Royal maelstrom

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The UK government has been drifting for some months; since the London Group of 20 meeting in April, there has been little sense of direction. But one of the few areas where the Labour administration was still making progress was in pressing the case to part-privatise the Royal Mail. No longer. Now, even here, fearful of a fight, the government has sought the safety of the doldrums.

The Hooper report, published last December, analysed the Royal Mail. It, rightly, advises that the service would need investment, reform and a strategy to deal with its chasmic pension deficit if it were to survive the liberalisation of Europe’s mail markets in 2011.

The report’s proposed solution is a good one: a strategic partnership should be formed with a private company to help turn the business around. And, at the same time, the government should tackle the pension deficit. The consequence would be a leaner postal machine.

The government’s initial response, led by Lord Mandelson, the business secretary, was the right one. Understanding the urgency of the 2011 deadline, he pushed legislation through the House of Lords to allow rapid part-privatisation of the business.

Lord Mandelson, however, has now shelved the plan. Market conditions, we are told, are not good enough to permit the sale of a stake in the service. In truth, it would be far easier to find investors now than it was in December, when the plan was announced. Lord Mandelson is backing down in the face of baser pressures.

Gordon Brown, the prime minister, has not had to deal with a coup attempt for some weeks. But, even now, punters believe that the chance of him being deposed before the election, due within a year, is greater than one-third. Lord Mandelson will not press for reform of the Royal Mail because it could inspire fresh mutiny.

A total of 149 Labour MPs have signed a motion opposing part-privatisation. If the bill were voted down by these rebels or, worse, were passed thanks to the support of the opposition Conservative party, postal reform would split the Labour party. Royal Mail reform is being cast overboard to save Mr Brown from suffering the same fate.

In the time it has left, the government still needs to make some stark choices. In defence, in particular, budget constraints are severe. As it considers these questions, the louder fringes of the Labour party, who now seem to be holding the prime minister hostage, must not be allowed a veto.