Royal Mail sell-off facing delays
Lord Mandelson has said plans to sell a minority stake in Royal Mail to a private company are being delayed, report the BBC.
Lord Mandelson has said plans to sell a minority stake in Royal Mail to a private company are being delayed, report the BBC.
The article continues:
The business secretary says the bill which would allow the controversial move was being “jostled for space” in the government’s legislative programme.
It was due to go to Parliament before the summer break but Lord Mandelson told the BBC that it not do so now, saying it would now happen “later”.
The Royal Mail reforms are opposed by unions and many Labour MPs.
More than 140 Labour backbenchers have signed a Commons motion critical of the plan and there have also been rumours for weeks that the whole scheme could be shelved.
But Lord Mandelson has said the company cannot survive without it and he told BBC One’s Breakfast that its finances were “reaching crisis point”.
In a separate interview with the Financial Times Lord Mandelson said he still hoped to get the necessary legislation on the statute book before the next election.
But, he said, it may be difficult to do so before the House of Commons breaks for the summer, as was originally scheduled. He told the paper: “I want to retain the slot, but… I have to concede that the original linking of the legislative passage and the bidding process for the strategic partner has been decoupled.”
He pointed to the depressed state of the markets, meaning the sell-off was unlikely to raise a substantial amount of money, as another reason for delaying legislation to allow the sale.
BBC political correspondent Iain Watson said any delay in part-privatisation of Royal Mail would boost the morale of Labour Party activists but it was also likely to be seen as a climb-down by political opponents.
The government says that the partial sell off of Royal Mail is required as part of measures to tackle the financial position of the company – in particular a pensions deficit said to be near to £8bn.
The inevitable obligation to make increased payments to pay off the deficit might force the Royal Mail to increase its overall contributions to the fund to more than £1bn a year – which would drain all its potential profits for many years.
In June, the new chairman of Royal Mail Donald Brydon, threatened to close the scheme even to current staff, if the government did not take over responsibility for the pension fund.
However there was some relief for the Royal Mail, and other employers, recently from the pensions regulator which last week published new guidance on how companies could cope with increased pension deficits during the recession.
This included the proposal to allow such pension recovery plans to be spread over a much longer period – such as 20 years.
