Royal Mail sale to be put on hold
The UK government’s plans to part-privatise the Royal Mail are to be put on hold pending an increase in the price bidders are willing are to pay, in what is likely to be seen as a significant concession to Labour rebels, reports the Guardian. The UK government's plans to part-privatise the Royal Mail are to be put on hold pending an increase in the price bidders are willing are to pay, in what is likely to be seen as a significant concession to Labour rebels, reports the Guardian.
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Ministers indicated they intend to go ahead with the legislation to privatise in some form, but believe that the price for the sale is currently too low.
Labour's chief whip, Nick Brown, said he was "strongly in favour of a way through this issue that had a buy-in from a majority of the Labour and trade union movement".
Government sources said they were looking for more than £2bn for a 30% stake, but had not yet received such a bid. Gordon Brown has been told there is a centrist section of the parliamentary Labour party likely to back his leadership if he undertakes not to go ahead with the sale if there are no bidders at the right price.
Ministers had been due to press ahead with the second reading of the postal services bill in the Commons this month, but it is now unlikely to be held until the autumn, by which time it will be clear whether the government has high enough bids. One ministerial source said: "There is no point trying a sale at the bottom of the market."
The issue is due to be raised at a meeting of the parliamentary Labour party by some of the 100 or more Labour MPs opposed to the part-privatisation. Mick Clapham, the Labour MP for Barnsley West, said: "We must develop another business plan for Royal Mail. If he insists on pressing on with it, the whole thing could start unravelling again for Brown." It is not clear that rebels will be satisfied by an assurance that the sale will not go ahead until the price is right.
Peter Hain, the new Welsh secretary, and a former postal union activist, has been privately urging Downing Street to look at a separate option that would aim to bring in private expertise without selling any shares to the private sector.
It was also reported that the Communication Workers Union, which has opposed part-privatisation, is willing to look at modernisation in return for a better regulatory structure and a shoring up of the mammoth pension deficit. The business secretary, Lord Mandelson, has been blaming the unions for their campaign, saying it has been scaring bidders.
Ministers are privately arguing it is better from the union's viewpoint to agree to a minority sale of the government's stake, rather than see a Tory government push through full-scale privatisation.The commitment that the sale will not go ahead unless it provides clear value for money for the taxpayer has been squared with Mandelson. He has been given frequent reassurances by Brown that he will not back down, since the problems of the Royal Mail are deep-seated, including the loss of 8% if its letters business a year.
The CWU reacted angrily to comments from the new Royal Mail chairman, Donald Brydon, about a possible end to the company's pension scheme. "If we don't get this relief [part-privatisation] from the government, we are going to have to look at the same option as Barclays and close the pension scheme to existing members," he said.
The union said Brydon was scaremongering and denied there was any link between the retirement arrangements and privatisation.
"Selling off any part of the Royal Mail would only make the situation worse," said the union. "It is very worrying that the new chairman cannot see a way of preserving pensions when the company is making £1m a day in profits." added the union spokesman.
