Downing Street rejects Royal Mail compromise

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Tuesday, 05, May 2009 09:49
By Ian Dunt

The potential for a backbench revolt over plans to privatise Royal Mail became markedly more likely this morning when a Number 10 spokesman ruled out a compromise solution.

Left-wing thinktank Compass proposed an alternative to the government plans, which would see the Royal Mail turned into a not-for-profit company, along the lines of Network Rail.

Undertaking the scheme would have allowed the government to sidestep a backbench revolt by disgruntled Labour MPs, which would be considered a political disaster after Gordon Brown received his first Commons defeat as prime minister over Gurkha residency last week.

A spokesman for Number 10 described the plan as "unworkable".

Dozens of MPs have said they will vote against the government measures, formulated by business secretary Peter Mandelson.

The latest comments follow a weekend of damage limitation exercises by Labour, with every potential leadership challenger publicly professing loyalty to Mr Brown.

Health secretary Alan Johnson and deputy Labour leader Harriet Harman both said they would not stand against Mr Brown, while communities secretary Hazel Blears quickly put out a statement clarifying a seemingly critical piece she had written for the Observer.

Government plans would see Royal Mail part-privatised, with Dutch firm TNT taking on a minority stake.

So far 148 Labour MPs have signed a motion opposing Downing Street's plan.