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Royal Mail sell-off plan unveiled Sell-off 'to save postal service'
(40 minutes later)
Full details of Lord Mandelson's plan to sell a 30% stake in the Royal Mail have been published by the government. Controversial plans to sell off 30% of Royal Mail are the only way to secure the future of a universal postal service, Lord Mandelson has said.
The proposals are aimed at modernising the service and supporting its pension fund which is believed to be facing a deficit of £8bn. The Royal Mail's huge pension deficit and the rise of e-mail communication mean it will never be profitable in its current form, he claims.
Postal unions are opposed to the plans while more than 130 Labour MPs have publicly called for a rethink. The business secretary has published a bill proposing to modernise the service by opening it up to private investment.
Business Secretary Lord Mandelson said he would listen to concerns about the plans but would not "duck" the issue. But the plans are opposed by postal unions and more than 130 Labour MPs.
But he says in the plan, entitled The Future of the Universal Postal Service in the UK, that Britain's postal "network is under threat as people increasingly switch to digital technology as their preferred way of communicating". They say it breaks a Labour manifesto pledge to keep Royal Mail in public hands and threatens the future of a universal service, with staff delivering letters and parcels to everyone in the country.
He writes: "I am determined to protect the universal service by ensuring we have a world class Royal Mail. That requires us to act today to secure the Royal Mail's future. Pension deficit
"The policy we are proposing will keep the Royal Mail in the public sector, while equipping it for modernisation." But the plan entitled The Future of the Universal Postal Service in the UK, Lord Mandelson said: "I am determined to protect the universal service by ensuring we have a world class Royal Mail."
He said the aim was to "fully restore a publicly owned Royal Mail to good health". He adds: "The policy we are proposing will keep the Royal Mail in the public sector, while equipping it for modernisation."
The Royal Mail's pension deficit, believed to be £8bn, is expected to grow "significantly," the plan says, and "swallow any profits that the company might make in the future".
But "tackling pensions on their own would not be a panacea for Royal Mail's difficulties".
Increasing the price of stamps would not work as people would continue to switch to digital communication, which has already accounted for a big fall in the volume of mail being sent, the plan argues.
It proposes:
  • Inviting private firms to form partnerships with Royal Mail, including taking a minority stake in its parcels and letters business
  • Tackling the pension fund deficit
  • Transferring regulation from Postcomm to Ofcom
Industrial relations within Royal Mail must also improve, it adds, pointing out that in 2007 60% of days lost to strikes in the entire UK economy were down to postal workers.
The plan, which is based on recommendations by the 2007 Hooper review, do not include post offices, which would continue to remain in the public sector.
'Door is open''Door is open'
But in a letter to the Guardian, the leaders of Labour's eight largest affiliated unions attacked the plans as "electorally unpopular, politically unwise and damaging to the concept of universal service provision". The leaders of Labour's eight largest affiliated unions have attacked Lord Mandelson's plan as "electorally unpopular, politically unwise and damaging to the concept of universal service provision".
They also accuse the ministers of breaking an agreement between the government and the trade union movement in the summer of 2008 to keep the service in public ownership. In a letter to The Guardian, they accuse the ministers of breaking an agreement between the government and the trade union movement in the summer of 2008 to keep the service in public ownership.
Lord Mandelson, writing in the Daily Mirror, admitted that he knew the issue was "politically different" but was determined to confront it head on.
There was angry condemnation of the plans at a union rally on TuesdayThere was angry condemnation of the plans at a union rally on Tuesday
Lord Mandelson, writing in the Daily Mirror, admitted that he knew the issue was "politically different" but was determined to confront it head on.
"My door is open and I will listen to these concerns," he said."My door is open and I will listen to these concerns," he said.
"But we face a choice. We either let Royal Mail drift and do nothing. Or we take action to secure the universal postal service for the customer and secure the pensions of Royal Mail employees.""But we face a choice. We either let Royal Mail drift and do nothing. Or we take action to secure the universal postal service for the customer and secure the pensions of Royal Mail employees."
Ministers may make a statement in Parliament outlining government policy after the bill's publication.Ministers may make a statement in Parliament outlining government policy after the bill's publication.
Opponents say the plans break a Labour manifesto commitment to keep Royal Mail in public hands.
The government says the company will remain under public ownership while benefitting from much-needed investment and added expertise that a private sector partner would bring.
As part of its reform package, the government government also intends to take on responsibility for the pension scheme, whose deficit is believed to be about £8bn.
'New provision''New provision'
More than 130 Labour MPs - including a reported 11 parliamentary private secretaries - have signed a Commons motion rejecting the plan, saying it threatens Royal Mail's future.More than 130 Labour MPs - including a reported 11 parliamentary private secretaries - have signed a Commons motion rejecting the plan, saying it threatens Royal Mail's future.
Downing Street has denied reports the rebellion has spread to the cabinet, saying there was no differences of opinion in the Cabinet about the substance of the bill.Downing Street has denied reports the rebellion has spread to the cabinet, saying there was no differences of opinion in the Cabinet about the substance of the bill.
Introducing the bill on Wednesday, Lord Mandelson told peers the bill would "make provision for the restructuring of the Royal Mail Group and of the Royal Mail pension plan".Introducing the bill on Wednesday, Lord Mandelson told peers the bill would "make provision for the restructuring of the Royal Mail Group and of the Royal Mail pension plan".
It would also "make new provision about the regulation of postal services", he said.It would also "make new provision about the regulation of postal services", he said.
But while doing so, he was heckled by Lord Clarke, deputy general secretary of the postal workers' union in the 1980s.But while doing so, he was heckled by Lord Clarke, deputy general secretary of the postal workers' union in the 1980s.
The bill's first reading was essentially a formality which allows it to be printed so peers and MPs can see the proposals in detail.The bill's first reading was essentially a formality which allows it to be printed so peers and MPs can see the proposals in detail.
It will be debated in full at its second reading - expected on 10 March.It will be debated in full at its second reading - expected on 10 March.