MPs’ report to lambast Royal Mail plan

Lord Mandelson’s plans to part-privatise Royal Mail will receive a significant setback, when an all-party Commons inquiry lambasts the business secretary’s approach as “entirely unacceptable”.

Lord Mandelson’s plans to part-privatise Royal Mail will receive a significant setback, when an all-party Commons inquiry lambasts the business secretary’s approach as “entirely unacceptable”.

A unanimous report from the business select committee on 8 April warns that the government has not yet “made its case” for its plan to sell a 30% stake in the state-owned postal operator to a foreign rival.

The report will provide ammunition for the revolt massing on Labour’s backbenches against the part-privatisation, to be voted on by MPs before the summer. The Tories suggested they would maintain support for the bill, placing Gordon Brown in the difficult position of relying on opposition support to carry a measure opposed by much of the Labour movement.

A senior government insider admitted to the Financial Times that the scale of mounting opposition to the plans was such that it might prove “politically impossible” to achieve the sale. But the insider warned such a failure might have dire consequences for Royal Mail, and Brussels could force the company to re-structure as a condition of approving the proposed £6bn taxpayer bail-out of the company’s pension deficit.

Lord Mandelson hit back at the committee by accusing MPs of papering over their ideologically polarised views on privatisation. “It’s a pity the committee did not take the opportunity to show a sense of vision . . . but has instead taken a lowest common denominator approach,” he said. “This of course bridges the differing positions in the committee but does nothing to secure a viable future for Royal Mail.”

But Labour MPs on the committee accused the peer of trying to drive through the sale, despite a lack of supporting evidence. “In my view, this is driven by dogma,” said Lindsay Hoyle, a leading Labour rebel on Royal Mail.

The committee’s report attacks the government for a “worrying lack of transparency” in the proposals. The MPs said it was not clear how much money Royal Mail needed, how much a part-privatisation would raise or how that money would be used.

“It is entirely unacceptable for parliament to be asked to approve such fundamental changes” without knowing such information, the report states.