next month.

The number of Labour signatories trumps the 162 who signed a motion against top-up fees in 2004, and the 94 who put their names to a petition against military action in Iraq in 2002.