‘No political fix’ on Royal Mail

Ministers are not considering a compromise deal on Royal Mail in order to avoid a damaging Labour revolt, minister Pat McFadden has said.

Ministers are not considering a compromise deal on Royal Mail in order to avoid a damaging Labour revolt, minister Pat McFadden has said.

He said proposals to turn it into a not-for-profit company like Network Rail “underestimated” its challenges.

That would just be a “political fix” rather than a comprehensive plan to transform Royal Mail, he said.

The government’s plan is opposed by 148 Labour MPs and they might have to rely on Tory MPs in June’s vote.

Post Office minister Mr McFadden told BBC Radio 4’s Today programme the government’s plan to sell off 30% of Royal Mail was the “most convincing plan that has been put forward so far”.

He said the not-for-profit proposal – put forward by the left wing campaign group Compass – was “driven by the politics of finding a solution around a political fix, rather than the transformation that’s needed”.

The proposal “underestimates the challenges faced by Royal Mail” – such as the rapidly declining volume of letters posted, he said.

McFadden said he was happy to talk through other ideas but the government’s plan, which followed a 12-month review, offered a “comprehensive” solution to transform Royal Mail and deal with its pension deficit.

“I understand this is difficult for some colleagues. We did not set out to pick a fight with backbenchers or trade unions, but we have a responsibility,” he said.

“Simply to kick it into the long grass would not be a responsible thing to do.”

The government argues that Royal Mail’s multi-billion pound pension deficit and the increasing popularity of e-mail means it cannot survive in its current form and needs outside investment.

But its critics, including the Communication Workers’ Union, say the government’s plan would “nationalise the pension fund and privatise the profit”.

So far 148 Labour MPs have signed a motion signalling they oppose the plan.

Compass chairman Neal Lawson told the BBC the group’s proposal was “to try and find a way out of this mess”.

“At the moment they can’t get it through Parliament with the support of Labour MPs,” he said.

“I think they know there’s a political problem, given last week, given what is likely to be unsatisfactory results in June.”

The Guardian had reported aides to the prime minister were talking to Labour rebels about the Compass proposal.

A Compass pamphlet published on 5 May calls on all sides of the Labour party to “step back from the brink” and give support to the idea of keeping Royal Mail in the public sector.

But a Downing Street spokesman said: “The government has said its door is open to those with ideas on the future of the Royal Mail and Neal Lawson has taken advantage of the opportunity to present the proposal he is publishing this week to government officials.

“We do not believe his alternative is workable and it is not under consideration.”