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Row grows over Royal Mail plans Row grows over Royal Mail plans
(about 2 hours later)
Postal workers have been protesting in Westminster as the row grows over plans to sell off 30% of Royal Mail.Postal workers have been protesting in Westminster as the row grows over plans to sell off 30% of Royal Mail.
Over 120 Labour MPs oppose it, fearing full privatisation and job losses, and argue Labour made an election pledge to keep the Royal Mail in public hands.Over 120 Labour MPs oppose it, fearing full privatisation and job losses, and argue Labour made an election pledge to keep the Royal Mail in public hands.
Business Secretary Lord Mandelson said it was "absolutely clear" that the service would remain publicly owned.Business Secretary Lord Mandelson said it was "absolutely clear" that the service would remain publicly owned.
But he told the BBC that new investment was sorely needed as Royal Mail "was in danger of running out of money".But he told the BBC that new investment was sorely needed as Royal Mail "was in danger of running out of money".
Amid a row over the scale of Royal Mail's pension deficit, Lord Mandelson said the taxpayer could not be expected to fund potential liabilities in the region of £8bn without seeing an improvement in the performance of the company.Amid a row over the scale of Royal Mail's pension deficit, Lord Mandelson said the taxpayer could not be expected to fund potential liabilities in the region of £8bn without seeing an improvement in the performance of the company.
But there are signs the proposals, due to be introduced in the House of Lords on Thursday, are causing unease at the highest level of government.
The BBC's political editor Nick Robinson said there was disagreement on Tuesday over how the bill should be presented to Parliament at a meeting of a Cabinet sub-committee, responsible for legislation, chaired by Harriet Harman.
Although ministers deny any differences over the substance of the bill, Nick Robinson said there was anxiety about the prospect of a political fight the government may struggle to win.
Hundreds of postal workers and members of the Communication Workers' Union attended a rally at Methodist Central Hall in Westminster.Hundreds of postal workers and members of the Communication Workers' Union attended a rally at Methodist Central Hall in Westminster.
BBC political correspondent Ben Wright said there was angry criticism of government policy, some calls for the union to sever its links with the Labour Party and claims that workers were being "blackmailed" by linking the pension deficit issue to the part privatisation. During the meeting, there was angry criticism of government policy, some calls for the union to sever its links with the Labour Party and claims workers were being "blackmailed" by linking the pension deficit issue to the part privatisation.
The government has proposed taking over responsibility for the pension scheme as part of the proposed sell-off package.The government has proposed taking over responsibility for the pension scheme as part of the proposed sell-off package.
'Scare' claim'Scare' claim
In a letter to Lord Mandelson, Jane Newell - the chair of trustees of Royal Mail's pension scheme - warned the deficit could rise well in excess of its current £5.9bn, should the sale not happen. In a letter to Lord Mandelson, Jane Newell - the chair of trustees of Royal Mail's pension scheme - warned its deficit could rise well in excess of its current £5.9bn, should a stake not be sold.
But the Communication Workers' Union said the publication of the letter was an effort to "scare" MPs into voting with the government.But the Communication Workers' Union said the publication of the letter was an effort to "scare" MPs into voting with the government.
Union boss on sell-off 'scare' Lord Mandelson: 'The Royal Mail is in danger of running out of money'
Its leader Billy Hayes said it was a "scandal" that the chairman of the pension trustees was "interfering" in politics.Its leader Billy Hayes said it was a "scandal" that the chairman of the pension trustees was "interfering" in politics.
He told Sky News: "The government is saying they want a foreign company to run the post office, which is ridiculous. We could be faced with a situation where the Royal Bank of Scotland is nationalised and the Royal Mail is privatised."He told Sky News: "The government is saying they want a foreign company to run the post office, which is ridiculous. We could be faced with a situation where the Royal Bank of Scotland is nationalised and the Royal Mail is privatised."
Lord Mandelson defended the letter's publication, saying ministers had to "get a grip" on the pension situation and the public had a right to know the scale of the problems the company faced. Lord Mandelson defended the letter's publication, saying ministers had to "get a grip" on the pension situation.
Gordon Brown may face the largest backbench rebellion of his premiership on the bill, due to be introduced to Parliament on Thursday, and may have to rely on Conservative and Liberal Democrat votes to get it through. Gordon Brown may face the largest backbench rebellion of his premiership on the bill and may have to rely on Conservative and Liberal Democrat votes to get it through.
Rebels warnedRebels warned
Labour backbencher John Grogan said three cabinet ministers had told him they opposed the plan and told the BBC:Labour backbencher John Grogan said three cabinet ministers had told him they opposed the plan and told the BBC:
"Is this the time for the Labour government, which is going through hard times at the moment, to completely split the Parliamentary party down the middle?"Is this the time for the Labour government, which is going through hard times at the moment, to completely split the Parliamentary party down the middle?
"Over 100 Labour MPs have signed a motion against these proposals - it's going to be Peter Mandelson against a big bulk of the Parliamentary Labour Party.""Over 100 Labour MPs have signed a motion against these proposals - it's going to be Peter Mandelson against a big bulk of the Parliamentary Labour Party."
