Peter Mandelson urged to 'think again' over Royal Mail plans

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The Government was accused today of planning to nationalise the Royal Mail's debts and privatise its profits under controversial plans to allow a firm to take a minority stake in the business.

Leaders of the Communication Workers Union (CWU) urged Business Secretary Lord Mandelson to "think again" before pressing ahead with the part-privatisation, arguing that letters could be collected and delivered on the same day if there was proper investment in the Royal Mail.

Giving evidence to the Business and Enterprise committee, CWU general secretary Billy Hayes said Labour should stick to its manifesto commitment of keeping the service wholly publicly owned rather than allowing a private firm to take a stake.
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There has been speculation that a firm such as Dutch-owned TNT would be allowed to take a stake worth between 25% and 33%, but Mr Hayes told MPs the union feared it could be as high as 49%.

In response to an independent report last year into the postal service, the Government signalled it will take over the Royal Mail's multi billion pound pensions deficit, but the union argued this would free up the organisation to press ahead with investment without the need for a private partner.

Mr Hayes complained that no-one would say how much money the Royal Mail needed to modernise, adding: "It's like playing charades - trying to guess what future investment is needed for the company.

"If a private company comes in they will want to make a profit. My fear is that we would be nationalising the debt and privatising the profit.

"Isn't it about time the secretary of state said how much money the Royal Mail needed. I have not seen one convincing argument for privatising the Royal Mail."

CWU deputy leader Dave Ward said letters could be collected and delivered on the same day if proper investment and long term planning was made, complaining that Royal Mail executives often left within six months of joining.

Labour MP Lindsay Hoyle (Chorley) clashed with the author of last year's report, Richard Hooper, saying he did not accept the recommendation for part privatisation.

"I think you are driven by dogma. You don't like the Royal Mail - you want to see it broken up. You are giving taxpayers money away to a competitor. It is not good enough and I don't accept your report."

Mr Hooper argued that a strategic partner with experience of "transforming" a business would benefit the Royal Mail, but he repeatedly declined to say how much of a stake a private firm should be allowed to take, or how much money the business needed in the future.

Labour MP Anne Moffat (East Lothian) said MPs will have a "real problem" selling part-privatisation to their constituents.

Scores of Labour back-benchers have signed a Commons motion opposing the Government's plans, threatening a huge rebellion against the Prime Minister.