Mail rebels resist effort to quell revolt

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Labour rebels vowed on Wednesday to continue their fight to overturn government plans to part-privatise Royal Mail, in spite of significant concessions to be announced by Lord Mandelson on Thursday.

The business secretary will seek to win over some of the 132 Labour MPs who have signed a parliamentary motion opposing the plan to sell a stake of about 30 per cent in Royal Mail to an overseas operator.

In a statement to peers, Lord Mandelson will stress the government’s commitment to pressing ahead with the postal services bill, which had its first reading on Wednesday. But he will acknowledge the MPs’ concerns that Royal Mail has been treated unduly harshly by its regulator and, as the Financial Times reported on Wednesday, will pledge to relax regulatory price controls on the state-owned postal operator.

The bill will transfer regulatory responsibility for Royal Mail from Postcomm to Ofcom, which will be given a primary remit to ensure the maintenance of the “universal service obligation” – the one-price-goes-anywhere mail service. The MPs and Royal Mail had complained that Postcomm’s potentially conflicting duties of maintaining this service and encouraging competition had led the regulator to apply an unduly punitive pricing regime on Royal Mail in an attempt to encourage other operators into the market.

Ofcom will also be given powers to ensure other operators gain access to Royal Mail’s network, although the price charged for the “final mile” delivery to doorsteps was regulated on a “fair basis”, government insiders said.

Lord Mandelson will seek to assuage fears that the partial sell-off will prove a precursor to full privatisation by writing into the legislation a commitment that the taxpayer keep a majority stake. Preservation of the universal service obligation will also be included.

But there were clear signs last night that those concessions would not prove sufficient to quell the revolt.

Peter Hain, a former cabinet minister, told the FT the concessions were “very welcome”, but gave a warning that “private investment still remains an outstanding obstacle” that would “prove unacceptable” to the party.

Geraldine Smith, a rebel Labour backbencher, characterised the government’s approach as “complete madness”. She said: “If we are going to relax pricing controls we will give it to some private company, a foreign private company, at [a] dirt cheap give-away price and then, by letting them raise prices, we will lose out when it is back to being a profitable company.”

The Communication Workers’ Union, which is threatening to cut £1m of annual funding to Labour, said the only acceptable compromise was for the government to abandon any element of sale to the private sector.

Meanwhile, suspicions of splits within high levels of the government have been fuelled by the fact that 11 ministerial aides have now signed the parliamentary motion without, as yet, facing any apparent disciplinary action.

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[Yahoorsur]

Ofcom will also be given powers to ensure other operators gain access to Royal Mail’s network, although the price charged for the “final mile” delivery to doorsteps was regulated on a “fair basis”, government insiders said.


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