Lord Mandelson, who has come under fire for choosing to introduce the bill in the House of Lords, said he was sorry for the "political pain" that the proposals were causing in Labour ranks but vowed not to "walk away" from the proposals. Ministers have given themselves a couple of months to try to win the argument with almost 140 rebel Labour MPs Nick Robinson BBC's Political correspondent class="" href="http://www.bbc.co.uk/blogs/nickrobinson/2009/02/promising_posti.html">Read Nick's thoughts in full class="" href="/1/hi/uk/7908270.stm">Postman speaks of pension woes class="" href="/1/hi/uk/7908093.stm">Postal workers on the protest
SNP postal affairs spokesman Mike Weir said he was on a "collision course" with his own party adding: "It would be disgraceful if he is plotting to by-pass the Commons in an attempt to avoid embarrassment." Lord Mandelson said he was sorry for the "political pain" that the proposals were causing in Labour ranks but vowed not to "walk away" from the plans.
Royal Mail chief executive talks about its losses SNP postal affairs spokesman Mike Weir said Lord Mandelson was on a "collision course" with his own party adding.
The government says the Royal Mail needs new investment in technology to survive.The government says the Royal Mail needs new investment in technology to survive.
Chief executive Adam Crozier told the Commons business and enterprise committee on Tuesday they were facing "rapidly declining" volumes of letters posted - with an 8% drop predicted next year.Chief executive Adam Crozier told the Commons business and enterprise committee on Tuesday they were facing "rapidly declining" volumes of letters posted - with an 8% drop predicted next year.
When the pension deficit was revalued, it was expected to reach between £8bn and £9bn, he said.When the pension deficit was revalued, it was expected to reach between £8bn and £9bn, he said.
He added: "The simple fact is the business doesn't generate enough cash to fund the investment required to modernise the business and ensure the future of the USO (universal service obligation)."He added: "The simple fact is the business doesn't generate enough cash to fund the investment required to modernise the business and ensure the future of the USO (universal service obligation)."
'Crazy''Crazy'
Ministers say the plan is not a sell-off but a "partnership" which maintains Labour's manifesto commitment to keep the Royal Mail in public ownership.Ministers say the plan is not a sell-off but a "partnership" which maintains Labour's manifesto commitment to keep the Royal Mail in public ownership.
HAVE YOUR SAYEveryone knows Royal Mail has been haemorrhaging money for yearsPaul, ManchesterSend us your comments
So far 145 MPs have signed a Commons motion opposing the move - 125 of them Labour.So far 145 MPs have signed a Commons motion opposing the move - 125 of them Labour.
Tory MP Daniel Kawczynski told the BBC he would vote against the plan, because he was concerned deliveries to rural areas, like his Shropshire constituency, would be under threat if Royal Mail was run by a private company. Union boss on sell-off 'scare'
Tory MP Daniel Kawczynski told the BBC he would vote against the plan, because he was concerned deliveries to rural areas, like his Shropshire constituency, could be under threatened.
But shadow business secretary Ken Clarke, a former postal minister who failed to persuade Margaret Thatcher to privatise the service when she was prime minister, said most Conservatives would vote with the government.But shadow business secretary Ken Clarke, a former postal minister who failed to persuade Margaret Thatcher to privatise the service when she was prime minister, said most Conservatives would vote with the government.
He urged Lord Mandelson not to "cave in" and said matters had got worse over the past decade and Royal Mail now faced a "serious financial crisis".He urged Lord Mandelson not to "cave in" and said matters had got worse over the past decade and Royal Mail now faced a "serious financial crisis".
"We have the interests of the postal service and public in mind and we will vote in line with the policy of part privatisation," he said."We have the interests of the postal service and public in mind and we will vote in line with the policy of part privatisation," he said.
Ministers have given themselves a couple of months to try to win the argument with almost 140 rebel Labour MPs Nick Robinson BBC's Political correspondent class="" href="http://www.bbc.co.uk/blogs/nickrobinson/2009/02/promising_posti.html">Read Nick's thoughts in full class="" href="/1/hi/uk/7908270.stm">Postman speaks of pension woes class="" href="/1/hi/uk/7908093.stm">Postal workers on the protest Unions argue the Royal Mail made a healthy profit in 2008 and can thrive in its current form.
Unions argue the Royal Mail made a healthy profit of £255m in the last nine months of 2008 and can thrive in its current form.
They are worried about possible job losses and the impact of the private sector involvement on the universal service.They are worried about possible job losses and the impact of the private sector involvement on the universal service.
Former cabinet minister Peter Hain told BBC Radio 4's Today programme he was worried the plan could "open the door to full-scale privatisation in the future".Former cabinet minister Peter Hain told BBC Radio 4's Today programme he was worried the plan could "open the door to full-scale privatisation in the future".
Labour MP Geraldine Smith said that as the government had agreed to take on the pension deficit it was "crazy" to "keep the liability and give away the most profitable parts of the business to a foreign competitor".
But Postal Affairs Minister Pat McFadden told the BBC the Royal Mail could not afford to pay down the deficit and fund the modernisation needed - such as automating services.
"We will not privatise the company but what we want is to bring in the experience to drive forward that change precisely so we can continue the universal service for the future," he said.
Dutch postal operator TNT is the only firm, so far, to have publicly expressed interest in buying a chunk of Royal Mail.Dutch postal operator TNT is the only firm, so far, to have publicly expressed interest in buying a chunk of Royal Mail.